Friday, September 24, 2004
Copyright © Las Vegas Review-Journal
Control board to fine Station Casinos $2.2 million
Failure to file required reports part of 87-count complaint
By ROD SMITH
GAMING WIRE
The Nevada Gaming Commission is expected today to slap Station Casinos with a $2.2 million fine, the second largest in state history, for its failure to file hundreds of required anti-money laundering reports with the federal government.
In a settlement of the 18-month-old case with the Gaming Control Board, Station Casinos admitted three of its properties failed to submit 1,725 Regulation 6(A) documents to the Treasury Department's Financial Crime Network.
Casinos are required to track cash transactions of $3,000 or more and to submit currency reports to the Treasury Department whenever transactions by an individual total more than $10,000 in a 24-hour period.
In the settlement, which the commission is expected to approve, Station will admit it acted negligently by not filing two anti-terrorist suspicious activity reports and 58 race and sports book wagering reports, failing to log 595 multiple transactions, and failing to retain necessary records.
Station Chief Financial Officer Glenn Christenson declined comment on the settlement, saying it would be inappropriate to discuss the case until after the commission has acted.
Station Casinos' problems arose in April 2003 in the midst of an investigation that found MGM Mirage officials failed to file 15,000 of the required reports over a nearly 18-month period. That case resulted in a $5 million fine and a single criminal conviction.
Deputy Attorney General Jennifer Carvalho, who has handled the Station case, said no criminal prosecutions are expected in the case.
She said the case was referred to the criminal division for possible prosecution, but it was found to involve mainly systemic problems rather than individual culpability.
Initially, the Control Board had kicked off a regular audit at just one Station property, Sunset Station, when the company self-reported a failure-to-file problem at the Santa Fe Station.
Carvalho said the investigation tumbled from one property to another like dominos, which further dragged out the investigation.
Nevada Gaming Control Board Chairman Dennis Neilander said the 87-count complaint against Station took much longer to investigate than the MGM Mirage case because of concerns about possible evidence tampering. That forced the agency and outside auditors for Station to review and authenticate thousands of additional documents, Neilander said.
Ultimately, the state agency conducted a companywide investigation that settled on Santa Fe Station, Sunset Station and Fiesta Station, each of which was cited in the initial complaint and the final settlement.
Neilander said the violations, while involving negligence, were administrative and did not suggest any intent by Station to circumvent the filing requirements.
University of Nevada, Las Vegas professor Bill Thompson, who specializes in gaming studies, said stiff fines are essential for protecting the integrity of the industry.
"A $2 million fine is enough that it stings. They'll take notice and have an incentive to change the way they do business," he said. "That's what the penalties in these cases need to accomplish."
The control board also said Station has taken corrective action, including adding personnel, technology and training, to make sure such violations are not repeated, the settlement said.
The maximum fine for failing to submit the reports is $25,000 per count, but the control board bunched violations by date and property.
PAYING THE PRICE
Largest fines for Regulation 6(A) violations
| Casino operator | Year fined | Fine |
| MGM Mirage | 2003 | $5 million |
| Horseshoe Operating Co. | 1993 | $1 million |
| The Mirage Hotel-Casino | 1998 | $350,000 |
| MGM Grand Hotel | 2000 | $275,000 |
| Hotel Ramada of Nevada | 1998 | $250,000 |
| Comstock Hotel and Casino | 1990 | $150,000 |
| Rio Leasing | 1999 | $125,000 |
| Little Caesar's | 1993 | $100,000 |
| Rio Properties | 2001 | $100,000 |
| Showboat Operating Co. | 1991 | $100,000 |
| Unbelievable Inc. | 1993 | $100,000 |
| Harrah's Club | 1990 | $75,000 |
| M&H Investment | 1987 | $75,000 |
| Park Place Entertainment Corp. | 2003 | $75,000 |
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SOURCE: Nevada Gaming Commission
