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Thursday, September 1, 2016

Now-Defunct South Bay Casino Partnership Ordered to Pay $2.4 Mil for Violating Anti-Money Laundering Laws

Former operators of the Normandie Casino in Gardena, California have been hit with more than a million dollar penalty after the casino admitted to violating the Bank Secrecy Act in an attempt to protect its high roller customers from reporting their winnings as per federal law. The casino will now have to turn over $1.4 million which it did not report in high-value transactions to the government and also pay a fine of $1 million for its violations. The casino was sold in July after pleading guilty to the charges in January.
The Normandie Casino was one of the oldest casinos in California and opened in the 1940s. The casino admitted that it did not record a number of high-value transactions in 2013 and also was guilty of not adopting and following an effective program to countermoney laundering activities in the casino. During a six-week period in 2013, one of the casino’s VIP patrons is reported to have won $1 million from another customer and the casino management did not report these transactions and shielded the identity of the high-roller.
The acting special agent responsible for the IRS criminal investigations, Anthony J. Orlando stated that the fines imposed on the Normandie Casino are proof of the government’s seriousness to enforce anti-money laundering laws and ensure that VIP gamblers will not be encouraged to hide their winnings.
Casinos are required as per Federal law to collect identity proof, social security numbers, addresses and taxpayer information from any gambler who withdraws more than $10,000 in prize money. VIP players managed to conceal their winnings as Normandie Casino staff assisted them by breaking down their large transactions into smaller amounts and listing some of the high-rollers as independent gaming promoters. Federal prosecutors have also alleged that the casino did not properly monitor cash transactions which was “tantamount to money laundering” activities.
In a statement, Eileen M. Decker, U.S. Attorney said “The United States has an array of anti-money laundering statutes designed to prevent criminals from using the American financial system to launder the large sums of cash generated by illegal activity such as organized crime, drug trafficking, and human trafficking. Casinos and card rooms such as Normandie are cash-intensive businesses that are particularly attractive for use by criminals seeking to launder their ill-gotten gains, so they must be vigilant in meeting their obligations under those laws.”
Mark Werksman, a legal representative for the Normandie Casino, stated in January 2016 after the casino operator’s guilty plea that they have worked with the government to resolve the issues.
The Normandie casino has faced stiff competition from a number of newer casinos in the region such as the Commerce Casino and the Hollywood Park Casino in Inglewood.  The Normandie Casino was purchased in July 2016 by adult entertainment tycoon Larry Flynt who renamed the casino to Larry Flynt’s Lucky Lady Casino.

Now-Defunct South Bay Casino Partnership Ordered to Pay $2.4 Mil for Violating Anti-Money Laundering Laws

Under the Bank Secrecy Act, casinos are required to implement and maintain programs designed to prevent criminals from laundering money.

By August 30, 2016

LOS ANGELES, CA — The partnership that ran the Normandie Casino were ordered to Tuesday about $2.4 million to settle federal charges that the now- defunct Gardena club violated anti-money laundering provisions of the Bank Secrecy Act, court papers show.
As part of an agreement with federal prosecutors, the four partners agreed to pay a $1 million fine and to forfeit nearly $1.4 million for failing to report large cash transactions to federal authorities.
Sentencing took place Monday in Los Angeles before U.S. District Judge S. James Otero.
The Normandie partnership pleaded guilty in January to two felony offenses — failing to maintain an effective anti-money laundering program and conspiring to avoid reporting to the government the large cash transactions of some of the casino's "high-roller" gamblers.
Adult entertainment mogul Larry Flynt bought the gaming license for the Rosecrans Avenue card club in July for an undisclosed price. Flynt, who already owns the nearby Hustler Casino, said he planned to spend at least $60 million over the next four years to renovate the aging facility, which he renamed Larry Flynt's Lucky Lady Casino.
Under the Bank Secrecy Act, casinos are required to implement and maintain programs designed to prevent criminals from using the clubs to launder the large sums of cash that illegal activity can generate.
For example, casinos must record and report to the government the details of transactions involving more than $10,000 by any one gambler in a 24- hour period.
The card club at 1025 W. Rosecrans Ave. recently celebrated its 64th anniversary.
The casino remained a family business with original owner Russ Miller's sons, Lee, Larry, Greg and Steve overseeing operations, and granddaughter Michelle Miller Wahler serving as casino president.

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