Hawaiian Gardens Casino must comply with regulations for two years if it wants to keep its license

California's 2nd-largest card room fined nearly $6M for misleading regulators

The card room has 225 tables, but none of the slot machines that are reserved for tribal casinos in California. It’s the major source of tax revenue for Hawaiian Gardens, the smallest city in Los Angeles County.
2019-12-09
Reading time 3:22 min
The Gardens Casino agreed to pay $3.15 million to settle allegations brought by the California attorney general’s office that the casino’s operators made no mention of a federal probe regarding money laundering controls, and resultant $2.8-million penalty when applying to renew its license. The California Gambling Control Commission approved Thursday the state settlement.

California’s second-largest card room is paying state and federal regulators nearly $6 million for misleading gambling regulators and failing to do enough to deter money laundering, the state’s attorney general said Thursday.

Hawaiian Gardens Casino, which recently completed a $90 million renovation, must comply with regulations for two years if it wants to keep its license under the terms of the state settlement approved Thursday by the California Gambling Control Commission.

“Gardens Casino has strong procedures in place and several years ago we put in place the necessary corrective measures to ensure these issues do not re-occur,” the company’s general counsel, Keith Sharp, said in a statement. He said the company, its 2,000 employees and the community are pleased to have the settlement finalized.

The card room has 225 tables, but none of the slot machines that are reserved for tribal casinos in California. It’s the major source of tax revenue for Hawaiian Gardens, the smallest city in Los Angeles County.

The Gardens Casino has agreed to pay $3.15 million to settle allegations brought by the California attorney general’s office that the casino’s operators made no mention of a federal probe, and resultant $2.8-million penalty when applying to renew its license, Los Angeles Times reports. 

California Atty. Gen. Xavier Becerra’s deputies had asked state regulators to revoke licenses for the casino and its owners, alleging that in September 2016 its operators falsely told state gambling authorities they have “always been engaged in honest and frank dialogue with regulators.”

Casino operators neglected to mention that two months earlier, the Financial Crimes Enforcement Network, or FinCEN, had handed the casino a $2.8-million penalty for violating the Bank Secrecy Act, a federal law meant to counteract money laundering, a deputy attorney general wrote. FinCEN is a federal agency within the Treasury Department that monitors for money laundering and other financial crimes.

In exchange for keeping their licenses, the casino’s owners — Cherna Moskowitz, wife of the card room’s late founder, Irving Moskowitz; and Irving’s son, David — agreed to pay a $3.15-million penalty and complete a two-year compliance period. The state gambling commission approved the settlement Thursday.

If the casino’s license had been revoked, Hawaiian Gardens would have lost a revenue source that supplies two of every three dollars that flow to the city’s General Fund, said Ernie Hernandez, Hawaiian Gardens’ city manager. In the 2019-20 fiscal year, Hawaiian Gardens, population 14,450, budgeted for casino revenues of $13.5 million. “For better or for worse, if this thing goes bad, we would cease to exist as a city,” Hernandez said.

The state attorney general’s case hinged on whether the casino was truthful when it applied to renew its state gambling licenses. Becerra’s deputies alleged — and in settling, the owners acknowledged — that the casino had made no mention of the FinCEN probe into long-standing improprieties concerning how cash was being handled and tracked in the card room.

The casino agreed to pay the $2.8-million federal penalty and admitted its operators hadn’t reported suspicious activity to authorities, kept shoddy records and didn’t declare many large cash transactions or identify who was making them. In a document laying out the penalty, FinCEN said the failures made the casino “susceptible to money laundering and terrorist financing activity.”

One patron, known to the casino only as “Michelle,” was the subject of 15 FinCEN reports indicating suspicious cash transactions. She refused to provide casino employees with identification; the staff nevertheless allowed her and her “agents” to continue gambling and making cash transactions at the card room, the FinCEN document said.

The casino also flouted the requirement that it generate a currency report whenever a patron cashes in or out a sum exceeding $10,000, FinCEN found. In one incident, captured on the casino’s surveillance cameras, a patron tried to cash out $14,833 and was handed an Internal Revenue Service identification form. He ripped up the form, went to the card room’s “Asian VIP Section,” and got another employee to cash him out without providing an ID, the FinCEN document said.

In applying to renew their licenses, the casino’s operators made no mention of the FinCEN investigation, the issues it exposed or the multimillion penalty that settled it, Becerra’s office said. “There’s no excuse for failing to comply with the law and deliberately attempting to mislead regulators,” Becerra said in a statement. “In the gaming world, if you fail to play by the rules, expect to pay the price.”

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