Steve Ruddock Hawaiian Gardens money laundering

This week, Hawaiian Gardens Casino became the third California card room fined by FinCEN (Financial Crimes Enforcement Network) since December 2015.

The casino received the largest fine ever handed down to a California card room by FinCEN for failing to live up to the anti-money laundering procedures all casinos and card rooms must adhere to under the Bank Secrecy Act.

Hawaiian Gardens settles with FinCEN

According to press release from FinCEN, Hawaiian Gardens, which recently underwent a $90 million expansion project and rebranded itself as the Gardens Casino, reached a $2.8 million settlement with FinCEN stemming from multiple and repeated violations of the Bank Secrecy Act (BSA) dating back to 2009.

According to FinCEN’s report, the Hawaiian Gardens failed to:

  1. implement and maintain an effective AML program;
  2. report large cash transactions;
  3. file many suspicious activity reports (SAR);
  4. keep certain required records.

Furthermore, FinCEN alleges that the Hawaiian Gardens Casino did not utilize all the information at its disposal to “identify and verify customer information,” and that 80 percent of the casino’s SARs included an unknown subject — which is at best, careless.

“The Gardens lacked the culture of compliance required to effectively manage its anti-money laundering responsibilities,” said Acting FinCEN Director Jamal El-Hindi in a press release. “It ignored the IRS findings – and the findings of its own consultant – thus allowing these violations to go on for years.”

The press release makes specific mention of a Hawaiian Gardens employee guilty of the same behavior in 2013, despite being disciplined for it in 2009:

“IRS examiners also identified employees complicit in assisting customers with structuring at the card club. One such employee was disciplined for assisting a customer’s structuring in 2009 only for the IRS examiner to identify the same employee engaging in the same behavior in 2013.”

Normandie Casino takes one on the chin

Hawaiian Gardens may have received the largest fine in California card room history for lax anti-money laundering procedures, but it’s far from the only card club FinCEN has disciplined. In terms of pure impact, the Normandie Casino was much harder hit than Hawaiian Gardens.

The case against Normandie led to a combined $2.3 million in fines for the iconic Gardena, California card club’s four principle owners — brothers Lee, Larry, Greg, and Steve Miller — as well as the forfeiture of their gaming licenses.

As I wrote in a previous column, the Normandie’s violations were beyond brazen, with the investigation beginning after an employee found $50,000 in cash in a duffel bag in a store room:

“The charges stem from a multi-year investigation into the casino that uncovered the Normandie, in a reckless attempt to lure big players to the property, was helping high-rollers launder money by not filing AML Currency Transaction Reports required for all transactions over $5,000 by the Bank Secrecy Act.”

With its licenses revoked, Normandie was quickly put up for sale with the casino closing its doors and laying off some 380 employees in the interim. It has since been bought by Larry Flynt, who owns the nearby Hustler Casino.

Flynt is in the process of rebranding the property, which will now go by the name the Lady Luck Casino, but the scheduled reopening has been put on hold after the city rescinded an offer of tax breaks to Flynt.

Oaks Card Club gets off easy

Compared to Normandie Casino, the Oaks Card Club got a veritable slap on the wrist for its AML failures, as FinCen fined the casino $650,000 in December 2015.

Unlike Normandie Casino, which was facilitating money laundering for certain high rollers, Oaks Card Club’s violations were more a matter of sloppy training.

Steve Ruddock
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