Wynn Las Vegas has resolved an ongoing criminal investigation by the US Department of Justice (DOJ) into assertions of conspiring with unlicensed and unregulated third-party financial services, and of moving large sums of money from international gamblers into the casino for gambling and otther purposes in ways that violated anti-money laundering (AML) regulations. Wynn Las Vegas agreed to forfeit $130 million as part of a non-prosecution agreement to close the matter.
The agreement includes an admission by Wynn LV that that it "illegally used unregistered money transmitting businesses to circumvent the [United States'] conventional financial system," a DOJ statement declared. The DOJ also stated that the settlement is believed to be the largest-ever forfeiture agreed to by an American casino-entertainment entity.
Wynn Las Vegas parent entity Wynn Resorts acknowledged the forfeiture in a brief SEC filing, due to the possible material impact the settlement could have on Wynn's corporate stock. Wynn Resorts has also announced the private sale of $800 million worth of corporate debt, which will provide funds for covering the maturation of a maturing issue of corporate bonds, and for other general corporate purposes. Those purposes, according to a separate Wynn Resorts statement, may include using $130 million to cover the DOJ settlement.
Intermediaries used in 'convoluted' scheme
The investigation by the DOJ ran through the US Attorney's Office for the Southern District of California, due to the use of a bank account in southern California being used as the primary conduit to move funds between unlicensed intermediaries and the casino. The account was controlled by Wynn Las Vegas. The multi-level scheme involved using numerous third-party independent agents to recruit high-stakes foreign gamblers to Wynn LV, in a variation of the junket system prevalent throughout the Asian Pacific Rim casino industry.
The DOJ cited numerous activities that violated US law, including the use of 'Human Head' gamblers -- also known as 'beards' in sports-betting parlance -- to illegally place bets on behalf of wealthy patrons. As the DOJ detailed:
"WLV also facilitated the unlicensed transfer of money through 'Human Head' or 'Human Hat' gambling, known in Mandarin as '人头' or 'ren tou'. In this scheme, a person known as a 'Human Head' purchased chips at WLV and gambled at WLV as a proxy for another nearby person who, in some instances, because of federal Bank Secrecy Act or Anti-Money Laundering (BSA/AML) laws, was unable or unwilling to conduct financial transactions or gamble under their own identity. The true patron, however, would direct the Human Head’s gaming. WLV knowingly allowed this form of gambling without scrutinizing the true patron’s funds and without reporting the suspicious activity."
Another illicit activity that went unscrutinized and unreported was the use of 'flying money' two-way exchanges, known in Mandarin as 'qian chen'. As the DOJ explained, "A money processor, acting as an unlicensed money transmitting business, collected US dollars in cash from third parties in the United States and delivered that cash to a WLV patron who could not otherwise access cash in the US. The patron then electronically transferred the equivalent value of foreign currency from the patron’s foreign bank account to a foreign bank account designated by the money processor."
Only one individual named
The DOJ's lengthy statement described a couple of the people involved in indirect terms, such as a person involved in millions of dollars of transactions with Wynn LV who had already spent six years in a Chinese prison for conducting unauthorized international monetary and related financial crimes.
The only person directly named was an independent agent working on Wynn LV's behalf. That individual, Juan Carlos Palermo, operated unlicensed money-transaction businesses in the US in association with the scheme. In total, he conducted more than 200 transactions with Wynn Las Vegas banking accounts, involving over 50 foreign casino patrons and more than $17.7 million.
Not counting Wynn Las Vegas, which has assured the DOJ that any executives or employees involved with the scheme have been removed, 15 non-Wynn defendants have admitted to charges of money laundering, unlicensed money transmitting, or other crimes, with combined criminal penalties of more than $7.5 million.
The non-prosecution deal continues a run of prominent Vegas casinos facing stiff penalties for violating various compliance and financial rules. A serious matter involving Resorts World Las Vegas, that includes accepting heavy wagering from underground bookies, has that casino's operating license under review and includes the filing of official complaints by Nevada gaming regulators.
