Where is the FBI? Where is the U.S. Attorney?

The Justice Department, thanks to investigations by an array of federal agents, has taken down a criminal conspiracy involving the Wynn Las Vegas (WLV) casino hotel and its facilitation of millions of dollars in illegal transactions. The case agents were from Homeland Security Investigations, the IRS, and the Drug Enforcement Agency, an indication that authorities suspect that at least a significant part of the proceeds laundered through the casino were derived from illegal drug sales.

The case is eerily reminiscent of the accusations the Justice Department and its FBI made against Saipan-based Imperial Pacific International CNMI LLC in November 2019, when federal agents raided the casino. But what makes the IPI case different and far more significant than the Wynn case is that the alleged criminal conspiracy in Saipan involved public corruption. And then there’s the matter of money. According to several international media reports and filings by IPI itself in the Hong Kong Stock Exchange, at one point, IPI was pulling in between $2 billion to $4 billion a month — when it was operating out of the Duty Free Shoppers Galleria in Garapan. By comparison, Wynn in June reported revenue for a year at $7.1 billion.

Nearly five years after those raids at IPI and the simultaneous raids of then-Governor Ralph Torres’s office and home and the office of his brothers, a question swirls for the few who have maintained hope in federal criminal justice: Where is the FBI? Where is the United States Attorney?

Why hasn’t anyone been indicted and arrested for the federal crimes committed in the CNMI?

 

The Wynn case

WLV last week agreed to forfeit $130,131,645 to settle criminal allegations “that it conspired with unlicensed money transmitting businesses worldwide to transfer funds for the financial benefit of the casino.”

“Casinos, like all businesses, will be held to account when they allow customers to evade U.S. laws for the sake of profit,” said U.S. Attorney Tara McGrath for the Southern District of California. “Federal oversight seeks to prevent illegal funds from tainting legitimate businesses, ensuring that casinos offer a clean, thriving, and safe entertainment option.”

The Non-Prosecution Agreement between the U.S. Attorney’s Office and WLV allows the company and people in it to avoid criminal prosecution, with WLV admitting that it illegally used unregistered money transmitting businesses to circumvent U.S. financial laws.

The American financial system is regulated for, among other reasons, an ability to cut off black markets like meth and opiate sales from presenting drug cash profits as legitimate revenue through the banking system. Casinos and other forms of gambling are hotspots of loopholes in the system that the unscrupulous use to launder illegally made money.

In the WLV case, WLV regularly contracted “with third-party independent agents acting as unlicensed money transmitting businesses to recruit foreign gamblers to WLV. For the gamblers to repay debts to WLV or have funds available to gamble at WLV, the independent agents transferred the gamblers’ funds through companies, bank accounts, and other third-party nominees in Latin America and elsewhere, and ultimately into a WLV-controlled bank account in the Southern District of California,” according to a Justice Department news release issued yesterday.

“Funds deposited into the WLV-controlled account were transferred into the WLV cage account. WLV employees, with the knowledge of their supervisors, and working with the independent agents, eventually credited the WLV account of each individual patron. The convoluted transactions enabled foreign gamblers at WLV to evade foreign and U.S. laws governing monetary transfer and reporting,” the news release went on to describe part of the scheme.

The case highlights the federal government’s growing detection of the illegal movement of cash through the underground Chinese banking system operating in the United States and throughout the world. Kandit previously shared an investigative video report by Financial Times that explains how the underground Chinese banking system’s partnership with Mexican drug cartels have facilitated the near-smooth operation of transnational crimes linked to drug trafficking.

Here is the Justice Department news release’s description of WLV’s facilitation of the illegal movement of Chinese money through the Las Vegas casino:

“WLV also facilitated the unlicensed transfer of money through ‘Human Head’ or ‘Human Hat’ gambling, known in Mandarin as ‘人头’ or ‘ren tou.’ In this scheme, a person known as a ‘Human Head’ purchased chips at WLV and gambled at WLV as a proxy for another nearby person who, in some instances, because of federal Bank Secrecy Act or Anti-Money Laundering (BSA/AML) laws, was unable or unwilling to conduct financial transactions or gamble under their own identity. The true patron, however, would direct the Human Head’s gaming. WLV knowingly allowed this form of gambling without scrutinizing the true patron’s funds and without reporting the suspicious activity.

“In another example, WLV facilitated the unlicensed transfer of money to and from China through a method known as ‘qian chen’ or ‘Flying Money.’ A money processor, acting as an unlicensed money transmitting business, collected U.S. dollars in cash from third parties in the United States and delivered that cash to a WLV patron who could not otherwise access cash in the U.S. The patron then electronically transferred the equivalent value of foreign currency from the patron’s foreign bank account to a foreign bank account designated by the money processor. The WLV patron paid the money processor a percentage of the value transferred.  Like Human Head gambling, WLV knowingly allowed this form of gambling without scrutinizing the source of funds and without reporting the suspicious activity.”

 

The Saipan casino

Bloomberg on March 14, 2018 reported that the FBI had raided an IPI Saipan office the week prior, but not many details emerged about that raid. The month before, Bloomberg’s Matthew Campbell dropped his bombshell investigative report about the IPI casino scandal following his visit to Saipan and his interviews with several people there.

Saipan, he wrote, “has seemed less and less like America since 2014, when a Chinese casino operator arrived and—with near-total impunity—turned Saipan into a back door to the U.S. financial system. At a temporary storefront, the company, Imperial Pacific International Holdings Ltd., was somehow handling more than $2 billion a month in VIP bets.”

That kind of revenue meant that – on paper – IPI’s Best Sunshine Casino had become “the most successful gambling operation in history. In the first half of 2017, table for table, Imperial Pacific turned over nearly six times more cash than the fanciest gaming facilities in Macau, which themselves dwarf the activity in Las Vegas.”

It is unclear how long the FBI had been investigating IPI or if Mr. Campbell’s investigation allowed the agency to circle the wagons, but on November the following year – nearly five years ago – they presented enough evidence to a federal judge to get her to sign off on warrants to raid IPI’s legal offices, the home and office of the CNMI governor at the time, and even a law firm connected to Mr. Torres’s family and the casino.

The documents unsealed shortly after that raid showed that the Feds were looking for precisely what Bloomberg’s February 2018 report by Campbell, and an earlier report from the Palm Beach Post regarding casino connections to the Chinese Communist Party had first revealed: An alleged vast conspiracy involving the casino, the CCP, and government officials to allow the laundering of billions of dollars through Saipan, and even the Chinese interference of an unnamed U.S. election.

“Per capita, there’s almost certainly more Chinese money moving through Saipan than anywhere else in the world,” the February 2018 Bloomberg report said. “The unprecedented flow of capital has allowed Imperial Pacific to operate in ways that would be unthinkable within the 50 states. When laws have become inconvenient to the company, they’ve been flouted; when the requirements of its contract with the government have become onerous, they’ve been removed; when legislators have tried to interfere, they’ve been ignored. Imperial Pacific has made millions of dollars in payments to family members of the territory’s governor, Ralph Deleon Guerrero Torres. Remarkably, the company has also enjoyed the support of a gold-plated roster of American politicos. Its advisers and board of directors have included former directors of the CIA and FBI and former governors of Mississippi, New York, and Pennsylvania.”

The report succinctly described what countless news and government reports to follow would explain:

“The strongest desire among China’s wealthy is to get their money—ill-gotten or otherwise—out of the country, safe from the threat of government seizure. One prevalent method for magicking money across the border, in defiance of strict capital controls, begins with companies called junkets. They bring wealthy clients from the mainland, where gambling is illegal, to the VIP rooms of casinos in Macau. There, the junkets extend the clients credit to play baccarat, a game of luck at which they’re likely to win or lose a negligible amount. At the end of play, clients cash out their balance in the currency of their choice. The debt is collected in yuan, in China. Everybody wins: The clients have converted yuan into dollars or euros or sterling, and the middlemen get a cut.”

 

And while the federal government is celebrating its – by comparison to the allegations made against IPI and company – much smaller win against a Las Vegas casino operation, that same government remains silent about its effort, if any, to prosecute the alleged crimes for which it invested significant resources in November 2019 to raid in a highly public spectacle.

Since those raids and without federal intervention, the federal government attempted to help the people of the CNMI through the pandemic by giving Mr. Torres more than half a billion dollars in money to use at his discretion to help his territory. Reviews of government ledgers show those monies were squandered on procurement-protocol-absent contracts to cronies and even relatives of the former governor. The people of the Commonwealth in November 2022 took matters into their own hands and kicked Mr. Torres out of office, replacing him with Arnold Palacios.

Upon assuming office in January 2023, Mr. Palacios found and reported that not only had Mr. Torres exhausted all the federal funds the U.S. government entrusted to him, he had over obligated the Commonwealth by $80 million in contracts and purchase orders above the level of existing federal cash.

Thousands of pages of evidence of the former governor’s corruption, including evidence that several others in his administration were involved, have led to little more than a local prosecution effort that has been hampered at every turn by a criminal justice system untethered from the glaring and obvious wrongdoing and criminal activity of their former governor.

And while a stockpile of aging evidence has found that the alleged conspiracy involving the former governor allowed the alleged movement of billions of dollars in illegal Chinese money – far more than the WLV conspiracy, and with notably a wider reach of a transnational criminal network – the Justice Department has had little to say about these threats to security in this region and what they are doing about it.

Where is the FBI? Where is the United States Attorney? In exactly two months, it will have been five years of asking these questions and getting no answers.