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Gaming Guru

Rod Smith
 

Casinos Tied to Money Laundering

14 November 2003

LAS VEGAS -- Several Las Vegas casinos have been tied to money laundering activities involving a major Japanese loan shark who was arrested Thursday in Japan, according to Nevada gaming regulators.

The so-called "Emperor of Loan Sharks," Susumu Kajiyama, 54, was charged with organized crime activities involving leading Las Vegas casinos, Yomiuri Shimbun, Japan's largest newspaper, reported Thursday.

Nevada Gaming Control Board Chairman Dennis Neilander said more than one casino was involved, but sources close to the Tokyo Police Department identified one of the casinos as the MGM Grand.

"I won't name specific properties because we're (now) looking to see if the money was accounted for properly, but there was more than one," Neilander said.

Neilander said he does not yet know if any U.S. charges will be brought against Kajiyama or any Nevada gaming operators, although it does not appear any casinos did anything illegal.

Still, gaming regulators and federal officials are concerned that money may have been laundered through U.S. casinos despite heightened security and tighter currency transaction controls that followed the Sept. 11, 2001, terrorist attacks on the United States.

Neilander said the Gaming Control Board has been assisting the Tokyo Police Department in its investigation of Kajiyama's activities in Nevada. The control board chief said his agency is also investigating whether the casino companies linked to Kajiyama's activities followed all the necessary accounting regulations.

In essence, his agency has been assisting the Tokyo police trace assets Kajiyama deposited in "front money accounts" set up by Nevada casino companies' foreign agent offices in Japan.

Neilander said "front money accounts" are used by foreign nationals, who set up the accounts in their native country, deposit money in them overseas and draw against that money to gamble in Las Vegas.

While Neilander said the accounts are common and appear to be legal, "we're also looking at it to make sure it is a legitimate practice."

"I'm not in a position to say it is or it isn't because of the foreign laws (involved)," he said.

It is criminal, however, to use such accounts to launder illegally obtained funds or for the casinos to fail to account for the money properly.

Casinos, he said, are required to keep detailed information on the source of the funds in the accounts, the serial number of all deposited bills, and the uses of the funds.

The use of such accounts has come under increased scrutiny in Asian media as a way of evading currency control laws, which restrict how much cash Asian citizens are allowed to take overseas.

Sources in Japan say MGM Mirage's foreign agent accounts in Tokyo are administered by Destron Inc., which maintained a safety deposit box in the head office of a major Tokyo bank.

Yvette Monet, spokeswoman for MGM Mirage which owns the MGM Grand where Kajiyama is alleged to have gambled with illegally obtained funds, declined to comment on the activities of its guests, including Kajiyama.

However, she said MGM Mirage is "aware of and complies with all laws in Japan, the United States and the state of Nevada concerning gaming and money laundering."

Kajiyama was arrested Thursday as part of a continuing investigation of the loan shark operations run by Goryokokai, an affiliate of the Yamaguchi-gumi crime syndicate, and charged with violating Japan's Anti-Organized Crime Penal Law for hiding profits from illegal activities, the newspaper reported.

Tokyo police also seized $2 million in U.S. currency from a deposit box that belonged to Kajiyama, Yomiuri Shinbun reported.

The Tokyo police said Kajiyama had been ordering bosses for his various loan sharking shops to convert profits into U.S. dollars under false names and give them to his assistant in bundles of $10,000.

Tokyo police tracked the Las Vegas casino ties after a car belonging to a Las Vegas casino operator's foreign agent office visited Kajiyama's company in Tokyo, sources close to the police said.

U.S. authorities said that from as early as spring of 2002, Kajiyama used an account set up at a major Las Vegas hotel casino, thought to be the MGM Grand, and a secret account in a California bank to launder several million dollars in the United States, Yomiuri Shinbun reported.

Kajiyama has been visiting the MGM Grand for about 10 years, the newspaper quoted police sources as saying.

Kajiyama was regarded as a "whale" in Las Vegas and was treated as a VIP guest even though he apparently never placed big bets with the money he deposited in the account, the newspaper reported.

The FBI led Tokyo police detectives on an investigation of the MGM Mirage property, sources close to the Tokyo Police Department said.

The Nevada attorney general's office and the U.S. Customs Service also have been involved in the investigation, Yomiuri Shinbun reported.

Sources close to the investigation said MGM Mirage has been cooperating fully with investigators in both countries.

Spokesmen for the FBI and the attorney general's office said they could neither confirm nor deny their participation in the investigation, although attorney general sources indicated an awareness of the case.

Kajiyama already was on trial for several violations of Japan's investment deposit and interest rate law.

The Japanese case follows currency transaction irregularities at three Las Vegas operators earlier this year.

The Nevada Gaming Commission in June unanimously approved a $5 million fine against MGM Mirage to end a state's civil case alleging The Mirage failed to file almost 15,000 federal anti-money laundering reports in 2001 and 2002.

Such Regulation 6A reports are filed with the Treasury Department's Financial Crime Network and are used to track large cash transactions by individuals in casinos.

Christopher Morishita, the former anti-money laundering compliance officer for The Mirage, admitted he deliberately failed to file the required cash transaction reports over an 18-month period and lied to his supervisors to cover up his actions. He is scheduled to be sentenced Dec. 3.

Park Place Entertainment agreed to a $75,000 settlement on Feb. 28 after finding it failed to file two transaction reports in December 2000 and December 2001.

Station Casinos has been under investigation since April for its failure to file regulation 6A reports. That investigation is alleged to involve hundreds of reports.