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WASHINGTON, DC – FinCEN today assessed a civil money penalty of $12 million against CG Technology, L.P., doing business as Cantor Gaming, for egregious and systemic violations of the anti-money laundering (AML) provisions of the Bank Secrecy Act (BSA). FinCEN’s analysis of reports filed under the BSA and information obtained from a 2010 examination by the Internal Revenue Service’s Small Business/Self-Employed Division (IRS SB/SE), as well as a 2014 follow up audit by FinCEN, support this action. Additional supporting information concerning illegal gambling and money laundering surfaced stemming from a criminal investigation and indictment of 25 individuals, known as the “Jersey Boys,” conducted by the U.S Attorney’s Office for the Eastern District of New York.
FinCEN’s assessment is concurrent with the U.S. Attorney’s Offices for the Eastern District of New York and District of Nevada’s announcement of a non-prosecution agreement with Cantor Gaming. In that settlement, Cantor Gaming resolved possible criminal charges, agreeing to a forfeiture of $6 million and a criminal fine of $10.5 million. Six million dollars of the criminal fine and forfeiture will be credited to partially satisfy FinCEN’s $12 million civil money penalty.
Pursuant to the settlement, Cantor Gaming admitted that it willfully violated the BSA and its implementing regulations. These violations are described in an accompanying Statement of Facts. Cantor Gaming facilitated high risk and high dollar wagering on sporting events representing over 30% of all sports wagers in Nevada. At the same time, it failed to have an appropriate AML program in place. Cantor Gaming failed to have sufficient internal controls and mandatory independent audits; it failed to have sufficient AML training for its officers and employees; and it failed to use all available information to detect and report suspicious transactions. In addition to these extensive, years-long program violations, Cantor Gaming failed to properly and timely report currency transactions. Cantor Gaming also failed to file required suspicious activity reports (SARs) on several transactions, including transactions by customers who were involved in blatantly suspicious activity, those who were involved in criminal activity, and those who had no legitimate source of funds. And finally, Cantor Gaming committed thousands of recordkeeping violations, including by failing to keep required records on its highest-volume patron who placed more than $300 million in wagers between 2010 and 2013.
Part of FinCEN’s action also stemmed from a criminal investigation relating to Cantor Gaming’s involvement with the “Jersey Boys,” an illegal gambling operation that employed “runners,” or individuals who opened wagering accounts and placed bets with Cantor Gaming’s sports books. These runners were paid for illegally placing bets on behalf of others, including out-of-state bettors. Cantor Gaming’s Vice President, Michael Colbert, facilitated this illegal activity, and was indicted for his involvement with the Jersey Boys operation. Colbert was aware of the arrangement with the Jersey Boys runners, and facilitated its operation. Colbert was charged in the Eastern District of New York with a felony count of participating in an illegal gambling conspiracy and pled guilty on August 21, 2013.
Both FinCEN’s Assessment and the Non-Prosecution Agreement filed by the U.S. Attorney’s Offices were accompanied by Cantor Gaming’s commitment to perform a series of required Remedial Measures to ensure forward-looking compliance. Cantor Gaming will also conduct a look-back review of transactions conducted between 2010 and 2013 to ensure that suspicious transactions and attempted transactions were properly reported.
“Compliance with AML laws has to be considered part of the deal when allowing the lucrative business of gaming in the United States,” said FinCEN Acting Director Jamal El-Hindi. “When greed clouds judgment within the leadership of an organization, and when even explicit warnings are ignored, it is a sign that the organization’s compliance culture is damaged or nonexistent. Failure to focus on developing a strong compliance culture is not only short-sighted for an institution in terms of potential penalties, it also undercuts its stature within the financial community where many others are committed to supporting AML measures—not just because of the requirements, but because it’s the right thing to do.”
FinCEN thanks the IRS SB/SE, which performed the examination of Cantor Gaming, for its extensive work in the investigation. FinCEN also recognizes and extends its thanks to the United States Postal Inspection Service and to the Criminal Investigations Division of the IRS for their contributions to the investigation, and to the U.S. Attorney’s Offices for the Eastern District of New York and District of Nevada for their strong partnership with FinCEN.