In a case that could have serious implications for Las Vegas Sands under U.S. anti-money laundering laws, attorneys for two women facing charges in Las Vegas over millions in gambling debts allegedly owed to the casino giant say their clients were merely fronts recruited by the casino giant to enable high rollers to conceal their play.
Sands says Xiufei Yang, 59, and Meie Sun, 52, owe the company $6.4 million in markers. Their attorneys say the debts are fake and that the two were recruited with the cooperation of Sands employees to take out credit in their names on behalf of high rollers who gambled at baccarat with the borrowed chips at the company’s Venetian and Palazzo casinos on the Las Vegas Strip.
The scheme, which insiders say is common practice in the VIP gambling world, was designed so the real gamblers could play without a paper trail.
The lawyers, both former federal prosecutors, further contend the Sands may have violated federal anti-money laundering rules prohibiting casinos from helping players keep their names off the books.
The case, which was under wraps for months, came to light last week in a lengthy report by Reutersthat questions how the two women, whom their attorneys describe as housekeepers, ended up owing the casino giant millions and were hit with criminal charges in separate cases last year.
In Nevada, failing to pay a gambling debt is a felony comparable to passing a bad check, and Clark County prosecutors are reported to be preparing a case against the women to bring to a grand jury.
“The episode also shows how crucial Chinese money has become to the American gambling capital at a time when Macau has eclipsed Las Vegas as the world’s biggest betting hub,” Reuters said.
The ability of high rollers to move large sums of money in and out of casinos got a lot more complicated in the aftermath of 9/11, when U.S. anti-money laundering laws were expanded and strengthened to combat terrorist financing. Then when the recession hit in 2008 and Las Vegas visitation and gambling revenue collapsed, Asian high-end play became critical to keeping casino revenues afloat. Since 2008, baccarat revenue on the Strip has doubled and now accounts for around 40 percent of the market’s entire table take, state records show. Asians account for as much as 90 percent of this volume, with the majority being Chinese play, experts say. Asian players now represent around 75 percent of the high-rollers in the market, they say.
And most of it is credit play, because the players are coming from overseas and because the sums they wager tend to be enormous.
Gamblers may have any number of professional and personal incentives for wanting to hide large wins and losses. Those from mainland China may also want to avoid scrutiny from the Chinese government, which is cracking down on corruption and lavish spending by business and political elites and is particularly anxious to stem capital flight, a major problem for the country.
In Macau, these factors have combined to devastate the VIP market over the last two years, while in the United States, law enforcement has become increasingly concerned that casinos are more interested in capturing business from wealthy foreign gamblers than in vetting them and the sources of their wealth.
It’s a violation of federal anti-money laundering laws to help gamblers evade financial reporting requirements and stay anonymous, a state of affairs with which Las Vegas Sands is all too familiar. The company generates two-thirds of its table volume from credit play, according to company financial filings researched by Reuters. In 2013, the company paid $47 million to resolve a Justice Department investigation into its relationship with an alleged Chinese–Mexican drug trafficker named Zhenli Ye Gon, who lost more than $84 million at The Venetian.
The attorneys for Yang and Sun are Jeffrey Setness of the law firm of Fabian VanCott and Kevin Rosenberg of Lowenstein & Weatherwax. Both are former federal prosecutors, and Rosenberg is a former assistant U.S. attorney who helped lead the Ye Gon money laundering case against LVS. They describe their clients as merely the bottom rung of an elaborate network of hosts and handlers who court wealthy gamblers from China and help them play anonymously. Industry executives, casino floor employees and independent agents told Reuters that the use of such shills is a frequent practice at some casinos catering to these players.
Setness and Rosenberg allege that all the parties involved knew their clients’ debts were a sham and so their markers are a sham as well. The women, Chinese citizens living in the United States, were “the real victim(s) here,” they said, and they want the charges dropped.
Sands spokesman Ron Reese called their allegations a “smokescreen” intended to distract from the debts the women owe. The company has no “clear evidence” the women were recruited by Sands employees, he said, and even if it did, “Ultimately those people signed credit on behalf of their name and that debt should be collected.
“If credible proof is presented that an employee or employees were complicit, we will promptly take appropriate action as required by our policies,” Reese said. “However, even a scenario in which a company employee was involved still does not void the debt.”
County prosecutors dropped the charges against Sun and Yang earlier this year in a preliminary hearings before a Las Vegas judge. But legal filings indicate they now intend to pursue the charges through a grand jury, which Reuters said could make it easier to secure indictments than proving a case before a judge.
