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Gaming Guru

Howard Stutz

Caesars facing fine of up to $20 million to settle money laundering charges

12 May 2015

Caesars Entertainment Corp. said it was in discussions with federal authorities to settle money laundering allegations at Caesars Palace and the casino company could pay a fine of between $12 million and $20 million.

The company disclosed the talks with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury (FinCen) in its quarterly Securities and Exchange Commission filing Monday.

Caesars said it met with FinCen representatives and other government officials on April 29 to review “in general terms the results of their investigations and proposed a range of potential settlement outcomes.”

The company said Caesars Palace was “evaluating the government’s proposals,” and a meeting was scheduled for next month “to further discuss the resolution of these matters.”

A spokesman for Caesars declined comment beyond the SEC filing.

Caesars first revealed the money laundering allegations at Caesars Palace in October 2013. FinCen was investigating Caesars Palace for alleged violations of the Bank Secrecy Act, and the agency was attempting to determine if a civil penalty should be assessed or if additional enforcement was needed.

Caesars was also informed a grand jury was looking into the charges regarding anti-money laundering practices of the company and its subsidiaries. FinCen has never disclosed the basis for the money laundering allegations.

The Bank Secrecy Act requires financial institutions — as well as casinos — to assist federal agencies in preventing money laundering.

“The company and Caesars Palace have been fully cooperating with both the FinCen and grand jury investigations since October 2013,” Caesars said in the SEC filing.

The company said fines could range between $12 million to $20 million.

Gaming Control Board Chairman A.G. Burnett said the agency was “watching (the events) very carefully and may become part of it at some point.”

Caesars Palace is a subsidiary of Caesars Entertainment Operating Co., which filed a prepackaged Chapter 11 bankruptcy in January in Chicago. The company, which has a gaming industry-high $22.8 billion in long-term debt, has been attempting to restructure its obligations for several years.

The restructuring of CEOC will reduce the division’s $18.4 billion debt load by almost $10 billion. Caesars is seeking court approval to convert CEOC into a publicly traded real estate investment trust.

“We expect that any financial penalties imposed upon Caesars Palace would not impact Caesars Entertainment’s financial results,” the company said.

In the past few years, FinCen has focused on anti-money laundering policies and procedures, with a particular interest in the gaming industry. FinCen Director Jennifer Shasky Calvery — in public speeches — has criticized casino companies for not sharing information across their business units.

In August 2013, Las Vegas Sands Corp. struck a deal with federal prosecutors and paid a settlement of $47.4 million to avoid criminal charges in connection with allegation of money laundering activities at The Venetian in 2006 and 2007.

In March, FinCen imposed a $10 million civil penalty on Trump Taj Mahal in Atlantic City. Wynn Resorts Ltd. said last year that the Internal Revenue Service sent a letter requesting information about the company’s top customers.

Shares of Caesars closed Tuesday at $10.31 on the Nasdaq, up 10 cents or 0.98 percent.
Caesars facing fine of up to $20 million to settle money laundering charges is republished from