FinCen Did Not Give Details of the Money Laundering Charges, Which Date to October 2013 at Caesars Palace
Caesars Entertainment Corporation is in discussions with federal officials to settle money laundering charges against Caesars Palace, the flagship casino in the company’s large gaming portfolio. Howard Stutz of the Las Vegas Review-Journal speculated that Caesars could pay a fine ranging between $12 million and $20 million.
If that sum were agreed upon, it would be one of the largest fines in US casino history, though it would pale in comparison to a fine assessed to Las Vegas Sands in 2013.
October 2013 Complaint
The money laundering allegations first surfaced against Caesars Palace in October 2013. The Financial Crimes Enforcement Network (“FinCen”), a civision of the US Department of the Treasury, accused the casino of violationsof the Bank Secrecy Act. At the time, FinCen said it was attempting to determine whether it should assess a civil penalty or whether additional enforcement measures were needed.
At the time, Caesars Entertainment was informed that a grand jury was looking into money laundering practices. Oddly enough, the Las Vegas Review-Journal said FinCen “never disclosed the basis for the money laundering allegations”.
Bank Secret Act Information
Under the Bank Secrecy Act, financial institutions in any industry must assist federal agencies in combating money laundering practices. For a violation of that law to happen, FinCen would have had to have deemed Caesars Palace to have violated that law.
In an SEC filing on the case, Caesars refuted any assertion that it had not cooperated with federal authorities. The filing quoted Caesars as saying, “The company and Caesars Palace have been fully cooperating with both the FinCen and grand jury investigations since October 2013.”
Caesars Entertainment’s Troubles
Of course, that statement might sound like public relations. While it sounds at face value like Caesars Entertainment Corp. has cooperated all along, it does not address whether Caesars cooperated with authorities before October 2013. FinCen and the Securities and Exchange Commission obviously do not think so.
Caesars Entertainment is currently involved in a complicated restructuring plan. Gary Loveman is set to step down as CEO of the company after 12 years on the job. The Caesars Entertainment Operations Company (CEOC) is also undergoing a bankruptcy reorganization, in order for the company to deal with $18 billion of its staggering $23 billion in debt. That plan caused junior shareholders to sue the parent company, claiming Caesars moved assets out of CEOC just prior to the bankruptcy in order to keep those assets from bondholders who invested in good faith. That lawsuit is expected to take years to complete.
$20 Million “Would Not Impact Financial Results”
Given the huge sums of money involved in lingering debt and the bankruptcy plan, the $20 million fine is troublesome, but a troublesome drop in the bucket. Caesars released a statement which said, “We expect that any financial penalties imposed upon Caesars Palace would not impact Caesars Entertainment’s financial results.”
Caesars disclosed the coming settlement in a quarterly Securities & Exchange Commission filing on Monday of this week. In the filing, Caesars said it had met with FinCen representatives (plus other federal officials) on April 29 in order to review “(in general terms) the results of their investigations and proposed a range of potential settlement outcomes.”
Similar Prior Cases
When asked to reveal more information about the settlement plan, a spokesman for Caesars Entertainment declined to make a comment. This would seem to be a pattern in the industry, though, if FinCen Director Jennifer Shasky Calvery can be believed. Calvery has made references in speeches which indicate a belief that the gaming companies are not helpful enough in helping the Justice Department in finding and prosecuting money launderers.
This is not the first case involving such issues. Las Vegas Sands Corporation paid $47.5 million in fines in 2013 to settle money laundering charges involving incidents (with an alleged Chinese-Mexican drug lord) which happened in 2006 and 2007 at the Venetian. FinCen fined Trump Taj Mahal $10 million for similar violations in March 2015. In 2014, the IRS sent a letter to Wynn Resorts, requesting information on Wynn’s high rollers. All are indications that the casinos have trouble pleasing federal authorities.
Nevada Gaming Control Board
AG Burnett, the Chairman of the Nevada Gaming Control Board, said his regulatory body is keeping a close eye on the case. Burnett said the Gaming Control Board is “watching (the events) very carefully and may become part of it at some point.“
