State wants to revoke gaming license of Hawaiian Gardens casino after federal money laundering ...

State wants to revoke gaming license of Hawaiian Gardens casino after federal probe

In this file photo, Ron Sarabi, general manager, shows the interior of The Gardens Casino in Hawaiian Gardens. (File.) 

By Andrew Edwards, Press-Telegram

POSTED: 01/04/17

A grand reopening for The Gardens Casino — to show off the fruits of a $90 million renovation — could take place later this month, but state gambling regulators want to revoke the licenses that allow the casino’s principals to operate.

An accusation, dated Oct. 17, outlines California Bureau of Gambling Control officials’ contention that the casino and key figures there, including Chief Executive David Moskowitz, should be denied gambling licenses.

State officials allege that casino operators failed to disclose to California officials that the operators failed to comply with a federal anti-money laundering law, which in their view, would justify revoking the licenses that allow the venue and its trustees to operate. The Gardens Casino has already admitted to deficiencies in its ability to obey the federal law, according to state and federal officials.

“In view of that nondisclosure and admitted violations of federal and state laws, respondents continued licensure undermines the public trust that licensed gambling does not endanger the public health, safety and welfare,” the accusation reads.

A hearing to decide the casino’s fate has yet to be scheduled. In the meantime, Gardens Casino can remain open with a provisional license, said California Gambling Control Commission spokesman Eric Petosky. That license is valid through Nov. 30, 2018.

Gardens Casino personnel were not available to comment Wednesday. A woman in the casino’s legal department said comment from the casino’s general counsel may be available today.

The casino is a major employer and source of revenue to Hawaiian Gardens’ city government.

FEDERAL PENALTY

The Financial Crimes Enforcement Network, or FinCEN, is part of the Treasury Department and announced its issuance of a $2.8 million fine against Gardens Casino this past July. That fine followed Internal Revenue Service examinations and casino management’s admission of failures to abide by the Bank Secrecy Act that resulted, in the government’s words, in making the casino “susceptible to money laundering and terrorist financing activity.”

The Bank Secrecy Act is a 1970 law requiring business to keep records that enable law enforcement officials investigating money laundering to track illegal transactions. For example, the law mandates that businesses report single or related cash transactions whenever $10,000 changes hands.

FinCEN reported that Gardens Casino was in violation of this law over a period extending from September 2009 through July of last year. Gardens Casino’s managers did not implement controls needed to follow federal law despite a 2011 IRS examination and a 2013 consultant’s review that brought problems to light.

Those problems included casino personnel’s failures to keep track of exactly who was involved in cash transactions there, according to FinCEN. In one case, a woman known only as “Michelle” was referred to in 15 suspicious activity reports and five currency transaction reports, but casino personnel had no records of her actual identity.

The same “Michelle” and others believed to be her agents were able to continue activities at Gardens Casino even though she did not identify herself to casino employees on at least three separate occasions. According to FinCEN, casino managers told the IRS they did not think they had to prevent Michelle or others who refuse to provide identification from transacting business there and that doing so may result in customers switching to other Southern California casinos.

“Michelle” wasn’t the only the only case of someone doing business at Gardens Casino without sufficient records being kept.

Eighty percent of suspicious activity reports filed between Jan. 1, 2013, and Sept. 18, 2014, from Gardens Casino referred to at least one unknown subject being involved in transactions. What’s more, 347 cash transactions involving unknown parties between Oct. 1, 2013, and Dec. 31, 2013, were for amounts between $9,000 and $10,000, which FinCEN observed are just short of the level that triggers mandatory reporting.

The FinCEN’s consent agreement with Gardens Casino reports that casino operators admitted to those and other violations described within the document. In addition to the fine, the agreement also required the casino provide a risk assessment report to the government and to hire an external auditor.

STATE PROCEEDINGS

Gardens Casino’s license renewal request went before the California Gambling Control Commission during a mid-November meeting. Petosky, the commission’s spokesman, said commissioners issued the provisional license pending further proceedings.

The allegations against Gardens Casino are set to go before an administrative law judge at some point in the future, Petosky said. A provisional license allows Gardens Casino to stay open through Nov. 30, 2018, depending upon when the licensing issue can be resolved.

Gardens Casino has nearly completed a $90 million renovation that involved the construction of an entirely new casino building. Gov. Jerry Brown visited the casino in December 2013 to help casino owners celebrate the beginning of their project.

At the time of the governor’s appearance, casino operators expected to spend $45 million on the project. The amount doubled over the course of renovations, which involved construction of a large kitchen, VIP area and gaming space large enough to accommodate 5,000 to 7,000 customers.

http://www.presstelegram.com/business/20170104/state-wants-to-revoke-gaming-license-of-hawaiian-gardens-casino-after-federal-probe

Driver in tour bus crash found fans among gamblers, but had a checkered safety record

Driver in tour bus crash found fans among gamblers, but had a checkered safety record


By Paloma Esquivel, Louis Sahagun, Esmeralda Bermudez and Richard Winton

Those who boarded the white tour bus on a Koreatown corner looked forward to seeing Teodulo Elias Vides and escaping on one of his casino trips.

Vides, both bus owner and driver, would stand on the sidewalk where Olympic Boulevard crosses Vermont Avenue, greeting regulars. He doled out friendly advice, such as making sure to eat before placing bets that could leave you empty-handed. He was unfazed when someone couldn’t afford the trip on his USA Holiday bus. Pay me later from your winnings, he would say.

“He was always friendly, always jovial,” said Maggie Monterroso, who began traveling to casinos on Vides’ bus nearly a decade ago. “He cared a lot about us.”

On Sunday, Vides and 12 of his passengers died when his bus collided with a big rig on the 10 Freeway as he drove his guests back to Los Angeles after a night of gambling at a casino near the Salton Sea.

The crash, the deadliest in California in several decades, has focused attention on his company’s safety record and on the subculture of independent coach operators who ferry gamblers on a budget to casinos around the region.

Vides, 59, had been previously sued at least twice for negligence after collisions with vehicles, one of which resulted in three deaths. His company received at least six “unsatisfactory” ratings from the California Highway Patrol. Vides had also been cited in several counties for traffic violations.

Vides was in the business for years, driving buses filled with older passengers to casinos across the Southland, his next-door neighbor said. Some nights, he parked the tour bus on the street near his apartment.

Customers said he ran the business with his daughter and that his destinations included Las Vegas, Santa Barbara and San Diego.

According to federal records, USA Holiday is an Alhambra-based company that owns one bus and employs one driver.

Investigators with the National Transportation Safety Board plan to examine Vides’ background, as well as a variety of other factors in Sunday’s early morning crash, including the role of road conditions and lighting, an agency member said Monday.

Vides and his company had been named in a civil suit after a USA Holiday bus crashed into a Honda Civic on the northbound 215 Freeway in Riverside on May 6, 2007. The driver of the sedan, Sylvia Saucedo, and two of her passengers, Maria Llamas and Julio Morales, were killed. Llamas’ relatives sued Vides and the bus driver, Paulino Camacho Ceballos, the following year, alleging personal injury and negligence.

Lawyers for Vides, however, argued that the Honda was traveling at an “unreasonable rate of speed” and that Saucedo lost control of the vehicle and ricocheted off the center divider wall. The case appears to have been dismissed after the plaintiffs failed to respond to discovery requests.

Vides had faced an earlier lawsuit when a USA Holiday bus collided with a car on the westbound 60 Freeway in Riverside in June 2003. Two of the car’s passengers sued USA Holiday as well as Ceballos, alleging the bus was negligently operated and responsible for the crash. The case was settled in 2006. The terms of the settlement were not disclosed in court documents.

In September 2005, Vides was cited in Riverside County for speeding on the highway in excess of 70 mph, according to court records. He had been pulled over in a 1996 white bus on the eastbound 10 Freeway just west of Main Street near Cabazon. He was ordered to attend traffic school but according to the records, traffic school was "not completed as ordered" and his bail of $151.80 was forfeited.

In 2007, Vides was cited by the California Public Utilities Commission for operating with an expired permit.

Records show that Vides was pulled over again in a white bus in May 2011 on the eastbound 10 Freeway, not far from where Sunday’s crash occurred. At the time, he was cited for speeding and driving with a suspended license. He initially failed to appear in court and a bench warrant was issued for him, with bail set at $2,500. A month later, the case was dismissed after Vides showed proof of a valid driver’s license.

Vides also had citations in Santa Barbara County, where he was pulled over for lane straddling twice in 2011, according to court records.

It’s not clear why USA Holiday received “unsatisfactory” ratings from the CHP after 2005 and 2010 inspections of controlled substances and alcohol testing requirements. Detailed reports were not immediately available.

The company also received “unsatisfactory” CHP ratings during inspections of its terminal in 2005, 2007, 2008 and 2010, according to the agency’s online database. The ratings came in various categories, including maintenance, driver, equipment and terminal.

Jeff Picardi, a supervisor in the CHP Border Division’s motor carrier safety unit, said he could not comment on the details of the ratings without the full reports but noted that there are a number of reasons why the inspections might have resulted in unsatisfactory ratings. Generally, drivers are given an opportunity to correct deficiencies, he said. If an owner continues to be out of compliance, the CHP may make a recommendation to the Public Utilities Commission or to the Department of Transportation for further action.    

USA Holiday was last inspected by federal transportation officials in April of last year and received a satisfactory rating, according to FreightConnect, a private data provider. No issues with the coach or driver were reported. 

The company drove 68,780 miles in 2015, the most recent data available, federal records indicate.

On Monday, a makeshift memorial grew in the place where Vides once cheerfully met customers. Dozens stopped to leave candles and notes. Some tucked flowers into the trunk of a palm tree.

Rosa Maria Cabello arrived in the early day’s drizzle, desperate for information on friends. She had heard that a woman she knew was among the dead. 

“My soul hurts to think she’s gone,” Cabello said.

Cabello, 79, said the long overnight trips to the casino with Vides had given many seniors like her a sense of community, of family.

“Your kids, they forget about you,” she said. “This was our distraction. A place to forget everything and just enjoy.”

The bus had been on its way to Los Angeles from Red Earth Casino in Thermal, near the Salton Sea, when it slammed into the back of a big rig. Most of those who died appeared to have been sitting toward the front of the bus. CHP officials said the bus appeared to have made no attempt to brake as it careened into the tractor trailer shortly after 5:15 a.m.

By Monday evening, officials had publicly identified all 13 people killed in the crash. In addition to Vides, they included Tony Mai, 50; Zoila Aguilera, 72; Concepcion Corvera, 57; Dora Galvez de Rodriguez, 69; Ana Gomes de Magallon, 71; Milagros Gonzales, 72; Gustavo Green, 62; Isabel Jimenez Hernandez, 66; Yolanda Mendoza, 69; Rosa Ruiz, 53; Elvia Sanchez, 52; and Aracely Tije, 63, according to Riverside County coroner’s records.

All were identified as residents of Los Angeles, except Corvera, who lived in Palmdale.

The bus was not equipped with seat belts when it ran into the back of the truck, hurling the victims into the air, officials said. As a result, their fatal injuries were consistent with those caused by striking blunt and jagged objects.

An additional 31 people were injured, including the driver of the big rig. He was identified as Bruce Guilford, 50, a resident of Covington, Ga.

The injured victims ranged in age from 26 to 76 years old; six of them suffered major trauma, according to a list handed out by CHP officials.

On Monday, four patients remained in critical condition at Desert Regional Medical Center, the Coachella Valley’s only trauma center. One patient was in serious condition, another in fair condition and nine patients had been treated and released, hospital spokesman Richard Ramhoff said.

Esquivel and Sahagun reported from Palm Springs; Bermudez and Winton from Los Angeles. Times staff writers Corina Knoll and Brittny Mejia contributed to this report.

http://www.latimes.com/local/california/la-me-ln-bus-crash-owner-20161024-snap-story.html

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

Normandie Casino owners hit with more than million dollar fine for protecting higher roller customers

 Renee Kingsley

 

 September 1, 2016

 

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.

https://news.worldcasinodirectory.com/normandie-casino-owners-hit-with-more-than-million-dollar-fine-for-protecting-higher-roller-customers-33590

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 PATCH SOCAL (Patch Staff) - 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.

http://patch.com/california/redondobeach/now-defunct-south-bay-casino-partnership-ordered-pay-2-4-mil-violating-anti

New casino would just create more problems

Letter: New casino would just create more problems

POSTED: 08/07/16,|

New casino would just create more problems

I agree 100 percent with the Butte County Board of Supervisors in their opposition to a new casino down off of Highway 149 near Chico. This area doesn’t need another casino that is designed by engineers to do nothing but take your money.

These casinos are designed to not only take your money but designed to turn thousand of its visitors into addicts. This is true, every new casino creates 12,000 new addicts. Casinos have the best marketing people in the business. They know how to draw people in and once they are in, they transform them into addicts, addicts that litterally will lose every dime they receive each month to live on. I’ve see the very worst of this happen, where people will spend all of their medication money, rent money, car payment money, food money and destroy marriages, lose jobs, go homeless because of this addiction, and end up on the streets.

Any new casino will take your money to pay off the casino before any one sees a dime in winnings. And don’t think for one minute that the casinos care about anything except the bottom line. I believe the rights of the Indian nations to be sovereign only if the non Indians are not cheated out of millions of dollars on fixed slot machines.

— Darryl Gorham, Oroville

http://www.chicoer.com/article/NA/20160806/LOCAL1/160809839

mechoopda-nsn.gov

California tribe wins land-into-trust court battle

 Adam Morgan

 

 July 19, 2016

 

In northern California, the federally-recognized Mechoopda Indian Tribe Of Chico Rancheria could finally be allowed to open a casino after a federal judge upheld a previous land-into-trust ruling over the objections of local officials.

According to a report from The Bellingham Herald newspaper, the tribe wants to construct a 42,000 sq ft casino on a portion of 625 acres of land located about ten miles south of the city of Chico. After purchasing the plot in 2001, the Mechoopda Indian Tribe Of Chico Rancheria submitted a land-into-trust application with the Department Of The Interior and had the request approved in 2008.

It was at this point that Butte County, which already hosts a pair of casinos in the Gold Country Casino And Hotel and the Feather Falls Casino And Lodge, objected in court citing environmental and water-supply concerns. This eventually resulted in an appellate court ordering the Department Of The Interior to conduct a review into its decision, which ultimately led to the federal agency via then-Assistant Secretary Of The Interior Kevin Washburn to conclude in 2014 that its original verdict had been justified.

Undeterred by the Department Of The Interior’s second pronouncement, Butte County took the matter to the United States District Court For The District Of Columbia in hopes of overturning the land-into-trust decision.

However, in his Friday ruling, Judge Frederick Scullin wrote that the Department Of The Interior’s 2014 decision had been “thorough and well-reasoned” and had “included explanations that were consistent with the evidence before the agency and considered all of the relevant issues” including a claim from the Mechoopda Indian Tribe Of Chico Rancheria that they were among the first peoples to have lived in the areas around Chico.

“The secretary noted that he had derived the recitation of the tribe’s history from his review of all of the documents submitted by the tribe and the county as well as his own independent research,” read the 17-page decision from Scullin, who was appointed to the federal bench 24 years ago by then-President George HW Bush.

“We’re very pleased, obviously,” Sandra Knight, Vice-Chairperson for the Mechoopda Indian Tribe Of Chico Rancheria, told the newspaper. “This battle has been going on for more than ten years.”

Despite the possibility that Butte County could appeal the land-into-trust decision a final time, the tribe stated that it now intends to proceed with plans to build a casino offering around 500 slots and ten gaming tables.

“Since we were re-recognized, we have the right to establish reservation or tribal land in Chico,” Knight told local television broadcaster KHSL-TV. “They went after the tribe at it’s core, saying that we were a manufactured tribe. This is just a main economic development project for the tribe that will create funding for future generations; childcare, healthcare, all of those things that we haven’t been able to provide for our members.”

https://news.worldcasinodirectory.com/california-tribe-wins-land-into-trust-court-battle-31147

2 Calif. tribes sue to block casino proposal

Two California casino-owning tribes have filed lawsuits to block a third tribe in the state from building its own casino.

View original Article 

Federal judge denies effort to block proposed Indian casino in Butte County

By KRCR Staff

POSTED: 1:29 PM Jul 18 2016

CHICO, Calif. -

U.S. District Judge Frederick Scullen denied Butte County’s request to block the Mechoopda Indian Tribe’s proposed casino, paving the way for a casino to be built on a portion of 600 acres owned by the tribe at the northeast intersection of Highways 99 and 149.

Butte County asserted that the government's decision to take the land into trust was unfounded, and agreed with the Department of Interior's determination that the tribe did indeed have a historical connection to the land.

In a statement, the Mechoopda Tribe said it looks forward to advancing its proposed casino project.

http://www.krcrtv.com/news/local/federal-judge-denies-effort-to-block-proposed-indian-casino-in-butte-county/40766978

County’s Tribal Casino Challenge Lacking, Judge Says

By Jimmy Hoover

Law360, Washington (May 10, 2016, 1:09 PM ET) -- A D.C. federal judge on Tuesday appeared poised to deny a California county’s request to block a proposed casino for the Mechoopda Native American tribe, saying at a hearing the county failed to show how the federal government’s decision to take land into trust was unfounded.

U.S. District Judge Frederick Scullen said Butte County was essentially asking the court to “second guess” the Department of Interior’s determination that the Mechoopda had a historical connection to hundreds of acres in Chico, California, and “substitute” his judgment for...

http://www.law360.com/articles/794444/county-s-tribal-casino-challenge-lacking-judge-says

Mechoopda Casino Project Upheld in Federal Court
April 16, 2009

The Mechoopda Casino Project was challenged by Butte County in Federal court, however U.S. District Court Judge Henry H. Kennedy Jr. dismissed the county’s suit yesterday. AES prepared the NEPA Environmental Assessment for the Tribe’s casino project.

—

CHICO ENTERPRISE-RECORD

Judge: County can’t stop casino

By ROGER H. AYLWORTH – Staff Writer

Posted: 04/14/2009 12:00:00 AM PDT

OROVILLE — After more than two years of legal briefs, arguments and counter-arguments, a federal court in Washington, D.C. has rejected a Butte County effort to block a Mechoopda casino on Highway 149, about a mile east of Highway 99.

Monday, representatives of the tribe and the county issued announcements that U.S. District Court Judge Henry H. Kennedy Jr. had dismissed the county’s suit.

Butte County Counsel Bruce Alpert, in a press release, stated, “The proposed casino site on Highway 149 will have major public safety, traffic, environmental and groundwater impacts.

“For the past several years, the casino developer has simply refused to work with Butte County to find an alternative site. As a result, Butte County had no recourse other than this litigation.”

Throughout the entire process, the county maintained the lawsuit was about environmental concerns related to the tribe’s proposed casino site, and not an attack on the Mechoopda.

Even so, the suit, which was filed against the National Indian Gaming Commission and the Department of the Interior, sought to persuade the court the agencies could not grant the Chico Rancheria Mechoopda the right to use the land because the Mechoopda did not qualify as a tribe.

Based on a study conducted in 2006 by Professor Stephen Dow Beckham, of Lewis & Clark College in Portland, Ore., the county lawsuit charged the Chico Rancheria unit of the Mechoopda Indians was not a tribe in any meaningful sense, but was an amalgamation of 11 groups that had little or nothing to do with the historic Mechoopda tribe.

The county claimed if the Chico Rancheria group was not a legitimate tribe, the federal agencies could not grant them the necessary authority to put a casino on the Highway 149 property.

“The court has considered the briefing, scoured the record, and pressed the parties on this issue during oral argument. Having done so, the court cannot find the county has done enough to justify setting aside the agencies’ actions here,” wrote Judge Kennedy in his decision.

Doug Elmets of Sacramento, the tribe’s spokesman, said the casino project is “alive and well.”

“This project has been in the process for many years despite the hurdles that have been thrown in its way, particularly by Butte County,” he said.

Elmets explained, from the tribe’s perspective, the next step will be to get the agreements with the state that will allow for gaming on the 645-acre site.

He also said it is far too early to discuss a target for groundbreaking.

The press release from the county said the possibility of an appeal is still being discussed.

As of the end of 2008, the litigation had cost the county nearly $322,800, according to records obtained by the tribe.

Elmets charged that was money “that was flushed down the drain on a frivolous lawsuit.”

Posted in News

http://www.analyticalcorp.com/news/2009/04/16/mechoopda-casino-project-upheld-in-federal-court/'

Hawaiian Gardens Casino levied $2.8m fine by FinCEN for AML lapses

 Marie Kelley

 

 July 18, 2016

 

The United States Financial Crimes Enforcement Network announced this past Friday that they were able to reach an agreement with the owners of the Hawaiian Gardens Casino, a card club of California, for violations the venue faced based on the Bank Secrecy Act. The casino will have to pay a $2.8m fine for being in violation of anti-money laundering regulations.

The Financial Crimes Enforcement Network reported that the casino was investigated by the Internal Revenue Service in regards to the Bank Secrecy Act back in 2011 and three years later, in 2014. The IRS were able to uncover several violations from 2011 that had still not been dealt with by 2014. An independent consultant from the Hawaiian Gardens Casino identified the same issues a year earlier, in 2013.

The violations against the Hawaiian Gardens are in relation to several issues with the Bank Secrecy Act. The venue did not have an effective anti-money laundering program in place that was implemented and maintained. The venue did not report large cash transactions and did not file activity reports that were found to be suspicious. Required records were not always kept in regards to game play.

Financial Crimes Enforcement Network collected the information of customers at the venue by using player club cards and have stated that 80% of the suspicious activity reports that were filed by the venue from early 2013 to late 2014 included at least one unknown subject. The Financial Crimes Enforcement Network stated that the investigation shows a lack of interest by the casino to use all the tools available to them which allowed transactions to be anonymous and ‘frustrated record keeping’.

During investigations, it was found that staff of the Hawaiian Gardens were involved in helping customers to create transactions that could be kept from the reporting thresholds set by the federal government. It was found that the venue continued to work with individuals who had been identified as suspicious, by the actual casino, even when the individuals would not show identification. According to CalvinAyre, one suspect was able to take part in gaming at the Hawaiian Gardens even after 15 suspicious activity reports were filed against the player.

Jamal El-Hindi is the Acting Director of the Financial Crimes Enforcement Network who commented on the matter, stating that the Hawaiian Gardens was lacking a culture of compliance and had allowed these violations to go on for years after ignoring the findings by the IRS as well as their own consultant.

On a side note, the Hawaiian Gardens is partnered with PokerStars, the online poker brand who is trying to be involved with online poker gaming within the state of California if regulations are put in place. PokerStars, owned by Amaya Gaming, partnered with the card room, along with other cards rooms and certain Indian tribes in the state to be ready for when online poker legislation passed.

However, legislation efforts have stalled and PokerStars is a hot point of contention as certain groups do not want to see the brand being able to operate once legislation is put in place. The violations of the card room may be a further deterrent for the online poker brand as they try to be included in the online poker operations in California.

Hawaiian Gardens opened a $90 million renovation and expansion earlier this year.

https://news.worldcasinodirectory.com/hawaiian-gardens-casino-levied-2-8m-fine-by-fincen-for-aml-lapses-31100

Casino M8trix owner fined millions by state gambling regulators, stripped of gaming license

Jun 5, 2016

Bryce Druzin

San Jose's Casino M8trix is setting records for all the wrong reasons.

On May 26, the California Gambling Control Commission stripped M8trix owner Eric Swallow of his ownership license and fined him a record $13.7 million for violating state gaming regulations. Chief among these was misleading regulators about the nature of, and financial ties to, companies the card room paid over $80 million from 2009 to 2013, according to Commission documents.

Enlarge

Casino M8trix owner Eric Swallow was stripped of his ownership license and fined $13.7… more

DINO VOURAS

Swallow could still be in good financial shape even after paying, according to the decision, which cites an unnamed potential purchaser estimating the value of Swallow's 50 percent stake at $50 million. Swallow has already declared his desire to sell his stake, and one potential buyer is John Park, who owns five card rooms in California and filed for an ownership license with San Jose in April 2015.

It's not a surprise Swallow was stripped of his license. I n December, an administrative law judge recommended the Commission take that action based on an investigation by the Bureau of Gambling Control. But the size of the penalty dwarfs the judge's recommended $430,000 amount.

The decision goes into effect June 27, but the story may not be over.

In an email, Swallow's attorney Allen Ruby wrote that his client intends to challenge the decision, most likely in Superior Court, and that the first steps in that process will take place within the next 60 days.

The huge penalty blows away the previous record $1.5 million fine levied against (wait for it) Casino M8trix and co-owner Peter Lunardi in May 2015 for related accusations. That fine was part of a settlement with Peter and his wife Jeanine Lunardithat allowed them to keep their gaming licenses. The Lunardis control the other 50 percent of Garden City Inc., the entity that owns M8trix.

In 2008, Swallow and the Lunardis set up three limited liability companies in Nevada, which does not have an income tax, to ostensibly provide software, table games and consulting services to Garden City Casino, the card room that was replaced by M8trix in 2012. From 2009 to 2013, these LLCs received $81,762,000 from Garden City.

The Commission found that Garden City paid well-over market prices for the services rendered by the LLCs and that a significant amount of the payments were in reality distributions of profits to entities not licensed by the Commission, a practice prohibited by California's Gambling Control Act.

To be clear, setting up the LLCs was not found to violate state regulations, and the distributions to the LLCs were not part of the formal accusations filed by the Bureau that formed the basis of the case. But giving misleading information to Bureau agents does violate the Act.

One accusation upheld by the commission has to do with Dolchee LLC, which received more than $47 million from 2009 to 2013, according to the Bureau.

The Bureau stated that Swallow said the large payments were justified by gaming analytical software provided by Dolchee to manage Garden City operations. Peter Lunardi, former Garden City CFO Deven Kumar and former accountant Jerome Bellotti (who helped set up the LLCs) said they were unaware this software existed, and thought Dolchee only licensed the use of their games like "Baccarat Gold" and "Pai Gow Tiles" to the card room.

Furthermore, Lunardi and Kumar have previously testified that there were payments to Dolchee that were distributions of profits, not for services.

The commission stated "when an applicant and owner misrepresents the nature of his cardroom’s financial relationships, makes distributions to unlicensed entities, and misrepresents corresponding material facts, he obstructs the statutory oversight of both the (Bureau) and Commission ... (Swallow's) conduct collectively was a clear violation of the (Act)."

One point Swallow plans on contesting in court is the size of the $13.7 million fine. Ruby wrote that the amount is because individual violations have a $20,000 maximum which, if followed, would have resulted in a fine of a few hundred thousand dollars.

The Commission acknowledges the $20,000 limit on legally defined "fines," but states that the $13.7 million is a "penalty," which does not have any limits.

The Swallow decision came almost four weeks after former M8trix compliance officer Bob Lytle, also the former chief of the Bureau, reached a settlement with the Commission that resulted in his ownership licenses for two Sacramento-area card rooms being revoked and a fine of at least $75,000.

http://www.bizjournals.com/sanjose/news/2016/06/05/casino-m8trix-fined-millions-by-state-gambling.html