Hollywood Casino Toledo Slots Allegedly Used for Attempted Laundering of $138,000
Posted on: August 17, 2019, 12:46h.
Last updated on: August 17, 2019, 01:26h.
A man accused of trying to launder $138,843 of alleged “drug profits” through “fast feeding” at Hollywood Casino Toledo pleaded not guilty this week to all charges, according to Ohio federal court officials.
Todd A. Brown, 40, of Arizona, was indicted last week on 15 counts of concealment money laundering. The incidents took place between March 1, 2016 and June 14, 2017.
He could face up to 20 years in prison for each count, according to the Toledo Blade. Brown was released from custody on a $10,000 unsecured bond.
The money laundering allegedly took place by a technique called “fast-feeding,” federal officials said. This is where someone takes large amounts of currency — earned from illegal activity — to a casino, puts some of it into slot machines, plays the machine briefly, and then gets a ticket for the unused currency.
The remaining credit is swapped for a check from the casino, according to Kerry Myers, a former attorney and an accountant with the FBI who now teaches forensic accounting at the University of South Florida.
The check from the casino can then be deposited into a bank account and subsequently recorded on a tax return as gambling income,” Myers explained to Casino.org. “The casino is not necessarily involved or aware, especially if it is in amounts less than $10,000.”
He added that the criminal in such an instance “reports the money on his/her tax return, pays taxes on it, and commingles it with legitimate funds so it can be spent without suspicion.”
Also, Annemarie McAvoy, a former prosecutor who specializes in financial crime compliance and is currently CEO of Clovis Quantum Solutions, and teaches courses on financial crimes, at Columbia University’s School of International and Public Affairs, told Casino.org that “to a financial institution, it … looks as though the money simply came from gambling at a casino.
“This makes it harder to see the actual criminal source of the funds, and also makes it much more difficult for law enforcement to track down the money,” she added. “Money launderers are always looking to hide the illicit gains from their crimes by making those funds look legitimate.”
Myers adds that fast feeding is a “common” money laundering practice. But it can be controlled.
US Officials Curb Fast Feeding
“The US government attempts to control it by monitoring the placement of large amounts of cash into the financial system,” Myers said. “All financial institutions, including casinos with revenues greater than $1 million a year, are required by law to file a Currency Transaction Report (CTR) with the US Treasury regarding any deposit or withdrawal by an individual of an aggregate of $10,000 cash (or more) on any given day.”
Like banks, casinos are also required to file a Suspicious Activity Report (SAR) with the US Treasury regarding any suspicious activity by any customer regardless of amount, he said. The failure to file the reports can subject the casinos to fines and increased regulatory oversight, he added. Casinos have paid hefty fines for non-compliance.
“If money comes from a casino, it appears legitimate to the bank, since its actual source has been hidden,” McAvoy explained. “Gambling is thus used to give the funds the look of legitimacy so that they can then be allowed into the banking system without much questioning. If a bank thinks a transaction is suspicious, the funds will not be accepted and a Suspicious Activity Report on the transaction will be filed by the bank with regulators and law enforcement.”
Casinos are also required to have anti-money laundering programs in place, just like banks.
Where those programs are not sufficiently robust, casinos can be fined significant sums by regulators, and criminals can more easily launder money through those establishments,” McAvoy said. “Casinos need to make sure that they have appropriate compliance policies and procedures in place that will help to catch and report unusual activity that could turn out to be criminal.”
William H. Byrnes, IV, a professor at Texas A&M University School of Law, further told Casino.org that in the Toledo case, “the good news is that the casino reported it as a suspicious activity report … because it was clearly suspicious in the context of this man, and the casino has a legal obligation to report suspicious activities.”
Earlier Money Laundering Claims
Byrnes additionally points to a 2018 Singapore case, China Medical Technologies, Inc. (in liquidation) & CMED Technologies Ltd vs Wu Xiaodong & Bi Xiaoqiong. In this case, a husband/wife team who founded the firm allegedly stole about $600 million from the initial public offering and credit lines — “pushing the corporation into insolvency and leaving many USA investors and vendors out-of-pocket all that money,” Byrnes said.
“Hard to imagine but the wife, Bi Xiaoqiong, fast fed $60 million over four years, about $15 million a year, just through Bellagio [Las Vegas] … slots,” Byrnes added. “That’s a lot of hundred dollars bills.… To pull the money out requires a claim ticket and a claim ticket for a significant amount, certainly $25,000 or more, is going to lead to a casino check, which is exactly what the money launderer wants.”
Also, Zhenli Ye Gon, an alleged drug trafficker who was extradited to Mexico following US incarceration for a 2007 indictment, “famously [allegedly] spent $175 million in Vegas casinos, about $75 million in less than two years of that at the Venetian [Las Vegas]. Venetian did not file a SAR. Venetian was fined $47 million,” Byrnes said.
“The Bi Xiaoqiong and the Zhenli Ye Gon cases woke [up] Vegas,” Byrnes concluded.
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