Park Place to pay fine for currency violations

By Liz Benston

Wednesday, April 30, 2003 | 10:42 a.m.

Park Place Entertainment Corp. has agreed to pay a fine of $75,000 to settle a complaint by the state Gaming Control Board that employees deliberately avoided filing required financial information with the federal government to appease "good customers."

The complaint, filed Monday by the Control Board, must receive final approval from the Nevada Gaming Commission. The commission can either sign off on the agreement or reject it by sending it back to the board for a new settlement.

At issue are two separate incidents involving employees at a Caesars World marketing office in Dallas. In both cases, employees failed to file the currency transaction reports required of Nevada casinos. Two employees were fired and two others were issued written warnings because of their actions, which Park Place discovered after an investigation and reported to Nevada regulators.

"I think we did everything we possibly could to rectify the situation," Park Place spokesman Robert Stewart said Tuesday. "These rogue employees clearly violated their policy (though) they were trained on this issue. As soon as we discovered this, we acted and we acted with speed, deliberateness and severity. It was our own internal reporting system that uncovered this problem."

Control Board Chairman Dennis Neilander said he would reserve comment on the complaint until the Nevada Gaming Commission has reviewed the matter.

Under a state law known as Regulation 6A, casino employees must note cash transactions of more than $10,000 and file forms with the Financial Crimes Enforcement Network division of the U.S. Department of the Treasury. Employees must also file "Multiple Transaction Logs" for customer transactions that could add up to $10,000 during a 24-hour period. Companies can be fined from $25,000 up to $250,000 per violation.

Casinos outside of Nevada must also comply with similar federal reporting rules aimed at combating money-laundering.

Regulators offered this account of what happened:

On Dec. 18, 2000, the marketing director of the Caesars World branch, Mark Massad, obtained $30,000 in cash from a customer in Texas to clear outstanding markers the customer had obtained by gambling at Caesars Palace. Massad then delivered the cash to his supervisor, Assistant Vice President Brenda Phelps.

Phelps advised Massad that he should show on his expense report that he visited the customer on three separate days to pick up money from the customer. Massad refused to comply with the instruction.

An administrative assistant instructed Massad to sign a Multiple Transaction Log of the money collected from the gambler. Massad signed a log on Dec. 21, 2000, showing that he had received $6,300 from the gambler. Other entries stipulated that he had received $9,500 on Dec. 18, $8,000 on Dec. 20 and $6,200 on Dec. 29.

Caesars World discovered the incident and conducted an internal investigation of Phelps and the Dallas branch. Phelps later admitted she divided up the $30,000 cash payment to avoid triggering a cash transaction report because the gambler was a "good customer."

Based on its investigation, Caesars World on Jan. 24, 2001, filed a transaction report on the total amount.

The second incident similarly implicates Phelps, who admitted to dividing up a marker payment from another gambler who was also a "good customer."

On Jan. 8, 2001, Phelps sent manager Kevin Whipple to meet with the second Texas gambler to pick up a check for $25,000 as well as $60,000 in cash.

Phelps gave an administrative assistant the $25,000 check and $9,500 in cash to be deposited in the company's account.

Phelps entered Whipple's office Jan. 9 and emerged with another $9,500 in cash to deposit into the company account. The following day, Phelps again left Whipple's office with another $9,000 for deposit. On Jan. 12, Whipple offered an additional $9,000 in cash for deposit. The company's Multiple Transaction Log showed that money was collected from the gambler on these different days as well as $23,000 received on Jan. 15, 2001.

Caesars World again discovered the incident and launched an investigation of the branch. When questioned, Phelps acknowledged dividing up the $60,000 payment and Whipple admitted to hiding the rest of the money in his office until it could be deposited in the company's account over the course of several days. The company filed a corrected report on Jan. 24, 2001.

The settlement agreement takes into account Caesars World's immediate filing of the appropriate forms and the company's prompt reporting of the violations to the Control Board, regulators said.

On Jan. 23, 2001, Park Place terminated Phelps and Whipple and issued written warnings to Massad and the administrative assistant.

"The candor and thoroughness of (the company's) investigation is a factor to be considered," according to the agreement. "(Park Place's) compliance department is staffed with experienced internal investigators, many with extensive law enforcement or regulatory experience. The capability allows (Park Place) and its gaming subsidiaries to respond effectively to reports of violations."

Both employees had received training when they were hired by Caesars World and throughout their tenure, the settlement read. About one month before the first violation, Phelps demonstrated to Park Place's internal audit department her knowledge of 6A rules, for example. The company trains employees on a yearly basis.

"(Park Place) made, and continues to make, diligent efforts to train its employees on their duties and responsibilities under (Regulation 6A)," the document reads. "Caesars Palace employees reported Phelps and Whipple to their supervisors, which speaks well of (Park Place) and the proactive sense of self-regulation it cultivates among its employees."

The complaint comes just a few months after news that an employee at The Mirage resort failed to file federal documents for about 15,000 cash transactions over the course of a year. The Mirage could potentially be fined millions of dollars for the oversight, though a settlement with the company is still under consideration. That agreement awaits approvals from both the Control Board and the Gaming Commission.

Nevada regulators have fined several casinos over the years for failing to file cash transaction reports. Unlike the Mirage and Caesars World cases, incidents typically involve mistakes made by rank and file employees who fail to correctly account for large financial transactions. Such mistakes are often discovered during undercover sting operations in which board agents pose as customers and try to exchange money at the casino cage.

Some casinos have failed to file such reports to try and protect their customers from the hassle of having financial information forwarded to the Treasury, which makes the information available to law enforcement officials and other federal agencies such as the Internal Revenue Service.