Big Money, Big Questions at Trump Protege's Remote Casino
Far-flung gambling operation advised by former FBI and CIA chiefs posts huge revenues—and its flows of cash have drawn the attention of the U.S. Treasury.
On a tiny island in the western Pacific, at the end of a duty-free mall wedged between a one-story laundromat and a cell-phone shop, you’ll find what may be the most successful casino of all time.
The awkwardly named Best Sunshine Live hardly looks like a high-roller hub. Construction workers bet $5 or $10 at a time on roulette and baccarat in a fug of nicotine. Clustered in a far corner are a handful of tables for so-called VIP gamblers, which at 8:30 p.m. on a September Saturday are almost empty. A nearby bar has just a couple of patrons.
Nothing about the facility, which opened last year on the U.S. island of Saipan, hints at the money flowing through it—table for table, far more than at the biggest casinos in Macau, the world’s number-one gambling capital. Nor is there any sign of the connections of its owner, Hong Kong-listed Imperial Pacific International Holdings Ltd., which has a market value of $2.4 billion.
It’s a power list that includes a former director of the Central Intelligence Agency, a former director of the Federal Bureau of Investigation, and three former U.S. governors, including past chairmen of both the Democratic and Republican National Committees. Behind them all: a Donald Trump protege, Mark Brown, who ran the Republican president-elect’s Atlantic City casino empire and is now Imperial Pacific’s chief executive officer.
With that backing, Best Sunshine is posting numbers that stagger industry veterans. The daily reported revenue for each of its VIP tables in the first half of the year, about $170,000, is almost eight times the average of Macau’s largest casinos. Its 16 VIP tables alone generate revenue that’s more than half of the receipts from 178 high-stakes tables at Wynn Resorts Ltd.’s flagship casino in the Chinese territory, a 20-story palace with three Michelin-starred restaurants.
The revenue figures, or actual wins by the house, are just a fraction of total bets. In September, Imperial Pacific reported a record $3.9 billion in bets at its casino—meaning the 100 or so high-rollers who it says come through its doors monthly each wagered an average of $39 million.
Those volumes of cash are drawing the attention of law-enforcement officials. The U.S. Treasury's Financial Crimes Enforcement Network, which is responsible for alerting prosecutors and other authorities of suspicious financial flows, has taken notice of the activity at Best Sunshine, according to a person with knowledge of the matter. The person asked not to be identified because the information isn't public. Spokesmen for the Treasury and Department of Justice declined to comment.
“I’ve heard every question that you have in your mind. All my guys, my friends in Macau say this is bullshit,” Brown said in an interview, adding that he’s not aware of a Treasury inquiry and has not been contacted by the agency. “We are very transparent. We don’t want to do anything to break the law.”
The story of how Saipan’s casino came to enjoy such puzzling success is a tale of money and political intrigue that stretches across the Pacific, connecting it to top power-brokers in Washington and New York, 14 time zones away. But above all, it links the island with the burgeoning ranks of China’s super-rich and the fathomless wealth, obtained legitimately or otherwise, that they’re seeking to move around the world.
It is cash that has bent the course of the global economy, flowing from Beijing and Shanghai to London, Sydney, Vancouver and other international cities. Along the way, it’s washing up in unheard-of volumes on an obscure speck of American soil thousands of miles from almost anywhere.
The money has arrived on Saipan as Chinese President Xi Jinping intensifies an unprecedented crackdown on corruption and capital flight from the world’s second-largest economy. Macau’s casinos, traditionally a relatively simple avenue for citizens to spirit funds offshore in violation of currency controls, are a key target of his efforts, driving high-stakes gambling elsewhere.
“It’s like pressing a balloon down—it’s going to pop up somewhere else,” said Grant Govertsen, an analyst at advisory firm Union Gaming. The somewhere else is Saipan, he said.
Large-scale capital flight may be what accounts for the revenues at Best Sunshine, according to executives at three Macau gambling promoters, who spoke on the condition they not be identified bad-mouthing a competitor. The numbers are simply impossible if they are not inflated or facilitating money-laundering, they said.
Four analysts who focus on Macau’s gaming industry and have examined Imperial Pacific’s figures said they can’t understand how it could report VIP bets totaling HK$105 billion ($13.5 billion) and revenue of HK$3.8 billion in the first half of the year. They asked not to be identified because they don’t cover the company, whose shares have dropped 24 percent this year.
Even the rare high rollers betting several hundred million Hong Kong dollars wouldn’t be enough to generate those kinds of revenues, the executives said. One executive, who works with some of Macau’s largest casinos, said he’s never been able to attain Saipan’s daily average even on a single day in 20 years in business.
Asked about the discrepancy, Brown said he believes Macau casinos are under-reporting figures, with off-books betting not showing up in official reports. Many gaming tables at Macau resorts are underused, which accounts for the high revenue from the limited tables in Saipan, according to Imperial Pacific. Brown also said the company is stepping up its anti-money-laundering procedures to match those at international banks, and that about 750 prolific gamblers whose backgrounds it knows have accounted for the bulk of revenue since Best Sunshine opened.
In what it said was an effort to “enhance its integrity,” Imperial Pacific earlier this year appointed to its board James Woolsey, who ran the CIA in the early 1990s and was among national-security advisers to Trump’s White House campaign. He joined Eugene Sullivan, formerly a senior U.S. military judge, who was appointed last year. Sullivan declined to comment; Woolsey didn’t respond to requests for comment.
A separate advisory committee for business strategies and government relations, formed in April, includes former FBI director Louis Freeh and Ed Rendell, previously governor of Pennsylvania and chairman of the DNC. Freeh didn’t respond to requests for comment.
Former New York Governor David Paterson was also an adviser to Imperial Pacific from August 2015 to this spring, when he resigned to pursue other opportunities. Paterson didn’t attend any meetings about the Saipan casino “beyond due diligence and security-expert recommendations,” said a spokesman, Sean Darcy.
It was Paterson who pitched Freeh and Rendell on joining the committee, according to the latter.
“They wanted some Americans involved in case anything came up with the regulation or legalities,” Rendell said in an interview, adding that he and Brown were previously acquainted from his efforts as governor to bring gambling to Pennsylvania. “The biggest selling point to me was the trip to the Mariana Islands, a part of the world where I’ve never been.”
Rendell said he is paid $5,000 a month for his role, and that his work so far has mostly been limited to making an introduction to Haley Barbour, the ex-Mississippi governor and RNC chairman who’s now a prominent lobbyist. The Saipan revenues are possible because Macau’s casino industry is “cratering,” Rendell said.
Barbour now also advises Imperial Pacific. He said he'd not yet had “the chance to get into the details of the business,” and was not concerned about accepting the role “because I have high regard” for Rendell and Woolsey.
Proximity to the corridors of power is a dramatic change for Imperial Pacific, which is controlled by a mother-and-son duo from mainland China and for most of its existence was called First Natural Foods. In 2013 it recorded gross profit of just $1.25 million. The following year it embarked upon an unusual metamorphosis, announcing it would move from frozen food into the greater opportunities of gambling by paying $30 million to apply for a casino license on Saipan, the capital of the U.S. Commonwealth of the Northern Mariana Islands.
At the time the island, with 50,000 inhabitants and such poor infrastructure that the Centers for Disease Control advises against drinking the tap water, was hardly a tourist hub. Local legislators wanted to change that, and earlier in 2014 had reversed years of opposition to casinos.
The casino law was introduced and passed in the Marianas’ House on March 3, and in the Senate the following day, without being referred to committee. A lawsuit filed by a local activist, Glen Hunter, alleged the process violated rules that forbid "legislators from holding surprise sessions where acts are undertaken as part of a secret agenda." Before voting for the law, Senate President Ralph Torres and other legislators had visited Hong Kong for "fact-finding" purposes, Torres said in a deposition. He also said he was "not sure" if he’d fully read the bill before the Senate acted on it.
As Imperial Pacific closed in on a 40-year casino license, the only other bidder, Marianas Star Entertainment Inc., also sued the government. It alleged that “significant benefits" were illegally provided to legislators by casino investors, and that regulators refused to investigate whether Imperial Pacific was linked to them. The suit was unsuccessful; Imperial Pacific said those investors “were not connected” to the company.
A spokeswoman for Torres, now the Marianas governor, said there is “no evidence to support” allegations of improper benefits to legislators.
Imperial Pacific’s deal did include above-board payments. The company agreed to pay $15 million annually to top up the Marianas pension fund. Another $20 million a year would go to a community fund, according to the island’s gaming regulator. And it added a remarkable sweetener: a one-time $10 million payment to cover the home electric bills of everyone on the island.
To run the Saipan project, Imperial Pacific hired Brown, who got his start as a teenage blackjack dealer in his native Atlantic City, before rising through the ranks of Trump’s casinos to become a senior executive. The real-estate mogul cited Brown among his trusted advisers in his 2004 book, “Trump: How to Get Rich,” and Brown returned the favor in May this year by telling Fortune that his old boss was “great with women” and has “a great brain.”
Brown left Trump in 2005, heading to Macau to oversee Las Vegas Sands Corp.’s project to build a replica of the Venetian hotel. He departed in 2009; two years later Las Vegas Sands was plunged into turmoil by a Securities and Exchange Commission investigation into potential violations of the Foreign Corrupt Practices Act in Macau over a period that overlapped with Brown’s tenure. In 2012, Australian regulators denied him a license to work at Sydney’s Star Casino for reasons they didn’t disclose.
Las Vegas Sands this year settled the allegations for $9 million without admitting guilt. Brown was not accused of wrongdoing, and said he was never involved in the investigation.
A chance at economic revival hasn’t silenced local critics of Brown’s latest project. At his low-slung office in the Saipan village referred to grandly as Capitol Hill, legislator Ramon Tebuteb said he fears the island is becoming a “safe haven” for illicit Chinese money. “It will happen, and I think it has happened,” said Tebuteb, the minority leader in the Marianas House of Representatives.
The neighboring island of Tinian provides a cautionary tale. Last year the U.S. Treasury fined the Tinian Dynasty casino $75 million for “willful and egregious” violations of anti-money-laundering rules. It closed afterward.
Saipan’s gambling watchdog is adamant there’s no impropriety on its watch. The Commonwealth Casino Commission was created in 2014 and oversees only Best Sunshine, the island’s sole casino. The commission’s members are paid $20 an hour for time spent attending official meetings only, according to the territory’s casino law.
“We do not cahoot with the licensee,” Edward DeLeon Guerrero, the commission’s executive director, said in an interview. “Have you seen corruption in other parts of the world? Probably. From my experience, I have not seen that.”
DeLeon Guerrero, a former customs chief and court administrator, hadn’t worked in a casino-related job before taking on the role of regulating Best Sunshine. Although he conceded the commission faces a steep learning curve, “this is America. We protect our borders,” DeLeon Guerrero said. “Movement of money we track 1,000 percent.”
Brown has huge plans for Saipan. Near Best Sunshine, construction is underway on Imperial Pacific’s planned new hotel and resort. According to renderings, it will resemble a 1.5 million square-foot mash-up of the Forbidden City and the Palace of Versailles with a 100-foot glass sculpture of an undulating dragon in the lobby, reached via hallways drenched in golden filigree. After that, plans call for “20 six-star themed hotels, 11 world-class casinos," and a kilometer-long “duty-free shopping boulevard."
Imperial Pacific is planning to sell as much as $650 million in bonds to finance the project, Brown said. The company says it and future partners may spend as much as $7 billion, which would amount to one of the largest resort projects in history. It may all sound improbable—but then so is the notion that a storefront casino on Saipan could out-earn the titans of Macau.
“A legitimate high-stakes gambler wouldn’t want to spend time in this place,” Hunter, the plaintiff in the suit against the Saipan casino law, said of Best Sunshine. “Have you seen it? It’s a duty-free store with a fresh coat of paint and some chandeliers.”
—With assistance from Stephen Engle, David Kocieniewski and Greg Farrell.