A Nevada court has awarded a $4.5 million judgment to an executive for The Mirage who was fired after it was discovered that the Strip resort had failed to file thousands of anti-money laundering reports with the federal government between 2001 and 2003.
The court ruled Friday that the resort’s corporate owners, MGM Mirage, wrongfully fired Robert Kocienski, the former chief financial officer at The Mirage from 2000 to 2003, as a panicked response to the resort’s failure to file currency transaction reports, which led the Nevada Control Board to impose its largest-ever fine against a casino company.
Lawyers for Kocienski successfully argued he had nothing to do with how personnel managed to fail to file 15,000 currency transaction reports beginning in 2001. The reports are used by federal officials to track large cash transactions by casino customers.
Fallout from the incident included a “black cloud” over Kocienski, said the executive, who earlier this year became senior vice president, CFO and treasurer for Tropicana Entertainment.
“I’m pleased with the verdict, I’m moving on with the future,” said Kocienski, who wouldn’t elaborate on the case other than to accuse MGM Mirage officials of engaging in “a pretty good butcher job on me.”
In a statement, MGM Mirage spokesman Alan Feldman said the company will fight the decision.
“We strongly disagree with the verdict; we do not believe the verdict was supported by the evidence and we intend to vigorously pursue an appeal,” Feldman wrote.
The case dates back to a multiyear lapse in form filing that allowed about 15,000 transactions of $2,500 or more to go unreported.
The lapse had the potential to cost The Mirage $25,000 in fines to the federal government for each instance, a total hit of up to $500 million. At the time the annual cash flow at The Mirage was $152 million.
Eventually, the company paid $5 million in penalties and a compliance manager earning about $20,000 in salary was given a three-year probationary sentence.
A report by Nevada Gaming Control Board investigators blamed the compliance manager, staff turnover and supervision deficiencies for the lapse. There was never any evidence money-laundering actually occurred. The employee said he neglected the paperwork because he had been preoccupied with “relationship problems.” Supervisors were criticized for not picking up on the issue.
MGM Mirage fired Kocienski and Controller Brian Burtenshaw, who also sued the company.
Lawyers for Kocienski said the employee who was ultimately blamed for the problem was hired and promoted into that position before Kocienski began his tenure as CFO for The Mirage. They added that Kocienski was not even that person’s supervisor.
“The real reason is the company panicked,” attorney Adam Levine said. “For five years, you know, The Mirage had been taking the position he was at fault for this. He clearly wasn’t.”
Levine and colleague Daniel Marks argued MGM Mirage violated terms of Kocienski’s employment contract by firing him without cause and not buying out the remainder of his contract.
Marks said there were others who were fired but didn’t challenge the company in court as Kocienski did.
“Some of those people didn’t have contracts and felt like they had to take the one-month (severance),” he said.
University of Nevada, Las Vegas professor William Thompson followed the case in its early stages and said the allegations that The Mirage neglected anti-money laundering paperwork were serious.
That’s because casinos handle large amounts of cash and, without supervision, could become targets for drug dealers, terrorists or other criminals seeking to obscure sources of ill-gotten money.
“It would be an easy place to launder money,” Thompson said of a casino with lax procedures.
Thompson said one way would be for people to deposit money in a casino account and then, through intermediaries, withdraw chips and place bets that have little to no chance of losing — such as betting red and black simultaneously on roulette. The bettors could then redeem chips for cash.
The government prevents such activity by requiring casinos to make note of transactions greater than $2,500 and produce more detailed reports of transactions greater than $10,000.
Large casinos on the Strip can generate hundreds of such reports in a week.
“If the government didn’t have the big concern, it could get loose,” Thompson said. “As long as the government considers it serious, it sanitizes Las Vegas.”
Contact reporter Benjamin Spillman at firstname.lastname@example.org or 702-477-3861.