Las Vegas Sands Corp

Las Vegas Sands pays US$47m in deal to end inquiry into money transfers

Las Vegas Sands strikes deal with prosecutors over multi-million dollar cash transfers made by Chinese-Mexican linked to drug trafficking

PUBLISHED : Wednesday, 28 August, 2013, 10:59am
UPDATED : Thursday, 29 August, 2013, 2:58am

Casino operator Las Vegas Sands has agreed to pay US$47.4 million after failing to flag millions of dollars in money transfers made by a Chinese-Mexican linked to drug trafficking who became one of the biggest gamblers the world has ever known.

The settlement agreement said Zhenli Ye Gon's losses were large enough to affect the bonuses of many Las Vegas Sands and Venetian executives.

His individual bets were monitored in real time and had an immediate effect on the company's earnings, it said.

Ye Gon achieved notoriety in 2007 when Mexican police raided his house and found more then 2 tonnes of cash in US$100 bills. It was described as the biggest seizure of drug money in history.

In return for the settlement, the US Attorney's Office in Los Angeles would not seek an indictment against the casino operator, prosecutors said on Tuesday.

The deal brings the government's criminal investigation to a close, but requires Las Vegas Sands to boost its efforts to monitor suspicious financial transactions for the next two years.

Ron Reese, spokesman for the Las Vegas Sands, said: "The company co-operated fully and that effort was clearly recognised by the government."

Las Vegas Sands owns the Venetian and Palazzo resorts in Las Vegas, as well as similar resorts in Macau and Singapore. The company is owned by Republican donor Sheldon Adelson.

The investigation centred on Shanghai-born businessman Ye Gon, who prosecutors describe as a high-stakes player who gambled at major casinos, including the Venetian, between 2004 and 2007. In that period, Ye Gon lost more than US$125 million at multiple casinos, according to the settlement agreement filed by prosecutors.

Ye Gon's Venetian losses also included US$36.5 million in credit that the casino advanced to him and that was later written off as bad debt.

Investigators concluded that Las Vegas Sands had failed to comply with a federal law requiring casinos to report suspicious financial transactions involving customers.

Prosecutors noted that Ye Gon transferred more than US$45 million to the Venetian casino between 2006 and 2007, when he was the largest all-cash up-front gambler the Venetian had had, prosecutors said. He wire-transferred money to the casino from banks and money exchange houses in Mexico.

The Venetian filed a so-called suspicious activity report on Ye Gon in April 2007, but prosecutors contend that the report left out key transactions.

The money Las Vegas Sands agreed to pay as part of the settlement represents the funds that were sent to the Venetian by or on behalf of Ye Gon, prosecutors noted.

In March 2007, Ye Gon's Mexico City home was raided by police and officers seized US$207 million. The spectacular mountain of cash made headlines around the world.

The US government indicted Ye Gon on drug charges, but the case was dismissed in 2009.

He is now awaiting extradition to Mexico, where he faces drug-trafficking charges for his alleged involvement in the methamphetamine trade.

Shares of Las Vegas Sands ended regular trading down US$1.79, or 3.2 per cent, at US$54.57 on Tuesday.