Wednesday, April 30, 2003
Copyright © Las Vegas Review-Journal

GAMING CONTROL BOARD: New cash report mix-up studied

Station Casinos' failure to file financial documents investigated

The Nevada Gaming Control Board chairman Tuesday confirmed his agency is investigating a second local gaming company -- this time Station Casinos -- for failing to file anti-money laundering reports with the federal government.

Board Chairman Dennis Neilander said his agency opened an investigation a week ago into the company's failure to file currency transaction reports that are used to track large cash transactions by individuals in casinos.

Station Casinos' problems come on the heels of an investigation that determined MGM Mirage officials failed to file thousands of the required reports over a nearly 18-month period.

Station spokeswoman Lesley Pittman said company officials discovered the filing problems April 10. She also said the company believes the problem only involves Santa Fe Station.

Neilander said Station reported the apparent violations of federal and state regulations, but neither the company nor the board yet know the scope of the failure either in terms of the number of reports involved, the time frame or the number of casinos that may not have been filing the required reports.

"What we're doing is not looking at one property. We want to look at the company broadly (to see the extent of possible violations)," he said.

Neilander declined to comment on the details of the investigation or speculate on how long it may take to complete.

Pittman said Station has also launched its own internal investigation and is cooperating fully with the Gaming Control Board investigation.

"We're disappointed this happened, but we're going to work closely with the Gaming Control Board and do whatever it takes to get this cleared up as soon as possible and make sure it doesn't happen again," she said.

Las Vegas professor and casino gambling expert Bill Thompson, however, said Tuesday a heavy fine should be imposed to send a message that the state and industry both take enforcement of anti-money laundering and other regulations seriously.

"Unless there are exonerating circumstances, they should get a big fine. This is something they have to get control of. And if the numbers are significant, it's possible the Treasury will say `The hell with Nevada, we're going to regulate it directly, and we don't want that," he said.

"Not only do we have to give them a big fine, but we have to show them we know how to regulate the industry," Thompson said.

Paul Larson, a partner in the gaming division at Lionel Sawyer Collins who helped write the so-called Regulation 6A that set up the anti-money laundering rules, said the investigation "is not going to sit well in Washington" where the reports now have to be filed with the U.S. Department of the Treasury.

"I find it surprising that companies that know they have compliance obligations and have sophisticated compliance systems in place have or may have let these things (happen)," he said.

Larson said compliance with the regulations is not difficult and that the failure to file likely is an anomaly rather than a policy problem with specific companies.

Sources asking not to be named said the failures to file anti-money laundering reports took place at Texas Station and that the incidents were similar to those recently investigated at MGM Mirage.

A two-month investigation by the Nevada Gaming Control Board completed three weeks ago confirmed widespread and serious violations of state anti-money laundering regulations by The Mirage.

The investigation found that almost 15,000 required reports went unfiled over a period of 18 months, Neilander said.

In both cases, the companies failed to file required documents with the Financial Crime Network of the U.S. Treasury Department.

The fine for failing to submit the reports is $25,000 per count, but investigators have yet to determine how many failures to file occurred and how many would be considered infractions.

Casinos are required to track cash transactions of $3,000 or more and to submit currency reports whenever cash transactions by any individual total more than $10,000 in any 24-hour period.

The reports are filled out manually, usually at the cages on casino floors. The reports are turned over to company officials for auditing before they are mailed to the Treasury Department.

Until 1997, the 6A reports were submitted directly to the Gaming Control Board, but since then, at the request of the Internal Revenue Service, reports have been filed directly with the Treasury Department, which sends copies to the state.