Dover Downs scheme follows money laundering trend
Men are accused of funneling ill-gotten cash through casino, a tactic authorities are well aware of
The scheme recently revealed to have used Dover Downs Hotel & Casino slot machines to wash drug money was doomed from the start.
The effort made a man, now in custody, a celebrity on casino cameras for his flamboyant playing habits and eventually linked him to a ring of heroin peddlers in Kent and Sussex counties, casino and police officials said. The capture proves the house always wins.
Operation Duck Hunt was a Delaware State Police investigation that concluded in May targeting the heroin distribution ring. Thirteen people were indicted and during the investigation police confiscated 1.75 kilograms of heroin, a cache worth $1.2 million on the street.
Salman Choudhary was one of those arrested and is accused of funneling the ill-gotten cash through real estate and local businesses in an effort to legitimize the drug money. But police said he also brought large sums of cash to Dover Downs hoping to essentially exchange bills that'd make the IRS curious for ones that could be written off as gambling winnings.
"When we found out he was here on the floor, our cameras were trained on him. We cooperated with the regulatory people for over two years," said Ed Sutor, CEO and president of Dover Downs. "If it had not been for us following regulations properly, he wouldn't have been caught, at least not from his activities here."
Gambling establishments nationwide have fought — and earned — a reputation associated with organized crime and shady money practices. For those reasons, they're tightly controlled by state and federal regulations that makes cheating on either side of the blackjack table much more difficult.
But Dover Downs didn't know where Choudhary's money was coming from, nor was it their prerogative to care. And the money went securely into the casino's vault over the course of the two-year investigation.
What the casino knew was how much money Choudhary was spending on each trip, and that their bosses at the Delaware Department of Homeland Security wanted him watched.
When washing goes wrong
It didn't take long before the all-seeing eyes at Dover Downs were focused onto Choudhary, Sutor said.
The casino's 2,400 slot machines are connected to a single mainframe which can track how much money is put into individual devices, and when a gambler uses his rewards card — as Sutor said Choudhary did — how much money an individual is spending and making also can be tracked.
"He came in and started playing slot machines with a lot of cash. Now, we don't have people standing over their shoulder counting how much money they're placing into the machine. We, like all casinos, have a computer behind the scenes," Sutor said. "It got the attention of our state regulators."
If a player feeds a machine more than $10,000 in a single day, the law requires a casino to file a Currency Transaction Report. Sutor said Choudhary came often and the casino was required to file multiple CTRs over his playing habits.
It wasn't just high-dollar machines that kept Choudhary busy on the gaming floor, Sutor said. He became a regular and did little to try and hide the money he brought along.
Delaware Department of Safety and Homeland Security Division of Gaming Enforcement spokeswoman Wendy Hudson declined to comment on anything that had to do with the investigation at Dover Downs or the money laundering activities that happen at casinos in general. She cited an ongoing investigation as the reason for her silence.
The same was true at a news conference last month where the results of Operation Duck Hunt were announced. Police kept mum on the details of the laundering scheme.
"I know you have some good questions, but we have to hold off on that," Delaware State Police spokesman Sgt. Richard Bratz told reporters.
Police did say the laundering scheme and the heroin ring weren't initially linked, but the one investigation proceeded the other.
"It began as a possible money laundering case and evolved into one of the largest heroin seizures in Delaware, along with other asset seizures throughout Sussex County to include money, property and guns," Greg Nolt, director of the Division of Gaming Enforcement, said at the news conference.
A well-documented practice
The practice of washing illicit money through casinos, however, is well documented.
"I don't think casinos are a very good place to launder money. An idiot would do it. Sure, there's other ways you could dream of doing it. But to come in and gamble, to put your money in a machine knowing the casino wins, you're already starting with your foot in a hole," Sutor said. "However, we have all sorts of procedures in place in order to avoid people trying to exchange currency."
A 2014 investigation at Harrington Raceway and Casino centered around a similar theme — and in this case the money was dirty in a literal sense.
"Harrington Casino surveillance confirmed three subjects introduced the bills into machines and cashed out tickets with little or no play. The tainted money was recovered from the machines by DGE Detectives and linked to a bank robbery in Maryland," Hudson said. "The suspects and their vehicle were identified through surveillance video footage. The information was shared with Maryland State Police and the FBI. All three suspects were arrested in Maryland."
The U.S. Department of the Treasury 2015 money laundering report points to the practice of "structuring" — generally, parceling out what would otherwise be a large cash transaction to avoid reporting requirements — as the most commonly reported practice for washing money through casinos. This is especially prevalent in Nevada, the only state where sports betting is legal which allows their books to funnel illegal out-of-state money.
Another common practice is purchasing chips with cash or depositing funds into a casino account before a minimal amount of play on the casino floor, essentially trading dirty bills for the casino's clean money. This can work with fake money as well, and according to the Treasury report an average of $40,000 a week in counterfeit currency is reported by Nevada casinos.
"If someone came into our facility with a large amount of small bills — 5s, 10s, 20s — and tried to get that changed to hundreds or even a check, we wouldn't do it," Sutor said. "That would be facilitating money laundering, and it didn't happen in this case. The people in the cage right behind me, they're all trained. The people in the pits, they're all trained. And we use computers to catch people after the fact."
That training, Sutor said, extends to cashiers offering players advice on how to get around reporting their winnings or having the casino report of the same.
Casinos in New Jersey and Nevada file the most casino suspicious activity reports nationwide, according to the Treasury report, and are the venues most often cited in criminal prosecutions involving money laundering through casinos. In 2013, casinos and card clubs in the United States filed more than 27,000 SARs, more than 40 percent of which came from Nevada and New Jersey.
Delaware casinos filed 26 SARs in 2015 and eight between January and March of this year.
Contact Adam Duvernay at (302) 324-2785 or email@example.com.
Examples of money laundering through U.S. casinos
- New York, 2012: 25 people were indicted on charges of illegal gambling and money laundering, including using nominees to open accounts, place bets and collect winnings at a licensed Las Vegas sports book on behalf of out-of-state bettors.
- New Jersey, 2011: a woman was convicted of fraudulently misrepresenting herself as a U.S. government official who, for a fee, could help immigrants achieve permanent legal resident status. She earned hundreds of thousands of dollars. Among her expenditures were trips to Atlantic City casinos where she allegedly spent tens of thousands of dollars in cash.
- Maryland, 2011: a man and woman who managed a multimillion dollar heroin ring in the Baltimore area were indicted on drug trafficking and money laundering charges. They allegedly used drug cash for gambling in Las Vegas casinos and bought lottery tickets from winners.
- New York, 2011: a man was indicted for allegedly using casino slot machines to launder illicit proceeds. The transactions took place on an Indian reservation on the U.S./Canadian border. The farmer allegedly routinely visited the Mohawk Bingo Palace on the reservation, putting tens of thousands of dollars in U.S. currency into slot machines and then receiving a casino check for the credit balance.
- Arizona, 2010: a man was indicted for operating a fraudulent gambling enterprise in which he allegedly solicited funds based on claims of an insider advantage that would allow him to generate gambling profits for investors. He allegedly wired approximately $4 million from the credit union to accounts at Las Vegas casinos where he either used the money to gamble or converted it to cash.
Source: U.S. Department of the Treasury 2015 money laundering report
[Editor's note: The graphic below is the same as the one above that mobile users may not be able to see.]