By Kate O'Keeffe, Rachel Louise Ensign and Christopher M. Matthews
Federal authorities are investigating whether casino operator
Wynn Resorts Ltd. violated money-laundering laws, according to
people familiar with the matter.
Prosecutors from the Manhattan and Las Vegas U.S. Attorney's
offices and investigators from the Internal Revenue Service and
Drug Enforcement Administration are coordinating their efforts to
look into the Las Vegas-based company, people familiar with the
matter said.
The criminal probe comes as U.S. authorities step up their
scrutiny of casinos' efforts to prevent money laundering.
Regulators have long been concerned about vulnerabilities at
casinos, which are complex financial institutions that conduct a
large amount of cross-border and cash transactions. Wynn, which is
run by casino entrepreneur Steve Wynn, is the third major Las Vegas
casino company in recent years known to be investigated for
possible violations of money-laundering laws.
"We are not aware of any criminal investigation of the company
whatsoever and we have serious doubts that any such investigation
is taking place," said Michael Weaver, Wynn's senior vice president
of marketing. "No agency has notified the company that it is under
any investigation."
The company hasn't been accused of wrongdoing.
A letter sent to Donald Campbell, Wynn's outside lawyer, by the
IRS criminal investigation division in August requested information
on Wynn's U.S. and foreign clients, its domestic and overseas
marketing offices, and its internal controls.
Mr. Campbell didn't respond to requests seeking comment.
"As a highly regulated business we are in a constant dialogue
with regulators and governmental agencies on a variety of matters
and the fact that information is requested from us by a
governmental agency in no way implies the accusation of any
wrongdoing by the company," Mr. Weaver said. "We do not comment on
specific interactions with regulators and agencies, but as a
general matter we always fully cooperate with them."
The letter, which was reviewed by The Wall Street Journal, asked
the casino for a list of its biggest customers from 2011 through
2013, along with their dates of birth, Social Security numbers and
details from their identification documents. The IRS specified it
wants information about the company's safeguards against money
laundering and requested a list of Wynn's top 100 patrons from
North America as well as its top 50 in each of three other regions:
Asia, Europe and Latin America, according to the letter.
In the letter, the government also asked for an organizational
chart of Wynn senior management and staff working in casino and
credit operations. The IRS asked for details of branch offices in
the U.S. and abroad that enroll customers into credit programs.
Investigators are trying to determine if Wynn violated the laws
through its handling of sports-betting activities and through the
casino's dealings with high-roller gamblers, said some of the
people familiar with the matter.
Investigators are also trying to determine whether any of Wynn's
VIP customers laundered the proceeds of drug-trafficking through
the company's casinos, the people said. The investigations are
still at early stages, they added.
Since 1985, casinos, like banks, have had to report to
regulators large cash transactions by customers. Starting in 2003,
casinos also were required to file so-called suspicious-activity
reports--long a duty of banks.
The U.S. government has told casinos to improve their compliance
standards. Casinos "must continue their progress in thinking more
like other financial institutions" to identify money-laundering
risks, said Jennifer Shasky Calvery, the director of the Treasury
Department's Financial Crimes Enforcement Network, or Fincen, at a
conference in June. Fincen, which oversees casinos' compliance with
money-laundering laws, wouldn't comment beyond those remarks.
In her speech, Ms. Shasky laid out a series of red flags for the
industry. She said casinos needed to look at the source of
suspicious customer cash and watch out for patrons who: move money
into the U.S. through third parties; move cash through casino
accounts but don't gamble much; use cash in casino accounts to buy
assets like real estate; leave cash at casinos for long periods and
exit casinos with large amounts of chips. Under money laundering
laws, Ms. Shasky said, the onus is on casinos to figure out, among
other things, how their customers made their money if their
activity is suspicious.
Other casino operators have been subject to recent federal
government investigations involving money laundering laws,
including Las Vegas Sands Corp., the world's largest casino
operator, and Caesars Entertainment Corp.
In a first-of-its-kind case, Las Vegas Sands agreed in August
2013 to accept the Justice Department's assertion that the company
had failed to report potentially improper financial activity by one
of its customers. It paid more than $47 million as part of a
non-prosecution agreement that ended the criminal investigation.
The figure is roughly the amount prosecutors say Sands gained from
the high-roller, who was the largest all-cash gambler the company
had to that point, according to the agreement.
A few months later in October 2013, Caesars Entertainment
disclosed it was under investigation by the U.S. Treasury and a
federal grand jury for possible civil and criminal violations of
the Bank Secrecy Act. The company said in public filings that it
would fully cooperate with the investigations, which are still
active.
Wynn is facing additional government scrutiny. In July, the
corruption watchdog in the Chinese territory of Macau said it had
launched an investigation into a land deal that paved the way for
Wynn's planned $4.1 billion casino-resort there. The company has
said it is cooperating with investigators.
In April 2013, the U.S. Department of Justice disclosed it was
conducting a criminal investigation into Wynn's pledge to donate
$135 million to the University of Macau. "We have had no
communication from the U.S. DOJ on the matter and we do not believe
there is any ongoing investigation," Mr. Weaver said, adding Wynn
had been exonerated by the Securities and Exchange Commission and
the Nevada Gaming Control Board in the matter.
The Department of Justice wouldn't comment.
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