It must take a special talent, fueled by an unhealthy amount of arrogance, to get caught violating the government’s Anti Money Laundering (AML) regulations. Perhaps that’s why it was left to two of the biggest – and previously “highly respected” – casino executives to set new records for the largest fines.
I’m perplexed about these cases that hit the news this month because they are so outlandish that even those who were unaware that there was a presidential election this year probably heard about them. And even they would shake their heads in amazement at the audacity of these transgressors.
In case you’re not on the operational side of our business, you may not be aware that each and every year, all of us, from those counting C-Notes in the Cage to every executive in the C-Suite, have to sit through a class on the spellbinding topics of MTLs, CTRCs, FinCEN, FATF, PEPs, KYC, SARCs and the BSA (more on those later). And you have to pass a written quiz on the topics that must remain on permanent file each year. In other words, it’s pretty hard to claim ignorance.
But yet, there are these two headlines in the last month:
- “Resorts World facing millions in fines for allegedly violating anti-money laundering laws” – The Nevada Independent
- “Wynn Resorts paying $130M for letting illegal money reach gamblers at its Las Vegas Strip casino” – Associated Press
That last headline, from September 7th, involves transgressions that may have been committed over a decade ago. The property said, “Wynn Resorts has severed ties with all people and businesses involved in what the government characterized as “convoluted transactions” overseas. The AP also quoted U.S. Attorney Tara McGrath from San Diego who said, “The settlement showed that casinos are accountable if they let foreign customers evade U.S. laws. She said $130 million was believed to be the largest forfeiture by a casino based on admissions of criminal wrongdoing.”
In all the news, there was no mention of the disgraced casino founder Steve Wynn. However, these charges, which began in 2014, most likely occurred on his watch. He resigned, amid other well-publicized issues, in February of 2018.
There seems to be an epidemic in this country of those with great wealth or power believing that they are entitled and above the law. And that could be at the heart of these seemingly dumb violations.
Admittedly, a decent casino host would welcome with open arms any “whale” willing to wager millions. And many of those hosts wouldn’t spend too much time worrying whether or not those dollars were obtained legally. But, it is up to management (from supervisors to GMs) to provide oversight and enforce policies to make sure these violations don’t occur. When those at the highest levels also turn a blind eye, trouble is guaranteed.
(Photo: The Nevada Independent)
The second case indirectly involves Scott Sibella (pictured above) who was the president of Resorts World Las Vegas. He was terminated about a year ago and has pleaded guilty to multiple AML violations. He skirted a jail sentence but is currently serving a year of probation and must pay fines.
The specific charge is that he didn’t file the proper SARC reports on bookmaker Wayne Nix. That acronym stands for Suspicious Activity Reports – Casino. One of the other terms from the acronym soup mentioned above is KYC. That stands for “Know Your Customer”.
I have often railed against KYC since the government gives you no clear-cut advice on how to comply, but they punish you if you don’t. In my career we were forced to turn to questionable sources like Facebook, Tik Tok and LinkedIn. We also asked fellow players, had the hosts play detective, and sought wisdom from cocktail-server gossip groups. We even asked “Siri,” “Alexa” and the Google guru for help.
It would seem most logical to just run credit checks or look at customer bank accounts, but the government says that’s not legal without their permission. You can imagine that folks like Michael Corleone or Tony Soprano refuse to grant that access as often as they take the Fifth.
But that’s not the KYC case with Wayne Nix. He’s a former pro baseball player and one of the most well-known illegal bookmakers on the West Coast. Everyone from the topless nuns on Fremont Street to big-time betters like Mattress Mack know Wayne.
If you haven’t heard of him, maybe you have heard of the Los Angeles Dodgers superstar Shohei Ohtani. He recently signed a 10-year $700 million contract. He was also at the center of one of the biggest baseball scandals since Pete Rose and/or the Chicago White Black Sox.
Not only is Ohtani one of the best baseball players in the history of the game, he was cheated out of $16 million by his interpreter, Ippie Mizuhara. Without the ball player’s knowledge, Ippie made massive withdrawals from Ohtani’s bank accounts.
Guess what Ippie did with that money? He bet some of it with Wayne Nix. He bet even more of it with Mathew Bowyer, another shady bookmaker and also rumored to be a guest at Resorts World Las Vegas.
Sibella had to know. Nix was also a frequent player at the MGM Grand in Las Vegas where Sibella worked before he got the Resorts gig.
In January of this year, both MGM Grand and The Cosmopolitan in Las Vegas agreed to pay $7.45 million for AML and BSA charges. Sibella was also part of that as the DOJ recently reported, “According to his plea agreement, Sibella was the president of the MGM Grand from at least August of 2017 until February of 2019, during which time he knew that a casino patron, Wayne Nix, ran and operated an illegal bookmaking business. Despite this knowledge, Sibella allowed Nix to gamble at MGM Grand and affiliated properties with illicit proceeds generated from the illegal gambling business without notifying the casino’s compliance department.”
Again like Steve Wynn in the Wynn case, Sibella is not named in the new NGCB complaint against Resorts, but he was the man in charge for much of the time and many of the issues are the same.
We are still waiting to learn how much the upcoming fine will cost the Resorts World property, but if I were you, I’d call Nix and bet the “Over”.
The acronym, BSA, mentioned above isn’t for the Boy Scouts of America, but rather the Bank Secrecy Act. That’s a strange name for an act aimed at stopping secrecy. However, it was issued in 1970 to combat money laundering. Here’s another acronym (FATF) that came in 1989: the Financial Action Task Force. That one involves 39 countries and aims at stopping both money laundering and terrorist financing.
All of these alphabet acronyms in our country fall under the guidance and enforcement of FinCEN or the Financial Crimes Enforcement Network. They don’t have a huge investigative staff, but they can tap agents from the IRS and FBI (I assume that those two three-letter terms are well known and need no explanation).
All of these cases over the last 10 years have given Nevada a black eye. One of the first involved the Sparks Nugget. They were fined $1 million in 2016 by FinCEN for violations in the previous decade. What made it embarrassing was that the Nugget’s CEO prior to 2013 was Michonne Ascuaga. When the fines were announced, she was serving as a member of the Nevada Gaming Commission at the time. She promptly resigned.
That became a wake-up call for most executives since she had been highly regarded for her competence and leadership. I also liked and respected Michonne. But she, like many of us at the time, didn’t give AML enough focus. I used to tell friends that the “Nugget did nothing wrong. The problem was they just didn’t do anything.”
That was referring to their failure to complete the required SARCs and CTRCs. That latter term is for Currency Transaction Report – Casinos. They are to be completed for transactions involving cash over $10,000. FinCEN said at the time, the “Sparks Nugget, Inc. lacked a ‘culture of compliance’.”
So did the team at MGM Mirage a few years later. This time it was the State of Nevada who busted them: “The Nevada Gaming Control Board filed a 92-count complaint in the case because of the failure to file the reports in 2001 and 2002. The reports on large cash transactions are designed to prevent money-laundering.”
Again, it was top executives there who were responsible. The manager overseeing the reports, the CFO, two controllers and four other executives were fired. These violations, after the 2016 wakeup call from the Nugget, are mystifying. Likewise, the most recent violations are even more inexcusable.
While every team member in every casino has an important role to play in enforcing the AML standards, judging by this month’s news events, maybe we need a change. Instead of all of us “little folks” spending hundreds of hours each year in money laundering training, just make the top executives go bi-monthly. Perhaps, those with the biggest egos should attend weekly.
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NOTE: The two terms I didn’t translate above were MTL and PEP. The first one stands for the Multiple Transaction Log. It is used to track smaller transactions that could become bigger ones, and therefore trigger the completion of a CTRC. PEP stands for Politically Exposed Person. While infrequent, it can sometimes involve casinos. It is aimed at those laundering money obtained from bribes and illegal contributions (who can imagine that politicians and/or judges would do such things?).
