SACRAMENTO – California Attorney General Xavier Becerra today announced a settlement of $3.1 million against Hawaiian Gardens Casino for misleading gambling regulators and violating the Bank Secrecy Act, a federal law intended to combat money laundering. The casino failed to disclose a Financial Crimes Enforcement Network (FinCEN) investigation into its practices and attempted to deceive the California Department of Justice for years. At 225 tables, the casino is the second-largest card room in the state.
“There’s no excuse for failing to comply with the law and deliberately attempting to mislead regulators,” said Attorney General Becerra. “In the gaming world, if you fail to play by the rules, expect to pay the price. Hawaiian Gardens Casino is paying the price. At the California Department of Justice, we will do all we can to prevent the marriage of money laundering and casinos.”
Under the Gambling Control Act of 1998, casinos are required to make full and true disclosure to gambling regulators. However, the Hawaiian Gardens Casino failed for years to report, reveal, or disclose to the Bureau of Gambling Control (BGC) that: FinCEN or any other federal agency was examining the casino with respect to the Bank Secrecy Act; that the casino and FinCEN were involved in negotiations that could result in the casino’s admission of Bank Secrecy Act violations; and that, as part of the settlement they reached, the casino admitted to violations of the Bank Secrecy Act. During the time of this investigation, Hawaiian Gardens submitted, under penalty of perjury, multiple applications for license renewals to BGC, all of which failed to disclose any of this information. Yet, when BGC requested information from Hawaiian Gardens in August of 2016, the casino claimed that it had “always engaged in frank and honest dialogue with the regulators.”
Both the failures to disclose and the admitted violations of the Bank Secrecy Act violated the casino’s duties and responsibilities under the Gambling Control Act. As a result of the settlement secured by the Department of Justice related to these actions, the casino will pay a penalty of $3.15 million, reimburse BGC for costs associated with the case, and complete a required 24-month compliance period. The casino’s ability to continue to hold its state gambling license will be contingent upon its ability to meet the terms of the settlement during the compliance period.
The penalties assessed in this settlement are in addition to the $2.8 million penalty imposed by FinCEN as part of its settlement. In that settlement, the casino’s admitted willful violations of the Bank Secrecy Act's program and reporting requirements included: failing to implement and maintain an effective anti-money laundering program; failing to report certain transactions involving currency in amounts greater than $10,000; failing to report certain suspicious activity; and failing to keep appropriate records. Hawaiian Gardens Casino also admitted that its violations covered a period from September 1, 2009, through the July 15, 2016 assessment – a period of nearly seven years.
Attorney General Becerra is committed to protecting the interests of the people of California and upholding the state’s laws and regulations. Just last month, BGC special agents arrested two individuals for their alleged involvement in an embezzlement scheme that resulted in the theft of more than $200,000 from the Red Hawk Tribal Casino. In October, Attorney General Becerra brought charges against three individuals for an alleged mortgage fraud scheme that disproportionately targeted elderly Californians across the state and resulted in the loss of more than $7 million. In July, the California Department of Justice announced the arrest of several individuals for allegedly operating a tax fraud and identity theft scheme targeting military service members in San Diego County.