Hong Kong Entertainment (Overseas) Investments, Ltd, D/B/A Tinian Dynasty Hotel & Casino Enters Into Agreement With The United States To Resolve Bank Secrecy Act Liability
ALICIA A.G. LIMTIACO, United States Attorney for the Districts of Guam and the Northern Mariana Islands, announced that the Office of the United States Attorney for the Northern Mariana Islands (Office) and Defendant, HONG KONG ENTERTAINMENT (OVERSEAS) INVESTMENTS, LTD. dba TINIAN DYNASTY HOTEL & CASINO (“TDHC”), entered into a Non Prosecution Agreement (Agreement) which requires TDHC to forfeit $3,036,969.12 — the largest forfeiture ever collected by the United States in the Commonwealth of the Northern Mariana Islands. The Agreement also obligates TDHC to fully cooperate with the United States in ongoing criminal investigations and to comply with federal reporting and other regulatory requirements. The United States — in its sole discretion — can rescind the Agreement and initiate criminal proceedings should the Government determine that TDHC has failed to comply with any provision of the Agreement.
The Agreement further requires TDHC to implement new policies and procedures to ensure stringent compliance with federal law. This will assist the IRS and the Gaming Commission on better identifying all taxable revenue.
The United States will closely monitor TDHC to ensure compliance with their reporting requirements under federal law as well as under the terms of the Agreement. “Casino reporting requirements under the Bank Secrecy Act are an important means of preventing abuse of our financial system by those seeking to conceal ill-gotten gains or evade their tax obligations,” said Teri L. Alexander, Special Agent in Charge of IRS Criminal Investigation in Seattle, Washington. “The requirement of this agreement that the Tinian Dynasty Casino fully cooperate with IRS CI is an important step in ensuring that those who may be trying to evade reporting requirements are detected.”
Federal law known as the Bank Secrecy Act (BSA) requires that financial institutions and certain businesses, including casinos with annual gaming revenue in excess of $1 million, be vigilant in detecting and reporting activity that may indicate that money laundering, or other financial crimes, are being committed, and that the casino implement and maintain an effective anti-money laundering program. The BSA requires casinos to file a “Currency Transaction Report for Casinos” (CTR-C) for transactions that involve more than $10,000 in cash. Cash includes the coins and currency of the United States and foreign countries. The law requires that casinos and businesses report transactions when customers use cash in a single transaction or a related transaction occurring within a 24-hour period.
On November 20, 2014, a federal grand jury returned a Second Superseding Indictment that charged TDHC with one count of conspiracy to fail to file CTRs in violation of 18 U.S.C. § 371 and 31 U.S.C. §§ 5313(a), 5322(b) and 5324(a)(1) and (d)(2); 155 counts of failure to file CTRs in violation of 31 U.S.C. §§ 5313(a) and 5322(b); one count of failure to file a SAR in violation of 31 U.S.C. §§ 5313(a), and 5322(b); and one count of failure to maintain an effective anti-money laundering program in violation of 31 U.S.C. §§ 5318(h) and 5322(b).
According to filings with the court, TDHC did not fully identify and disclose all individuals whose gambling activities should have legally triggered a BSA report. From October 1, 2009 through April 25, 2013, TDHC failed to document over $138 million in reportable cash transactions. It is estimated that TDHC failed to report 3,640 separate cash transactions during this same time period.
Documents filed with the court show that during May 2012 and September 2012, TDHC VIP Services Manager George Que spoke to an undercover IRS agent and assured him that he could gamble at TDHC with large amounts of currency, and that no paperwork would be filed by the casino to report their transactions to the United States. Moreover, between February 28, 2013 and March 4, 2013, two undercover IRS agents posed as casino players at the TDHC and conducted currency transactions totaling more than $450,000. The undercover agents made repeated requests to TDHC employees Tim Blyth and Que to not file a CTR on their activity. A CTR was prepared but ultimately never filed with the government.
U.S. Attorney Alicia A.G. Limtiaco stated, “Under the BSA and its implementing regulations, financial institutions that fail to adequately know its customers and screen their transactions for suspicious activities can be exploited by criminals. Financial institutions that do not comply with the BSA also gain an unfair competitive advantage within the industry. The IRS CI, the U.S. Attorney’s Office, and the Department of Justice will continue to partner together to ensure casinos, financial institutions, and businesses comply with the requirements of the BSA and other regulations. This case was investigated by and we acknowledge and commend the hard work and diligent investigative efforts of the IRS CI.”
The case was handled and prosecuted by Assistant United States Attorneys Marivic P. David, Russell H. Lorfing, and Ross K. Naughton.