Artichoke Joe’s Casino, one of the largest card room casinos in California, has been fined $8 million by the U.S. Financial Crimes Enforcement Network (FinCEN) for “willfully violating” anti-money laundering laws and permitting a range of other unsavory activities dating back to 2009.
“For years, Artichoke Joe’s turned a blind eye to loan sharking, suspicious transfers of high-value gaming chips, and flagrant criminal activity that occurred in plain sight, “said Jamal El-Hindi, Acting Director of FinCEN. “FinCEN’s $8 million civil penalty results from the card club’s failure to establish adequate internal controls and its willful violations of the Bank Secrecy Act.”
The order asserts that senior-level employees at Artichoke Joe’s knew of loan sharking and other illicit activities being conducted on the premises, such as the use of casino chips to facilitate illegal transactions. All the while, the casino failed to file any suspicious activity reports related to the activity, and FinCEN noted “several instances in which loan-sharks provided AJC chips to customers on the gaming floor within plain sight of AJC employees.”
FinCEN also found that the casino did not have adequate internal controls in place and was thus exposed to greater risk of exploitation by money launderers and criminals, particularly with regard to the practice of customers pooling and commingling bets with relative anonymity.
“FinCEN’s Assessment of $8 million recognizes the duration and severity of AJC’s violations, the size and sophistication of the card club, AJC’s awareness of criminal activity on its premises, and its deficient culture of compliance,” the FinCEN order notes.
For context, FinCEN levied an $8 million penalty against Caesars International in 2015 for similar issues uncovered at its Caesars Palace property in Las Vegas.
Dennis Sammut, president of Artichoke Joe’s, told GamblingCompliance that the club is “still evaluating the civil assessment and next steps.”
“Artichoke Joe’s is fully committed to upholding all laws and complying with all regulations. A lot of effort has gone into and continues to go into compliance with the many laws and regulations applicable to cardrooms,” he said.
The penalty marks the California card room industry’s latest incident in a string of raids and run-ins with the law, and it’s the third time in just over two years that FinCEN has brought such an action on grounds of anti-money laundering failures against a card club.
In 2016, Hawaiian Gardens – outside of Los Angeles – agreed to a $2.8 million penalty over similar “willful” violations of the Bank Secrecy Act, including failures to report suspicious transactions and gather Know Your Customer information on patrons.
In 2015, the Oaks Club near San Francisco was fined $650,000 for failing to have a proper compliance plan and neglecting to file suspicious activity reports.
Also in 2016, the Normandie Club agreed to pay $2.38 million in a plea agreement reached after being charged with BSA violations by the U.S. Attorney’s Office in central California. Shortly thereafter, the club’s license was revoked by the California Gambling Control Commission.
Artichoke Joe’s, which has operated in San Bruno since 1916, has also had previous run-ins with authorities. In 2011, it was raided by federal law enforcement because of racketeering and loan sharking suspicions.
Since 2011, more than one-third of the state’s card rooms have faced accusations such as anti-money laundering, loan sharking, prostitution and racketeering, prompting outcry for stronger regulation and an improved culture of compliance.
While card rooms have stressed that they are already heavily regulated and that the run-ins with law enforcement have largely been attributable to bad apples, FinCEN’s El-Hindi issued a call for the industry to clean up its act.
“Casinos, card clubs and others in the gaming industry should consider their risk of exploitation by criminal elements, and understand that they will be held accountable if they disregard anti-money laundering and illicit finance laws,” he said.
“This significant action highlights the need for all entities, including those in the gaming industry, to build a robust culture of compliance into their policies and procedures to ensure they are not facilitating illicit activities.”
