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Rod Smith

Gaming Commission Hearing: Station Fined $2.2 Million

27 September 2004

The Nevada Gaming Commission on Friday approved a $2.2 million settlement of the 18-month-old case against Station Casinos for failing to file required anti-money laundering reports with the federal government.

Gaming Commission Chairman Peter Bernhard said the state's investigation proved that serious violations had occurred and that the fine, the second largest in state history, was proportional to the violations.

"Clearly $2.2 million is a very severe sanction, but also clearly there was a severe violation (of state gaming regulations)," Bernhard said.

Station Casinos Chief Financial Officer Glenn Christenson, however, said the state sanction is less than half the cost the company has had to incur as a result of its failure to adequately police currency transaction reporting operations.

On top of the fine, the company has had to spend more than $3.9 million to comply with state regulations and to set up systems to ensure there is no repeat of the violations, he said.

The company spent $1.5 million in direct and indirect costs to identify and rectify the violations, Christenson said.

Altogether, Station admitted three of its properties failed to submit 1,725 Regulation 6(A) documents to the Treasury Department's Financial Crime Network.

Casinos are required to track cash transactions of $3,000 or more and to submit currency reports to the Treasury Department whenever transactions by an individual total more than $10,000 in a 24-hour period.

In the settlement, which the commission approved unanimously Friday, Station admitted it also acted negligently by not filing two anti-terrorist suspicious activity reports and 58 race and sports book wagering reports, failing to log 595 multiple transactions, and failing to retain necessary records.

Christenson said the company has identified and disciplined all the individuals responsible, although he declined to disclose how many workers had left the company.

He stressed, however, that it is important to realize that Station Casinos reported the violations and launched an internal investigation as soon as an employee discovered the violations reported the situation to management.

He said it has also spent $1.4 million to buy and install document record and retention systems and $1 million on staffing to stay on top of the currency reporting requirements.

In addition, Christenson said the company is spending more than $1 million a year in added costs to monitor and enforce anti-money laundering procedures to make sure it stays on track.

Christenson said he doubts that any other gaming company has a better system in place to monitor compliance with currency reporting regulations on a weekly basis, and to detect and correct any violations that may occur.

"This is something we've been working on for over a year and a half, and it's important to get it behind us," he said after handing over two checks to pay the fine and cover nearly $200,000 in expenses incurred by the Gaming Control Board to investigate the case.

Gaming Commissioner John Moran, the commission's newest member, said the fine and the systems Station Casinos has established set a standard for the gaming industry in Nevada.

Deputy Attorney General Jennifer Carvalho, who has handled the case, said while it was reviewed for possible criminal violations, the criminal division of her office found no evidence of attempted money laundering in the violations.

Station Casinos' problems arose in April 2003 in the midst of an investigation that found MGM Mirage officials failed to file 15,000 of the required reports over a nearly 18-month period. That case resulted in a $5 million fine and a single criminal conviction.

Initially, the Control Board had kicked off a regular audit at just one Station property, Sunset Station, when the company self-reported a failure-to-file problem at Santa Fe Station.

Carvalho said the investigation went from one property to another, and ultimately the Gaming Control Board conducted a companywide investigation that settled on Santa Fe Station, Sunset Station and Fiesta Station, each of which was cited in the initial complaint and the final settlement.

Gaming Commission Hearing: Station Fined $2.2 Million is republished from