A 'blight on the neighborhood': Chiu says two Tenderloin shops are front for illegal activity

San Francisco City Attorney David Chiu has filed two lawsuits targeting alleged illegal gambling dens in the Tenderloin that he said are lightning rods for other crime and vice.

Chiu zeroed in on two businesses he said exemplify the problems plaguing the area such as crime and drugs, alleging that two convenience stores are engendering illegal activity in the neighborhood by operating "substantial" illegal gambling operations that facilitate drug activity in the neighborhood.

"For law abiding residents, there is nothing convenient about these stores," said Chiu in a statement released by his office this past Thursday. "They have been the blight on the neighborhood for too long and are fronts for gambling dens and fencing operations. The two stores are endangering the safety, health, and welfare of their Tenderloin neighbors."

The stores in question are SF Discount Market and the Tenderloin Market and Deli, both on Leavenworth Street in the heart of the Tenderloin.

Chiu alleges that SF Discount Market "looks like a typical convenience store from the outside but has housed substantial gambling and fencing operations inside."

According to the City Attorney's Office, undercover officers went into the market in May with two boxes of Gucci perfume that the officer said were stolen. The clerk allegedly purchased the boxes anyway.

In September, a search warrant was executed at the market that allegedly uncovered more criminal activity, such as nine slot machines, a high-capacity magazine for a Glock handgun, ammunition, 83 grams of cannabis, and over $10,000 in cash. Officers also allegedly seized contraband such as iPhones, cigarettes, and stolen merchandise from Walgreens, CVS, World Market and Sephora.

"For law abiding residents, there is nothing convenient about these stores. ... The two stores are endangering the safety, health, and welfare of their Tenderloin neighbors."

City Attorney David Chiu

In the filed court complaint, Chiu's office said SF Discount Market has raised criminal activity in the neighborhood ever since it opened in 2023.

"The neighborhood has experienced a rising number of thefts, assaults, drug-related offenses and arrests of SF Discount Market customers wanted on outstanding warrants," reads the complaint.

In April and July, an officer entered the Tenderloin Market and Deli and allegedly saw patrons playing slot machines. A search warrant was executed there in September and seven slot machines were seized, along with a loaded firearm with a loaded magazine, over $6,000 in cash and a money counting machine.

Chiu's office alleges that residents in the area of the Tenderloin Market and Deli have suffered for "at least a decade" due to its alleged illegality and contribution to criminal activity. As with SF Discount Market, the city attorney alleges that the Tenderloin Market's presence has contributed to lawlessness and rising crime in the area, with customers regularly picked up on outstanding warrants.

Both markets sold drug paraphernalia in plain view, such as straight glass pipes used to smoke methamphetamine and crack cocaine, and sheets of aluminum foil used to smoke fentanyl. According to court documents, Chiu's office alleges the businesses have given "safe haven" to drug users and sellers, who congregate around the markets.

Attempts to reach both markets for comment were not successful.

Chiu said that by allegedly operating illegal gambling dens, these stores are violating the state's Gambling Control Act and are thus violating the state's unfair competition law. In addition to various monetary penalties, the City Attorney's Office seeks to shut down the businesses completely for one year.