CasinoCityTimes.com

Gurus
News
Newsletter
Author Home Author Archives Author Books Search Articles Subscribe
Stay informed with the
NEW Casino City Times newsletter!
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Related News
Recent Articles

Gaming Guru

Brian Eckhouse
 

Fry's exec accused of $65 million fraud to pay off gambling debts

24 December 2008

LAS VEGAS, Nevada -- A vice president of Fry's Electronics who is accused of swindling the company out of more than $65 million has long been on the radar of Clark County prosecutors.

The Internal Revenue Service accuses Ausaf Umar Siddiqui, who has since been fired as Fry's vice president of merchandising and operations, of helming a kickback scheme to help pay off his enormous debts amassed at Las Vegas casinos.

Siddiqui required Fry's vendors he dealt with to pay a side company a kickback of up to 31 percent per transaction, the IRS alleges in a complaint filed Dec. 18 in U.S. District Court in San Jose, Calif., where the company is based.

Siddiqui has owed millions of dollars to The Venetian, Caesars Palace and Binion's, according to the complaint and the Clark County district attorney's office. Some of the debt was racked up through markers — notes that resemble small checks and represent casino loans to gamblers. In Nevada, failure to repay that debt constitutes a criminal penalty, under a 1983 state statute that equates a marker to a check.

Since 2001, the bad check unit of the Clark County district attorney's office has filed criminal complaints against Siddiqui in connection with at least $12.2 million in unpaid markers, according to the head of that unit, Bernard Zadrowski.

Siddiqui, Zadrowski said, is a whale — someone who bets in excess of $100,000 — and is among the top five debtors ever to pass through the bad check unit.

The Palo Alto, Calif., resident has repaid his $1.71 million debt to Binion's and paid another $4.8 million to Caesars, but still owes Caesars Palace about $5.7 million, Zadrowski said. "Mr. Siddiqui has been paying back his restitution according to negotiations," Zadrowski said.

It's unclear whether these debts are related to Siddiqui's alleged kickback scheme. Siddiqui repaid the Binion's and Caesars markers documented by the bad check unit through cashier's checks, said Zadrowski, who added he does not know the origin of those funds.

The federal complaint alleges that a company set up by Siddiqui to reap the kickbacks from Fry's vendors — PC International LLC — repaid his debt to Las Vegas casinos. On July 13, 2005, for instance, PC International's checking account contained about $354,500. The next day, $3 million was deposited into it. The following day, a wire transfer of $3 million was sent to Venetian Marketing Inc., a subsidiary of The Venetian, an IRS spokeswoman said.

The IRS identified six wire transfers from Siddiqui's PC International to subsidiaries of the Las Vegas Sands Corp., according to the federal complaint.

Zadrowski declined to say whether he had been approached by federal investigators about Siddiqui.

The San Jose Mercury News reported Wednesday that from January 2005 to November this year, Siddiqui spent $162 million from the PC International account, three quarters of which were payments to three Las Vegas casinos.

U.S. District Court Judge Richard Seeborg on Monday forbade Siddiqui from returning to Las Vegas, where the defendant traveled frequently, sometimes by Fry's corporate jet or casino-paid jets, the Mercury News reported.

Representatives of The Venetian declined to comment.