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Anti-Money Laundering Rules: Criminal Case May Threaten Settlement

2 June 2003

by Rod Smith

The criminal case against a former Mirage employee could threaten a proposed settlement of MGM Mirage's civil charges for not filing thousands of anti-money laundering reports, state and industry officials are suggesting.

MGM Mirage agreed May 23 to pay a $5 million fine, the largest in state gaming history, to settle a civil case involving its failure to file 14,903 anti-money laundering reports with the federal government over 18 months in 2001, 2002 and 2003.

Former Mirage currency transactions compliance officer Christopher Morishita also has been charged with four criminal counts of failing to maintain required currency transaction records. He was released May 23 from the County Detention Center on his own recognizance.

MGM Mirage's settlement with the Nevada Gaming Control Board still requires Nevada Gaming Commission approval. State and industry officials this week said approval should not be considered a foregone conclusion, in part, because of the unique criminal element of the case.

Las Vegas professor and casino gambling expert Bill Thompson, said simply accepting the proposed agreement could be taken as absolving the company and other employees of culpability, especially in the criminal matter.

"It would probably be best to keep the door open in the event other facts or criminal conduct comes to light. Negotiated justice is best after we know all the facts," he said.

The chief deputy attorney general who will prosecute Morishita this week said intentional criminal conduct -- not a clerical error -- was at the heart of the MGM Mirage's failure to file the reports.

"It was not a clerical error and it was not an administrative error," said Chief Deputy Attorney General Elizabeth Quillin, referring to MGM Mirage officials' statements that blamed an "administrative" foul up for the company's failure to spot the problem.

"He did this intentionally and covered it up," Quillin said of Morishita.

While it appears there was "no criminal intent on the part of MGM officials or supervisors ... (Morishita) willfully did not comply (with state Regulation 6A, the state law requiring casinos to file currency transaction reports on cash exchanges of $10,000 or more with the federal Financial Crimes Enforcement Network)," Quillin said.

However, the attorney general's office, at this point, does not believe money laundering occurred and doesn't think anyone else was involved, although the investigation into both issues is continuing, she said.

The former Mirage official could face up to five years in prison and $50,000 in fines if convicted on the charges, said Keith Copher, chief of enforcement for the control board.

Reached at his home in Peccole Ranch, Morishita on Friday said he was "not interested" in talking with the media or telling his side of the story.

The original investigation into the MGM Mirage allegations was conducted by senior Gaming Control Board enforcement officer Theresa Fullerton, whose supervisor said she cannot discuss the case while the criminal prosecution is ongoing.

Gaming Control Board Chairman Dennis Neilander also declined to discuss the criminal case this week and said he would not discuss the civil case until the state Gaming Commission rules on it June 19.

The commission can approve the settlement agreed to by MGM Mirage, increase the proposed penalties or refer the case to the attorney general for prosecution before the commission and impose its own penalties.

The original Gaming Control Board investigation was launched Feb. 10, and uncovered evidence that from April 20, 2001, through last Oct. 6, and from last Nov. 23 through Jan. 6, Morishita deliberately didn't file the required currency transaction reports with the U.S. Department of the Treasury.

From Oct. 7 through Nov. 23, Morishita filed the required reports with the federal government.

Fullerton also determined in her investigation that Morishita's actions were deliberate and that he "was extremely knowledgeable regarding 6A reporting requirements and had trained other Regulation 6A employees concerning the requirements."

Morishita admitted he was solely responsible for the filings during interviews conducted in February, March and April of this year, according to the affidavit filed in support of the criminal charges.

Moreover, "Morishita took deliberate steps designed to deceive his supervisors and hide the fact he was failing to file (the reports)," the affidavit said.

The affidavit also says he admitted several times during interviews that he lied to his supervisors about not filing the forms.

Specifically, he said he told former Mirage Controller Brian Burtenshaw at one point he "was a few weeks behind," and later said he was caught up.

Burtenshaw, reached by telephone this week, said he had nothing to say about the failure to file, the investigation or the criminal case.

Another former Mirage controller, Scott Torman, also told the attorney general's office that Morishita never advised him of the problems with the filings and claimed the forms were "always filed immediately," according to the affidavit.

Torman could not be reached for comment.

Morshita also admitted to deceiving internal auditors when they conducted quarterly audits and to lying about the whereabouts of postal return receipt cards which would have verified the forms had been mailed to and received by regulators, the affidavit said.

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