Columnist Jeff German: South Korean high-roller action mired in scandal

Thursday, Aug. 20, 1998 | 11:04 a.m.

THE LURE OF THE high-roller has become risky business for Nevada's booming megaresorts.

Within the last year, the biggest names on the Las Vegas Strip have been putting their reputations on the line in pursuit of gambling dollars halfway around the world.

Two flagship hotel-casinos, the Tropicana and Mirage, already have landed in hot water with the state Gaming Control Board after their marketing agents were arrested in South Korea for violating currency transaction laws while collecting millions in gambling debts.

Wealthy Korean businessmen have been among the most highly sought-after credit players on the Strip. They are reliable and don't seem to mind losing their money on games of chance.

But Las Vegas casinos have had to jump through international hoops to get that money out of South Korea, primarily because of archaic laws that restrict the flow of cash from the country.

South Korean law, for example, prohibits the transfer of more than $10,000 outside the country without special permission from the government. The marketing agents for the two Las Vegas megaresorts, Sammy Jung of the Tropicana, and Laura Choi of the Mirage, have been accused in Korea of circumventing that law when smuggling large sums of money into the United States.

Their actions have been disavowed by nervous casino bosses worried that such law enforcement attention has the potential to shine a big light on the carefully guarded relationship between a casino and its valued high-rollers.

To avoid lengthy and embarrassing disciplinary proceedings, the Tropicana and Mirage have agreed to pay six-figure fines to settle detailed Control Board complaints against them.

Mirage Resorts Inc., which owns the Mirage, has additional motivation to put the Korean scandal behind it. The company plans to open its newest Strip megaresort, Bellagio, with much fanfare in October. It doesn't need this kind distraction now.

The investigation has been particularly hard on Mirage General Counsel Bruce Aguilera, who has been accused of lying to the Control Board about a meeting he had with Choi after she returned to Las Vegas. Aguilera, a veteran of 20 years in the casino industry strongly denies misleading the board, but the board doesn't seem to believe him. Approval for Aguilera's license to serve as Bellagio's secretary-treasurer has been held up during the probe.

Inside the Control Board, meanwhile, there's word that gaming agents are so concerned about the unfolding events in South Korea, they plan to expand their probe to several other well-known casinos who cater to high-rolling Korean businessmen.

Worse, the arrests of the two marketing agents have attracted the attention of federal authorities. The FBI, U.S. Customs Service and the U.S. attorney's Organized Crime Strike Force all are said to be looking into possible criminal wrongdoing on the part of casino officials.

The federal probe still is in its early stages, and there's no telling what will come of it. But the Mirage is going all-out to persuade authorities that its top executives were kept in the dark about the collection activities in South Korea.

Six weeks ago, Mirage lawyer Stan Hunterton, an expert in criminal law and a former Strike Force prosecutor, quietly met with the U.S. attorney's office to offer the Mirage's full cooperation in the criminal probe.

Hunterton made it clear that Mirage executives did not know of Choi's indiscretions in South Korea and that she specifically was told to abide by that country's currency laws.

"If anyone had any idea that this was going on, it would have been shut down," Hunterton says.

Whether Choi will offer a different explanation remains to be seen. In the meantime, she has been suspended without pay from the Mirage. Jung also reportedly has been relieved of his duties at the Tropicana.

Officials at both resorts insist that steps have been taken to ensure this never happens again. And the Control Board is prepared to take them for their word.

According to the Tropicana's eight-page settlement with the board, the casino has suspended credit play with South Korean residents and is putting together a comprehensive policy that will make sure it complies with foreign and U.S. law when collecting overseas debts in the future.

The Tropicana, which like the Mirage insists its top managers were not aware of their marketing agent's activities in South Korea, also is tightening its own internal procedures to keep it in compliance with Nevada's cash-reporting regulations.

The Mirage, in its own settlement with the Control Board, is expected to indicate it is taking similar measures to satisfy the concerns of gaming regulators.

But for now, both megaresorts will have to take their hits on the Strip, as their competitors start sweating out their own vulnerability on the Korean market.