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

Money Laundering Closes Normandie Casino

Normandie Casino to close after nearly 70 years

   Sat May 21, 2016

- See more at: http://www.gardenavalleynews.org/article/normandie-casino-close-after-nearly-70-years#sthash.0qgVY9N4.dpuf

The Normandie Casino, which started as the Western Club in 1940 before being purchased by Russ Miller in 1947, ends it legacy as the oldest poker club in the state as it closes its door when earlier this year its four owners where charged with money-laundering. In late April, the California Gambling Control Commission revoked the casino’s license to operate, but granted the business a four-month reprieve for the sale the casino, the Daily Breeze reported. 

The card club at 1045 W. Rosecrans Ave., Gardena was a family business, operated by the Miller Family for nearly 70 years. 

Russ Miller changed the casino name from the Western Club to the Normandie. It is speculated that among those bidding to purchase the Normandie is Larry Flynt, who owns the Hustler Casino, Gardena’s remaining card club that operates at the corner of Vermont and Rosecrans avenues. Flynt, a source said, would be interested in the spacious Normandie property to turn into a Vegas-style resort, complete with a hotel and shops. 

The timing of such a business venture would coincide with the arrival of the Los Angeles Rams football team, and the completion of a stadium construction in nearby Inglewood in 2019. Flynt did not comment on the rumored transactions.

Reports say the Miller family notified the state’s Employment Development Department in late April of the Normandie’s 380 employees, who face pending permanent layoff. 

Reports said the four Miller sons, who ran the casino operation, spurned selling the business in recent years. The casino came under investigation and in January 2016, the four partners pled guilty to federal charges that the Gardena club violated anti-money laundering provisions of the Bank Security Act, it was reported. 

The casino hid the winnings of several high rollers by failing to properly record and report a series of huge cash transactions in 2013, according to the court documents. 

The Normandie club agreed to forfeit $1.3 million in illegal earnings, documents show. It’s managing partners also agreed to pay $1 million in federal fines, as mentioned in the plea agreement. 

Court records showed that the casino failed to record information for one player who had racked up more than $1 million in winnings during a six-week span. 

“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,” U.S. Atty. Eileen M. Decker said in a statement. “Casinos that fail to follow these rules are particularly vulnerable to criminals who seek to disguise illegal cash as gambling winnings.” 

Mark Werksman, the attorney representing the Normandie Casino, said that his client has cooperated in resolving this case. He added that no individual managing partners or owners are facing criminals charges or jail time. - See more at: http://www.gardenavalleynews.org/article/normandie-casino-close-after-nearly-70-years#sthash.0qgVY9N4.dpuf

Exclusive: Feds probe L.A.-area casino over cash transactions

ST LOUIS | By Brett Wolf

 

 

A federal grand jury is probing a Los Angeles-area casino following allegations by state authorities the business allowed some players to evade transaction reporting requirements and possibly launder money, a source said.

 

The grand jury is probing the operations of the Gardena-based Normandie Casino, the source said.

 

Authorities suspect many of California's roughly 90 casinos known as "card clubs" are not fully complying with laws requiring they report when customers use more than $10,000 in cash to buy poker chips, the source said.

 

Organized crime figures linked to drug trafficking and other crimes may use the clubs to spend, or to disguise the source of their gains, the source added, speaking under condition of anonymity.

 

Lauren Miller, general manager and spokeswoman for Normandie Casino, said in a written statement that federal prosecutors in Los Angeles informed the casino it was under investigation in August 2014. She declined to comment on the grand jury probe. A spokesman for the U.S. Attorney's office in Los Angeles declined comment.

 

While many customers "bristle" at having cash transactions reported to the government, and there may be "one-off scenarios" where a card room obliges a customer's request to remain anonymous, "to suggest it's a widespread practice, I think that's really overstating it," said Kyle Kirkland.

 

Kirkland, who is president of the California Gaming Association, a trade group for the state's card rooms, added: "It violates federal law, people aren't inclined to do that."

 

It was not always that way, said Bill Zender, a consultant who has helped the Normandie and other card clubs better comply with anti-money laundering rules.

 

While compliance has improved in the past few years thanks to federal pressure, card clubs once commonly helped players evade reports on cash transactions, he said.

 

He added that "Asian games" operations that offer games tailored to Asian or Asian-American players were particularly vulnerable because players insist on privacy and there was stiff competition to attract them.

 

"I would suggest that of all the card rooms in California that dealt to Asian players, there wasn't a one of them that wasn't in violation," Zender said.

 

Card clubs, also known as "card rooms," are a relatively small part of the gaming industry, generating an estimated $1 billion in revenue per year, compared with about $6.4 billion at Las Vegas strip casinos. By law, card rooms can only feature card games, and many are family owned.

 

The United States is cracking down on casinos of all types. The U.S. Attorney's office in Los Angeles targeted Las Vegas Sands Corp over alleged failures to detect and report suspicious transactions involving high-roller Zhenli Ye Gon, a Mexican pharmaceutical executive. Ye Gon is currently fighting extradition to Mexico, which has charged him with drug trafficking.

 

In August 2013, Sands agreed to pay the Justice Department more than $47 million to settle the matter.

 

The following month, Jennifer Shasky Calvery, the director of the Treasury Department's Financial Crimes Enforcement Network (FinCEN) gave a speech in Las Vegas where she warned the gaming industry to step-up compliance.

 

A month after her speech, Caesars Entertainment Corp publicly disclosed that its flagship Las Vegas casino, Caesars Palace, was under investigation by FinCEN and the Justice Department over alleged anti-money laundering lapses. Earlier this month, Caesars said it appeared it might have to pay a penalty of between $12 million and $20 million to settle the matter.

 

Unlike casinos across the country, California card rooms - for many years the only legal form of gambling in the state - were not required to report cash transactions to authorities until 1998. That is when FinCEN began requiring the businesses to comply with Bank Secrecy Act regulations designed to help trace criminals' money, and when California's Gambling Control Act came into force.

 

"Card clubs are at least as vulnerable to use by money launderers as other gaming establishments, both because of their size and because those institutions often lack the controls found at casinos," Stanley Morris, the then director of FinCEN, said at the time.

(Reporting by Brett Wolf of Thomson Reuters Accelus; here; Editing by Andre Grenon)

http://www.reuters.com/article/2015/05/22/us-usa-casinos-normandie-idUSKBN0O708G20150522