Money-laundering concerns raised as B.C. slot machine players win millions

A review of gamblers placing massive bets in B.C. Lottery Corp. casino slot machines has raised concerns about the “effectiveness and/or existence of controls to monitor slots for money laundering,” documents obtained by Postmedia News show.

Documents say a B.C. gaming policy and enforcement branch review of BCLC slot machine play was triggered by the 2016 B.C. Civil Forfeiture Office case against Michael Mancini, a Salmon Arm landscaper.

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The case alleged that Mancini — who claimed he legitimately won about $2.2 million in one year of playing B.C. casino slot machines — was frequenting BCLC casinos “for the sole purpose” of laundering money obtained through drug trafficking.

In response to Mancini’s case, B.C. gaming enforcement investigators conducted a review of the 10 top slot machine players in BCLC casinos, in terms of large cash transactions.

Investigators studied the period from April 2015 to April 2016. The review counted only the 50 most recent transactions exceeding $10,000, for each player.

These transactions alone accounted for $33 million in disbursements, most of which were slot jackpots paid out in cash.

The identities of the 10 big gamblers, and what each gambler bet, won, lost, and the average bets made, are redacted, to protect police investigations.

Of the $33 million, the review explains, “it is important to note that the disbursement number does not indicate the patron’s net win.”

The review’s scope included concerns about “anonymous” play with slot machines, and the use of casino ticket redemption machines.

The big gamblers studied were sometimes cashing out tickets redeemed for slot machine credits not played, review documents say.

Casino experts say that gamblers can submit slot machine vouchers into ticket redemption machines and receive cash back in exchange, and that in this way gamblers do not need to be identified at casino cashier windows.

The review also looked at whether slot players could exchange $20 bills for $100 bills.

“There is a risk that slot machines could be used for refining … i.e. converting $20 bills into $100 bills,” the review says. Inside casinos, $100 bill deposits are viewed as less suspicious for money-laundering concerns than $20 bill deposits.

However, the 10 big slot players studied apparently were mostly feeding $100 bills into machines, according to the review.

RCMP question winnings

A heavily redacted conclusion for the slot audit states: “[redacted] makes it virtually impossible to determine a true value of their spend … or to get a complete picture of their play. It appears that while controls are in place within BCLC systems to detect suspicious slot play, they may not be utilized to their full potential.”

In Mancini’s case, jackpot winnings and verified casino win cheques seem to have been an important factor.

In October 2015, Mancini was stopped by police in a 2014 Chevrolet Camaro, parked in a handicapped stall of the Chances Casino in Chilliwack, according to the allegations. He had been spotted driving erratically, and was arrested after failing a sobriety test.

Police collared Mancini while he was walking from the car toward the casino with $3,775 in cash in his hands, according to the allegations.

Mancini then retrieved a $13,250 casino cheque from the Camaro, and “reported to RCMP spontaneously that he had won $300,000 playing slot machines at various casinos throughout British Columbia since March 2015,” the claim alleges.

Police searched the Camaro and found $10,535 in cash in the centre console, and on the floor two crumpled casino cheques in the amounts of $9,005 and $6,830.

In the trunk, police found 100 $20 bills, bundled together with a rubber band. The three casino cheques were from Lake City Casino.

A second police search of the Camaro in December 2015 found $24,405 in cash under a stereo amplifier in the trunk, plus several large rocks of crack cocaine and a bottle of 40 to 50 pills hidden under the driver’s console, and 19 yellow pills under the driver’s carpet.

The seized money was found to be covered in drug residue, the claim alleges.

The RCMP contacted BCLC to “verify the legitimacy of the gaming facility cheques” and asked BCLC to provide full gaming records as part of an ongoing investigation, BCLC documents say.

A police investigation showed that between November 2014 and October 2015, Mancini had played in 10 Lower Mainland and Fraser Valley casinos, and was paid out $2,189,880 by the casinos.

BCLC documents say the payouts were all “verified slot jackpot wins.”

Mancini had 92 casino payouts of $10,000 or more, documents say, including casino cheques worth $374,614, and $1.8 million in cash.

The Civil Forfeiture Office attempted to seize from Mancini as the proceeds of crime: the Camaro, three “verified casino cheques” worth $29,000, just in excess of $41,000 in cash, plus drugs seized from the vehicle.

But in a statement of defence, Mancini denied “attending casinos to launder money.”

Mancini “frequently attends casinos throughout British Columbia and is a legitimate and bona fide gambler,” according to his statement.

BCLC documents say that in a negotiated settlement in June 2016, Mancini forfeited $41,715 in cash and drugs seized from the Camaro.

But he did not forfeit the Camaro or his three verified casino cheques worth $29,000.

Postmedia contacted Mancini’s lawyer for comment on the allegations and settlement, but the lawyer did not immediately respond.

In BCLC’s anti-money laundering system, “verified win” payout cheques are approved by casino staff, and therefore these financial instruments are viewed as credible proof that the casino payout did not involve a suspicious transaction. Verified wins are defined by BCLC as the cash paid out to a gambler, minus the amount bet by the gambler.

In response to Postmedia’s questions, BCLC explained how much cash gamblers can take out of slot-ticket redemption machines, and the odds of winning jackpots.

Maximum cash payment

“The maximum cash payout for a slot-machine voucher from a ticket redemption machine is $2,999.99 at any BCLC facility, including River Rock Casino Resort,” a spokeswoman said.

“Over the very long term, the theoretical total ‘Return to Player’ payout from slot machines across BCLC facilities will fluctuate between 92 and 93 per cent.”

Postmedia asked if BCLC chief executive officer Jim Lightbody would answer questions about whether BCLC believes that Mancini’s slot-machine wins are legitimate, and whether BCLC slot machines can be gamed for money laundering.

Lightbody was not provided for an interview.

In a statement, a BCLC spokeswoman said: “All disbursements from B.C. casinos of $10,000 or more to this individual were from verified slot-machine jackpot winnings. All slot-machine jackpot winnings are verified by gaming facility staff. This extensive process begins with the machine freezing, disallowing further play until the win is verified through several procedures.”

The statement says BCLC will work with independent reviewer Peter German — appointed by Attorney General David Eby to address money-laundering concerns in B.C. casinos — “to take action on any recommendations.”

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