Jacobs' litigation heats up Las Vegas Sands Corp. Macau

Jacobs' litigation heats up Las Vegas Sands Corp. Macau
Posted by John L. Smith

While attorneys for former Las Vegas Sands Corp. Macau president Steve Jacobs and the powerful gaming giant continue to skirmish over jurisdiction in court filings, facts and allegations are emerging in documents that are bound to keep Nevada’s Gaming Control Board intrigued.

Jacobs was hired as a consultant for LVSC in March 2009. He was appointed president of Sands Macau operations that May and signed paperwork “memorializing the terms of his employment with LVSC in August 2009,” according to the plaintiff’s motion in opposition of Sands China Ltd.’s motion to dismiss for lack of personal jurisdiction filed Feb. 9 in District Court. Jacobs was then awarded the title “President and Chief Executive Officer of SCL.”

A trial judge will decide the jurisdictional issues in the case, and so far reporters seem more interested in the potentially embarrassing email of Sands executives about company founder Sheldon Adelson, which I found pretty uninteresting.

But other issues are popping up like brushfire for Las Vegas Sands Corp. Among them, according to Jacobs’ affidavit:

“- Adelson’s direction to me to have investigative reports prepared on Macau government officials as well as certain junket representatives reputed to have ties to Chinese gangs known as Triads;

“- Adelson’s demands that I use improper “leverage” against senior government officials of Macau in order to obtain Strata-Title for the Four Seasons Apartments in Macau;

“- Adelson’s demands that I threaten to withhold SCL business from prominent Chinese banks unless they agreed to use influence with the newly-elected senior government officials of Macau in order to obtain Strata-Title for the Four Seasons Apartments and favorable treatment with regards to labor quotas and table limits;

“- Adelson’s demands that SCL continue to use the legal services of Macau attorney Leonel Alves despite concerns that Mr. Alves’ retention posed serious risks under the criminal provisions of the United States code commonly known as the Foreign Corrupt Practices Act (“FCPA”).

The Jacobs litigation is also revealing the massive cash courier service quietly provided by SCL and LVSC. Some $68 million in player cash, according to the company’s own documents, has been flown from Asia to Las Vegas.

Writes Jacobs, “Upon information and belief, these funds total tens of millions of dollars and may then (be) used for a variety of purposes, including as cash advances for customers to spend when they arrive in Nevada, to re-pay past debts incurred at LVSC’s Las Vegas properties, or for the benefit of authorized persons other than the transferee.”

“Authorized persons other than the transferee?”

Casino customers with heavy cash must fill out the appropriate federal tax documentation or risk running afoul of this country’s money laundering statutes. The state also has strict guidelines every casino is well schooled in.

Executives using gaming licensee jets to bring millions from Macau or Singapore into the country would surely know the laws and follow them to the letter, wouldn’t they?

Exhibit 9 in the submission of Jacobs’ attorneys Donald Campbell and Colby Williams is a spicy exchange of letters from Campbell and Sands China Ltd. Attorney Patricia Glaser of the Los Angeles firm Glaser, Weil, Fink, Jacobs, Howard & Shapiro.

Glaser wrote a letter dated Nov. 23, 2010 demanding the immediate return of reports authored by Steve Vickers of International Risk Ltd.

Who is Steve Vickers?

He’s the chairman of FTI-International Risk, a company he created in 2000 at a time Macau was completing it transition from Portuguese to Chinese control.

According to his biography, “During the past 18 years, he has conducted numerous sensitive business intelligence projects, major financial investigations, international asset searches and risk management assessments. He has also led a number of crisis management teams faced with financial or other significant threats to multi-national corporations.“

And when they talk of “crisis management” in that part of Asia, they do mean crisis.

To say the least, Vickers didn’t gain his experience in an academic setting. He spent 18 years with the Royal Hong Kong Police Force and was the commander of its Criminal Intelligence Bureau before retiring with the rank of Senior Superintendent of Police.

What kept the CIB busy during Vickers’ tenure?

Keeping tabs on the Chinese triads and other organized crime groups that held a grip on Hong Kong and Macau. In addition to taking down a long lineup of triad hoodlums, Vickers handled 28 kidnappings, some of them stretching from Hong Kong to halfway around the world.

Vickers’ expertise would be invaluable in several areas, but most certainly he would be the man to see if you were a casino tycoon navigating through shark-infested waters in Macau.

In addition to the entertaining joust and parry between Glaser and Campbell, one important element emerges in their exchange: Glaser is extremely motivated to have returned from Jacobs the original and all copies of Vickers’ background reports on “certain Macau government officials, as well as the two reports relating to the background investigations of Cheung Chi Tai and Heung Wah Kong."

The identities of the Macau government officials aren’t revealed in the letters. And Vickers’ investigative reports aren’t included among the lengthy list of exhibits.

But it’s not difficult to obtain the identity of Cheung Chi Tai and Heung Wah Kong. Thanks to a groundbreaking article by Matt Isaacs and Reuters reporters, Cheung not only has been identified as a leader of the Wo Hop To triad clan, but also as “the person in charge” of one of the VIP rooms at the Sands Macau. Cheung was convicted in Hong Kong in 2009 in a case involving a conspiracy to commit bodily harm and solicitation of murder. Men were ordered to break the arms and legs of a Sands Macau dealer suspected of participating in a multimillion-dollar casino-cheating scheme.

“The murder-for-hire case sheds light on the links between China's secretive triad societies and Macau's booming gambling industry,” the article states. “It also raises potentially troubling questions about one of the world's largest gaming companies, Las Vegas Sands, which plans to open a $5.5 billion Singapore casino resort in late April.”

In Nevada, the Gaming Control Board has acknowledged that it attempts to monitor, when appropriate, the activity of Nevada casino licensees who do business there.

Documents showed Cheung received a share of the profits from the casino VIP room he controlled, according to Reuters.

Meanwhile, Heung Wah Keung (not Kong) ranks as one of the most colorful characters ever to be associated with the Chinese triads. He is better known as Charles Heung, international high roller and actor-turned-film producer and director. Heung plays for millions at Asian casinos and in Las Vegas, where his historical triad associations have never prevented him from being treated like a king on the Strip. He often arrives in Las Vegas in time for Chinese New Year festivities on the Strip.

The content of the Vickers investigative reports would surely provided compelling reading for Gaming Control Board investigators and curious columnists as well.