Monday, August 18, 2014
I stumbled across a money laundering Reuters story about Casinos while working on Lexis's Anti Money Laundering & Asset Forfeiture Guide due tonight. Realized, I had found a real life Gustavo Fring. Legitimate pharmeceutical CEO in Mexico on the one hand, alleged meth manufacturer and distributor on the other. Lost US$125 million gambling in Vegas over two years, had another US$207 million in small bills seized from his home with a cache of automatic weapons. So I dug into it and excerpted the below from various government documents.
Regulators pushing banks to rid casinos of money-laundering (Reuters Friday August 15, 2014)
Casinos were historically a popular place for criminals to launder money because it was easy
to make large-scale transfers through casino accounts, and swap ill-gotten gains for chips, and back into clean cash.
Operator Of Venetian Resort In Las Vegas Agrees To Return Over $47 Million After Receiving Money Under Suspicious Circumstances (DOJ Release 2013) Excerpts below
The Las Vegas Sands Corp., which operates the Venetian-Palazzo hotel complex in Las Vegas, has agreed to return $47,400,300 to conclude an investigation into the casino’s failure to alert authorities that a high-stakes gambler, who was later linked to international drug trafficking, made numerous large and suspicious deposits with the casino. In exchange, federal prosecutors have agreed not to prosecute the casino for failing to file Suspicious Activity Reports for casinos (SARCs), which are required when a customer is involved in a transaction the casino knows, suspects, or has reason to suspect “had no business or apparent lawful purpose or was not the sort in which the particular customer would normally be expected to engage, and the casino knew of no reasonable explanation for the transaction after examining the available facts.” The Bank Secrecy Act requires casinos with annual revenue of at least $1 million to file SARCs, which are then analyzed by appropriate government agencies to investigate possible violations of the law.
The money being paid the United States represents money sent to the Venetian casino by or on behalf of Zhenli Ye Gon, who at the end of 2006 or early 2007 was “the largest all-cash, up-front gambler the Venetian-Palazzo had ever had to that point,” according to the non-prosecution agreement. In March 2007, Ye Gon’s residence in Mexico City was searched by law enforcement authorities, who seized approximately $207 million in United States currency from the residence in what remains the largest-ever seizure of currency by law enforcement. (Ye Gon gambled away $125 million in the Venetian and other Vegas casinos during this period of time).
Ye Gon was indicted by federal officials in the District of Columbia on narcotics charges, but that case was dismissed in 2009. Ye Gon is currently pending extradition to Mexico, which has charged him with drug trafficking offenses.
Suspicious Activities of Zhenli Ye Gon
According to the agreement, prosecutors believe that in October 2006, prior to Ye Gon being publicly linked to drug trafficking as a result of the search of his residence, officials at the Venetian-Palazzo, should have identified as “suspicious” Ye Gon’s financial transactions, which included the wire transfer of approximately $45 million and depositing of approximately $13 million in cashier’s checks between February 2005 and continuing through March 2007. Casino officials should have filed one or more SARCs against Ye Gon in addition to a SARC it filed in April 2007, prosecutors contend.
During his patronage at the Venetian, Ye Gon wire transferred money to the Las Vegas Sands Corp. and subsidiary companies from two different banks and seven different Mexican money exchange houses known as casas de cambios. The wire transfer originators included several companies and individuals the Las Vegas Sands Corp. could not link to Ye Gon. Ye Gon also transferred some funds from Mexican casas de cambios to a Las Vegas Sands Corp. subsidiary in Hong Kong for transfer to Las Vegas.
In many instances, Ye Gon’s wire transfers lacked sufficient information to identify him as the beneficiary. The Las Vegas Sands also allowed Ye Gon to transfer funds several times to an account that did not identify its association with the Venetian, specifically an aviation account used to pay pilots operating the company’s aircraft. During its investigation, the government developed evidence that “when casino personnel asked Ye Gon to wire the money in larger lump sums, as opposed to breaking it up incrementally, and use consistent listed beneficiaries, Ye Gon stated that he preferred to wire the money incrementally because he did not want the government to know about these transfers.”
Federal prosecutors also believe that compliance personnel at the Venetian-Palazzo:
- failed to adequately investigate Ye Gon, his respective companies, or his source of funds;
- failed to conduct an appropriate deposit-pattern analysis of incoming front money deposits and marker payments by Ye Gon;
- failed to understand and appreciate the layered manner in which Ye Gon wire transferred his funds;
- failed to be appropriately suspicious of Ye Gon’s use of multiple third-party fund sources and multiple casas de cambios;
- failed to be appropriately suspicious of the Venetian’s inability to link Ye Gon to nearly all of the companies he professed to own and/or control which originated wire transfers to the Venetian;
- failed to be appropriately suspicious of Ye Gon making multiple wire transfers on the same day or consecutive days;
- failed to be appropriately suspicious of Ye Gon originating payments in Mexico and routing them through the Venetian’s Hong Kong subsidiaries for final credit at the Venetian casino in Las Vegas; and
- failed to conduct appropriate diligence into the reason for requests to use a non-casino-name account.
Extradition for Meth Manufacturing and Drug Dealing
Cousin of Chinese-Mexican meth kingpin sentenced to 25 years in jail (The Tequila Files, August 1, 2014)