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Ex-Mirage Employee 'Snapped' Under Pressure

by Liz Benston

LAS VEGAS -- A former Mirage casino employee who failed to file thousands of money-tracking reports with the federal government claimed he "snapped" under pressure and got so far behind that he was "scared" to tell other employees the truth, according to a state investigation made public this month.

The investigation offers the first explanation for why Christopher Morishita -- sentenced this month in Clark County District Court to three years of probation for failing to mail to the U.S. Treasury about 14,900 so-called Cash Transaction Reports over an 18-month period -- committed an obvious crime that ended up costing the Mirage $5 million in fines and threatened to send him to prison for several years.

In the report, Morishita told investigators that he takes "full responsibility" for the problem and that other employees were not aware of it. He also maintains he "was not trying to cover for anyone." But Morishita also blamed part of his job stress on staff turnover as well as cutbacks in after the Sept. 11 attacks, which left him "angry" at the company's "lack of communication" with employees. He also claims he had very little interaction with his superiors, which helped him fall deeper into the hole.

However, other employees who worked with Morishita characterized him as simply "lazy," the investigation said.

Morishita has declined to discuss his case, though an affidavit by a state investigator revealed early on that Morishita admitted lying to Mirage officials about having mailed the reports to hide the fact that he was months behind.

After completing its own investigation, the state Gaming Control Board slapped the Mirage with the largest casino fine in state history -- faulting Mirage officials, internal auditors and external auditors for failing to independently confirm whether Morishita had mailed the documents.

While some Mirage employees close to Morishita eventually became aware that his department was backlogged, company officials didn't know the full extent of the problem until after Morishita resigned in January, the investigation said. The following month, the employee who was promoted into his position discovered boxes upon boxes of unmailed Cash Transaction Reports. The following day, executives were notified of the reporting problem. A day later, on Feb. 5, the Mirage notified gaming regulators, who in turn notified federal officials. The Mirage and state regulators conducted separate audits.

Reports had not been mailed from April 2001 through January 2003, with some filed intermittently during that period.

After the Sept. 11 terrorist attacks, Morishita said the Mirage cut employee hours in his department, the investigation said. Morishita said he terminated a Cash Transaction Report specialist -- his primary "work horse" -- in 2001, which started his "downward spiral." The replacement and training process took more than a month. Shortly after hiring the replacement, another specialist in his department transferred to another position within the company, leaving him short one employee and another who was newly trained.

"By losing two well-trained employees and starting with new employees, Morishita said he fell further behind," the investigation said. "He stated he was not managing his time effectively and things just got worse."

Though displeased with company management, Morishita said his failure to mail the forms wasn't done maliciously to hurt his employer. He said he was going through a stressful period as management shifted under the Mirage Resorts Inc. merger with MGM Grand Inc. in 2000. He also cited "personal problems" that affected his judgment on the job, including a relationship and the near-death of his father.

Though Morishita said he ultimately blames himself, investigators said he believes "if the Mirage management would have supervised him a little better he may not have gotten in so deep."

During his tenure, Morishita said he worked under financial controllers who were successively less involved in his department. He said he also was never evaluated by the controllers. Morishita also claimed the Mirage's internal auditors were "inexperienced" and suffered from high turnover.

"Morishita did not feel it was hard to conceal the noncompliance ... from the internal auditors," the investigation said.

Internal auditors typically asked for recent cash reports that still could have been mailed to the federal government within a 15-day window, Morishita said in the investigation. By asking for documentation on older reports, auditors could have caught the fact that the reports had not been filed, he said.

The Mirage's external auditor, Deloitte and Touche, claimed internal auditors should have caught the error. Deloitte said it wouldn't have discovered the problem on its own because it didn't retest the internal auditors' work. The company's previous auditor, Arthur Andersen, retested internal auditors' work in January 2001, prior to the period in which the forms weren't mailed. Deloitte, which didn't do any retesting, replaced Arthur Andersen as Mirage's external auditor in 2002.

Morishita said he failed to notify "anyone in his chain of command" because he got "scared."

"He was not up to the task and 'basically broke down' ... he knew it was serious but he did not know what the penalties were for not filing," the investigation said.

The employee who eventually replaced Morishita thought her former boss was "lazy" and didn't carry his weight.

"She alleged he spent time on the Internet and was out of his immediate work area a lot ... she did not know where he would go."

Morishita's immediate supervisor also said he was "lazy" rather than simply overworked. When asked by the Mirage's former chief financial officer whether Morishita was able to keep up his workload after staff cuts, Morishita said he was up to the task because fewer reports were being generated.

Changes in the federal law that requires casinos to complete reports on large financial transactions have led to discussions between the Gaming Control Board and the U.S. Treasury's financial crimes unit about who will ultimately have control over the regulatory process, Gaming Control Board Chairman Dennis Neilander said. The Morishita case did not prompt those discussions but has become part of a broader dialogue about how to best oversee the casino industry, he said.

Morishita's cover-up will not change the framework of the cash reporting regulation, which is specific in its purpose and penalties, he said.

"(Morishita's) didn't follow the regulation. It was his responsibility" to mail the forms, not that of other employees, he said.

The Attorney General's office, which prosecuted Morishita, did not find any others criminally liable.

While some employees learned that Morishita was behind, they did not intentionally fail to mail the cash reports, Chief Deputy Attorney General Elizabeth Quillin said.

"To be criminally prosecuted, you have to prove that they intended not to file the forms," Quillin said. "Morishita intended not to file them. It was a willfull cover-up on his part."

The Mirage ultimately failed on an administrative level, resulting in the $5 million fine by regulators, she said.

Morishita was hired as a pit clerk in 1996 and was promoted to Regulation 6A specialist in 1998. He was promoted to Senior Regulation Specialist in 1999 and again to Regulation 6A manager in 2000. Documents show he received high marks in training sessions during his career at The Mirage.

Copyright © Las Vegas Sun. Inc. Republished with permission.

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