Earlier this week, American Gaming Association President Geoff Freeman unveiled a stern new set of anti-money laundering guidelines, lest any casinos out there hadn’t gotten the memo that Uncle Sam means business when it comes to enforcing AML rules. As though to reinforce Freeman’s point, California and federal authorities raided two card rooms, Seven Mile Casino in Chula Vista and Palomar Card Club in San Diego. The raids and the unveiling of a multi-count indictment against 25 individuals were the consummation of what was described as a year-long probe. The charges raided from the mundane (illegal blackjack) to the exotic (transportation for prostitution), in addition to money laundering.
Agents carted off $600,000 — a down payment on the $10 million the card rooms are accused of laundering. It gets better. Sports betting is one of the crimes alleged and a warrant was served upon bookie David “Fat Dave” Stroj, a Philadelphia mob associate. Fat Dave is accused of having a network of 360 bookmaking operations, from Canada to Mexico. There’s also a Las Vegas angle, as some of the illicit cash was allegedly washed through a Sin City bail bondsman (a big industry in this town). Wynn Las Vegas and Bellagio were also unindicted laundromats for Stroj’s money.
Fat Dave was caught on tape saying, “Palomar is the best way I can wash the money. I don’t have to report it. I just deposit it at the Palomar, and there’s no problem for me.” Three offshore Internet casinos — another subject of Freeman’s recent warnings — were accused of helping Stroj run his bookie operation. Other defendants were charged with holding off-site poker and blackjack games in area mansions. The illicit gambling was described as being conducted “in extravagant settings that featured professional card players, prostitutes, chefs and waitresses.” That’s living large.
In a tasteless play on the recent Muslim extremist shootings in California, one defense attorney wisecracked, “The FBI should be protecting us from terrorists, not from someone hoping to make an inside straight.” Arrests took place not only in the dawn California raid but in Iowa, Pennsylvania, New Jersey, Arizona and New Mexico. Seven Mile owner Harvey Souza got off easy, being charged only with not having a money-laundering program in place. It wouldn’t surprise me if he turned up as the prosecution’s star witness. He has already issued a statement that he’s willing to cooperate with the authorities. He could, however, lose his gaming license for concealing a $3 million loan, among other alleged malfeasances.
Ironically, Seven Mile’s license extension came through right after the raids. It was a bittersweet victory, as both Palomar and Seven Mile were immediately shut down. Complications could arise for Barona Casino, too, as one of those indicted in the sweep is a Barona employee. If anybody in the casino industry is snoozing on the money-laundering issue, they just got an extra-loud wakeup call.
