A recent case of kickbacks opens up an interesting public policy question that will probably not be answered. From the LV Sun:
A vice president of Fry’s Electronics who is accused of swindling the company out of more than $65 million has long been on the radar of Clark County prosecutors.
The Internal Revenue Service accuses Ausaf Umar Siddiqui, who has since been fired as Fry’s vice president of merchandising and operations, of helming a kickback scheme to help pay off his enormous debts amassed at Las Vegas casinos.
…
Since 2001, the bad check unit of the Clark County district attorney’s office has filed criminal complaints against Siddiqui in connection with at least $12.2 million in unpaid markers, according to the head of that unit, Bernard Zadrowski.
Siddiqui, Zadrowski said, is a whale — someone who bets in excess of $100,000 — and is among the top five debtors ever to pass through the bad check unit.
The Palo Alto, Calif., resident has repaid his $1.71 million debt to Binion’s and paid another $4.8 million to Caesars, but still owes Caesars Palace about $5.7 million, Zadrowski said. “Mr. Siddiqui has been paying back his restitution according to negotiations,” Zadrowski said.
It’s unclear whether these debts are related to Siddiqui’s alleged kickback scheme. Siddiqui repaid the Binion’s and Caesars markers documented by the bad check unit through cashier’s checks, said Zadrowski, who added he does not know the origin of those funds.
Maybe as a supplement to the Gaming Hall of Fame exhibit over at gaming.unlv.edu we should put up a “Las Vegas Bad Marker Hall of Fame.” It would certainly add some spice to the site.
I like the part about how it’s “unclear whether these debts are related to Siddiqui’s alleged kickback scheme.” Ya think?
According to the SF Chronicle article about the same story, Siddiqui’s paid $120 million to Vegas casinos since 2005, even though his annual income is only $225,000.
Do casinos have the obligation to make sure all of their customers earned their money on the up-and-up? Right now, they don’t, and unless we want to subject high rollers to intrusive background investigations by privately-hired auditors and investigators, I don’t see it happening. The casinos already have their hands full keeping up with Title 31 filings, which they see as doing their part to prevent money laundering. They can say, with some justification, that no other business is asked to investigate its clientele to mitigate the possibility of previous malfeasance. If Nevada casinos were required to verify that all of their clients were completely law-abiding, many players would visit other jurisdictions rather than submit to lengthy investigations.
As a practical retort, though, critics can respond that most other businesses don’t take $120 million from customers over three years. And most lenders, before loaning out their money, ask for some kind of income verification.
From a law-enforcement perspective, it would probably be a better world if guys like Siddiqui could get caught before they had swindled others out of $65 million. Politically, though, neither the casinos nor the players, nor, I suspect, the states have any strong desire to rewrite the regulations to prevent someone from doing what he did. To the extent that anyone in Nevada actually talks about the issue, the need for revenue will likely trump criminal justice here.
There’s another question that I’ve always wanted to know the answer to, but don’t think there’s a practical way to find out: what percentage of money gambled in legal casinos is illegitimate–either embezzled or otherwise obtained unlawfully? That’s a subset of the bigger question of how much money circulating in the American economy is dirty. The answer can’t be zero, because we know that there is a great deal of crime that’s quite lucrative, and those criminals have to spend their money somewhere, unless they’re stashing it all in the Caymans. I guess if you totaled the entire amount of money that’s been discovered to have been embezzled, stolen, seized in drug raids, etc, you’d have an idea of what’s been detected, but how many criminals, particularly smaller ones, never get caught?