Saipan Casino Suit Alleges Anti-Money-Laundering Policy Breaches

  • Lawsuit claims termination for reporting alleged rule breaches
  • Other court actions seek to address safety, non-payment

A former employee of Imperial Pacific International Holdings Ltd.’s casino on the U.S. territory of Saipan sued the company for wrongful termination on Thursday, alleging that he witnessed violations of its anti-money-laundering procedures and was fired for trying to rectify them.

Imperial Pacific “failed to implement or enforce an adequate" anti-money laundering program, and management ignored complaints and reports of violations, the suit, filed by Danny Ewing, former vice president of table games at the company’s casino, Best Sunshine Live, alleged in the court document filed in Saipan’s U.S. District Court.

It’s the third court action related to the casino within two weeks. U.S. Secretary of Labor Thomas Perez filed a motion in the same court seeking a warrant to enable the Occupational Safety and Health Administration to inspect a construction site for Imperial Pacific’s planned new casino in Saipan, according to a document filed Dec. 15. The motion follows a failure by OSHA inspectors to obtain access to the site to investigate a worker’s death and alleged safety violations, according to the court document. 

Separately, a Saipan company, RNV Construction, sued Imperial Pacific on Dec. 12 in the same U.S. District Court for $1.7 million in unpaid construction bills for building Best Sunshine Live, which Imperial Pacific has said is a temporary facility while the new casino is being built.

Imperial Pacific declined to comment about the two lawsuits. Regarding the warrant application, the company said it welcomes inspection and would coordinate with its contractor to allow it.

Shares of the company dropped 1 percent to close at HK$0.104 in Hong Kong Friday. They are down 38 percent this year.

FinCEN Attention

Mark Brown, Imperial Pacific’s chief executive officer and a former senior executive in U.S. President-elect Donald Trump’s Atlantic City casino operations, said in an interview last month that the Saipan operation complies with all relevant money-laundering and other regulations, and that bets are closely monitored by local and U.S. regulators. 

The large volumes of bets at the Saipan casino have drawn the attention of the U.S. Treasury’s Financial Crimes Enforcement Network, or FinCEN, which is responsible for alerting prosecutors and other authorities of suspicious financial flows, a person familiar with the matter said last month. Imperial Pacific has said it’s not aware of any investigations of the casino.

In the latest suit, Ewing alleged that “Imperial Pacific was engaging in practices that were in violation of the law and contrary to the public policy of both the United States" and Saipan. In one case, the casino allowed a customer to deposit $400,000 with the casino’s cashier without the identification required by its anti-money-laundering procedures, the suit alleged.

OSHA Inspectors

The suit alleged that Ewing also informed the management that it was a violation of FinCEN regulations to provide players with explanations of how to structure transactions to avoid reporting requirements, but he was told to cease his complaints and would be terminated if he escalated them to upper management. He was fired Aug. 1, with no advance notice and no reason given, according to the complaint. The lawsuit seeks unspecified damages.

The separate action by the U.S. labor secretary, against Imperial Pacific’s contractor, MCC International Saipan Ltd., followed an incident on Dec. 6 when OSHA inspectors visited the building site for the new casino and were denied entry, the document said. The OSHA inspector sought to investigate a worker’s death and an emergency room doctor’s tip that a number of workers were seriously injured every day at the construction project, the court document alleged. About 80 serious injuries from the site have been logged this year at a Saipan hospital, the Commonwealth Health Center, including amputations and fractures, according to the filing.

Imperial Pacific declined to comment on any allegations of injuries or safety issues at the construction site. MCC didn’t respond to e-mailed and phone requests for comment on the court action.

Construction workers at the site also went on strike last week over alleged unpaid wages by MCC, according to the local Saipan Tribune. MCC also didn’t reply to requests for comment on the labor action.

Brown had said in the interview in November that he planned for the new resort, ultimately envisaged to cost $7 billion and include 20, six-star hotels and 11 casinos, to attract more Chinese gamblers and become a tourist draw within Asia.

A bond offering to raise $200 million to $400 million that Imperial Pacific had planned to use to fund construction of the new casino has been put on hold, according to people with knowledge of the matter, raising questions about the project’s future. Investors wanted a higher yield than the 10 percent to 11 percent that the Hong Kong-listed company was willing to offer, and the deal was dropped by two of the lead underwriters in October, the people said. Imperial Pacific declined to comment on the status of its bond offering.

— With assistance by Carrie Hong

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