Lei Zhang walked out of the desert warmth into the cool air of a Las Vegas casino ground, his eyes hidden behind sun shades. Zhang strolled previous the buzzing crowds across the blackjack tables, skirted the clanging slot machines and headed to a lodge room.
He carried with him a satchel stuffed with cash and a darkish secret: He was a key participant in a suspected international money-laundering scheme – one which catered to high-rolling Chinese gamblers and that investigators would later tie to a few of the world’s most harmful felony gangs.
For years, authorities have battled an illicit black market for US {dollars} fueled by strict Chinese authorities restrictions on its residents. Affluent Chinese nationals trying to bypass these guidelines pay middlemen to obtain tens of millions in cash – usually sourced from Mexican cartels trying to rinse clear their illicit income from fentanyl and different drug gross sales.
Now, a NCS investigation that included a evaluate of a whole lot of pages of court docket paperwork and interviews with greater than half a dozen legislation enforcement sources reveals new particulars about a little acknowledged participant on this booming market: American casinos.
At one high-profile casino, a few of the workers have been even in on the scheme.
Last yr, Wynn Las Vegas agreed in a non-prosecution settlement to pay the federal authorities $130 million for basically serving to to place unlawful cash within the fingers of big-stakes gamblers within the largest criminal forfeiture by a casino in US historical past. The casino, which was based by Steve Wynn, who stepped down because the CEO of Wynn Resorts in 2018, was fined one other $5.5 million by state regulators in May to resolve the identical case.
But the small print of the a number of felony instances that sparked these large fines have largely been saved below wraps – till now.
A key consider these settlements, investigators mentioned, was proof gathered within the case towards Zhang and three different defendants, all of whom admitted to serving to rich Chinese gamblers keep away from forex restrictions so they may spend tens of 1000’s of {dollars} at Wynn and different casinos. At Wynn, the fraud was usually facilitated by staff.
Law enforcement officers instructed NCS that they had proof that cash supplied by Zhang and others — none of whom have been employed by the Wynn casino, however reasonably labored as middlemen offering gamblers with cash — got here from prostitution, human smuggling and the road sale of lethal medication.
At the casino, gamblers skirted “foreign and U.S. laws governing monetary transfer and reporting,” together with the Bank Secrecy Act or Anti-Money Laundering legal guidelines, the Department of Justice mentioned.
Neither the casino nor the 4 defendants admitted to knowingly laundering cash for cartels or anybody else. But some investigators mentioned that their actions helped dangerous actors disguise the supply of their illicit cash.
“Federal laws that regulate the reporting of financial transactions are in place to detect and stop illegal activities,” mentioned Carissa Messick, the particular agent in cost for the Internal Revenue Service’s felony investigations unit in Las Vegas, in a assertion on the time. “Deliberately avoiding Bank Secrecy Act requirements is a form of money laundering.”
In a assertion to NCS, Wynn Resorts mentioned the corporate totally cooperated with the investigation and “immediately terminated the few employees involved because their actions violated the Company’s compliance program.”
From fentanyl to the felt: How drug cash from Mexican cartels flowed to a Las Vegas casino
“Wynn is committed to upholding the highest standards of integrity, compliance, and regulatory responsibility,” the Wynn casino mentioned. “We accept responsibility for the historical deficiencies identified, have taken meaningful remediation, and are dedicated to ensuring that such failures do not reoccur.”
The instances of the 4 defendants that helped result in Wynn’s historic settlement present how casinos have profited from having soiled cash come through their coffers, and the way drug cartels search to legitimize the large income they generate from the sale of fentanyl and different medication through authorized playing institutions, consultants and investigators mentioned. One prosecutor in Zhang’s case estimated that no less than a hundred million {dollars} yearly was being laundered through American casinos.
“Forty-eight hours ago, that was the proceeds of fentanyl,” mentioned Chris Urben, a former assistant particular agent in cost with the Drug Enforcement Administration’s Special Operations Division, talking about a few of the cash that Zhang and others moved through the Wynn and different casinos.
Although federal regulators and authorities have cracked down on banks and demanded tighter scrutiny on the cash deposits favored by cartels, regulators have been slower to use that very same strain to casinos — regardless of their monetary curiosity in trying the opposite method and even facilitating these crimes.
“They haven’t received as much scrutiny as financial institutions have in the past,” mentioned Ian Messenger, founder and CEO of the Association of Certified Gaming Compliance Specialists in Toronto. “That is changing, with cases like Wynn.”
The schemes to maneuver illicit cash at Vegas casinos traced again to a easy drawback: High-rolling gamblers from China — who’re recognized to drop as much as a million {dollars} on a single hand of blackjack — have been having issues accessing their funds within the US.
A corruption crackdown by the Chinese authorities beginning round 2016 led to stricter enforcement of guidelines prohibiting people from taking greater than $50,000 a yr overseas.
For US authorities, this rule has created supersized demand amongst well-heeled Chinese guests and expats. When they want giant sums for buying actual property, shopping for a luxurious automobile or different large bills, many flip to underground bankers.
These illicit bankers, who’re additionally usually Chinese, have turned to felony gangs comparable to Mexican drug cartels and prostitution rings, legislation enforcement officers instructed NCS.
In change for cash, the cartels and different suppliers are paid again through Chinese financial institution accounts that face no US monetary scrutiny.
In latest years, these Chinese middlemen have basically change into the go-to bankers for the biggest gamers within the US drug commerce, authorities have mentioned, wresting management from Latin American pursuits in what has amounted to a cold coup.
And high-stakes Chinese gamblers shortly turned necessary gamers within the monetary scheme, authorities say.
In late 2018, Dave Mesler, a particular agent with the Internal Revenue Service’s felony investigation unit, acquired an intriguing tip from staff at one other Las Vegas casino.
They’d seen a unusual sample: A person would stroll into the casino carrying a satchel after which would meet a host — a casino worker in command of holding high-value gamblers joyful. The host would summon a high-roller, and the trio would disappear to a personal setting like a lodge room. Then the person who got here with the satchel would depart, usually with out having gambled.
Staff on the casino, which Mesler confirmed was not Wynn however declined to determine resulting from DOJ coverage, ultimately notified legislation enforcement about a handful of males all following the identical sample.
“The casino didn’t quite figure out what they were up to,” Mesler mentioned, however “they realized these guys were up to something.”
Mesler and different investigators quickly realized the IDs of 4 of the boys: Lei Zhang, Bing Han, Liang Zhou and Fan Wang. All have been Chinese nationals of their late 30s or 40s residing in Las Vegas. (None of the boys responded to NCS’s a number of efforts to succeed in them. )
Mesler, who on the time led the IRS’s Las Vegas Financial Crimes Task Force, subpoenaed their cell data. The outcomes excited him a lot he flew from his workplace in Las Vegas to San Diego to fulfill with a federal prosecutor.
“I found that these guys were talking to Wynn casino hosts multiple times a day every day,” Mesler mentioned. “Hundreds a week. … I mean, I don’t even talk to my girlfriend this much.”
Investigators had already been inquisitive about Wynn, a high-end resort with a glossy glass design with places worldwide, together with Macao – the one place in China the place playing is authorized.
Investigators had earlier appeared into financial institution accounts they suspected have been being utilized by drug cartels to fund playing on the casino, DEA sources mentioned, however none of these probes led to any fees being filed. (Wynn mentioned in its assertion that the accounts have been “established to allow out-of-state guests to make normal and customary payments to the Company” and that the casino adopted all correct monetary reporting procedures.)
Mesler believed one thing larger was afoot with the brand new proof involving the 4 Chinese males.
“It was happening now – it didn’t happen years ago,” Mesler mentioned. “This breathed a lot of new energy into the case.”
Mesler began reviewing surveillance footage from Wynn, and positive sufficient, the 4 males have been making common visits with casino hosts and high-rolling gamblers there.
With the proof mounting in early 2019, different companies joined the case: the US lawyer’s workplace in San Diego, the DEA, the Department of Homeland Security and even the Las Vegas Metropolitan Police Department.
Through surveillance footage, undercover assignments and interviews with informants and the defendants, investigators have been in a position to piece collectively a extra full image of the subtle scheme.
Wynn casino and Mexican cartels
Investigators started watching because the 4 underground bankers or couriers working for them drove in and round Las Vegas and Los Angeles making cash pickups, legislation enforcement sources instructed NCS.
“They would take cash from anybody that had cash they didn’t want to deposit in a bank account for various reasons,” Mesler mentioned.
The males would then shuttle the ill-gotten cash to Wynn and different casinos in Vegas, the place they might meet with a casino host and an elite gambler from China for a hand-off.
“It didn’t always happen in a hotel room, but it could. It could happen in the hotel bathroom as well,” mentioned Peter Fuller, a former detective within the Las Vegas police division who labored on the case. “It also happened in vehicles.”
Phone information seized from the 4 suspects confirmed they have been ceaselessly speaking with Wynn casino hosts, mentioned Urben, the previous DEA official — but additionally that a few of their communications traced again to Mexican cartel operatives. He added that different intelligence, together with surveillance and post-arrest interviews, additionally pointed to cartels as a important supply of cash.
NCS obtained an unclassified inside DEA doc, which reported that brokers suspected cash launderers have been feeding cash from Latin American drug cartels to Chinese gamblers, who have been “reliable customers to purchase cash drug proceeds.” The intelligence report, which was shared with area workplaces throughout the nation in 2021, additionally linked Vegas casino hosts with members of US-based drug trafficking organizations “seeking to launder drug proceeds.”
“The majority and the driver of this was Mexican cartel proceeds,” mentioned Urben, who now works as a managing director at Nardello & Co., a personal international investigations agency that focuses on company issues. “When I say that, I mean fentanyl, heroin, cocaine, methamphetamine.”
A Homeland Security investigator, who labored carefully on the case and requested that his identify not be used out of security considerations, mentioned a lot of the cash being offered by underground bankers to Chinese gamblers in Vegas on the time appeared to come back from cartels.
It’s unclear how a lot the casino hosts or Chinese gamblers knew in regards to the supply of the cash when coordinating the transactions, officers mentioned.
But all of them knew sufficient to be secretive in regards to the exercise, the Homeland Security investigator mentioned, “so they must have known they were doing something bad.”
After utilizing a Chinese social-messaging and mobile-payment app referred to as WeChat to make a fast cash switch, the gambler would usually take the cash, deliver it contained in the casino and change it for chips, officers mentioned.
The finish consequence was that everyone acquired what they wished. The casino host acquired the golden-goose gambler to play at Wynn, the gambler obtained the cash, the “third-party” supply was in a position to exchange their soiled cash with a clear deposit in a monetary establishment, and the underground banker acquired his payment, all with out having to ship hefty greenback quantities throughout worldwide borders.
In May 2019, investigators on the case carried out the primary sting operation. It focused Zhang.
Zhang had been lured to a Las Vegas casino lodge room by an undercover federal agent who referred to as the cash mover posing as a rich gambler trying to acquire $150,000 in cash.
As he made his method through the casino ground to the lodge room, brokers working with Homeland Security Investigations waited in an adjoining room. Zhang had been instructed to point out up alone, however he got here with a lady. Zhang knocked on the door and the secret agent answered.
The brokers barged in.
“He looked very cool and suave,” mentioned the Homeland Security investigator. “Cool sunglasses and hair. … Very Vegas.”
The brokers opened the satchel and found 4 brick-sized stacks of cash, the investigator mentioned.
The lady, who had a handful of cell telephones on her, was a “madam” who ran an escort service, he mentioned. Two-thirds of the cash belonged to her, and she or he wished to ensure the transaction went easily. The brokers seized the cash; the lady was not arrested, he mentioned.
That bust, he added, helped lead investigators to the opposite three suspects, who have been arrested in comparable stings all through Las Vegas that summer time.
With the proof collected by Mesler and others, Zhang, Han, Zhou and Wang have been charged in federal court docket between May and September of 2019 with working an unlicensed cash transmitting enterprise.
Prosecutors mentioned their scheme was simply a fraction of the illicit cash shifting through casinos.
“The total magnitude of this problem, especially in Las Vegas, catering to high-roller Chinese gamblers who come into Las Vegas without easy access to United States cash, is certainly in the nine figures on an annual basis,” mentioned prosecutor Mark Pletcher throughout Zhang’s sentencing listening to in 2020. “We’re talking about a problem in the hundred-million dollar range” yearly, he added.
In court docket, the defendants — who had all emigrated from China — described how they’d been drawn into the underground banking schemes as a result of they wanted cash to assist care for kids or aged mother and father, in a nation the place that they had few connections and spoke little English.
By fall of 2020, all 4 pleaded responsible to a lesser crime than cash laundering: working an “unlicensed money transmitting business.” Investigators instructed NCS the money-laundering cost would require proving that the defendants themselves knew the supply of the soiled cash they have been bringing into the casino.
But one other prosecutor, Daniel Silva, instructed the court docket that the exercise “totally undermines the United States’ anti-money laundering laws.”
The networks, he added, “are a huge, huge problem in the United States” and “will not be tolerated.”
Zhou, now 42, was ordered to repay the federal government $446,000. He was sentenced to 6 months in jail.
The lightest sentence went to Wang, who obtained three months in house detention and was ordered to repay $225,000 for his function within the scheme.
A former skilled poker participant who additionally labored within the “junket” business that introduced Chinese gamblers to Las Vegas, Wang, now about 43, was charged final yr with mendacity about his felony conviction whereas attempting to buy a semiautomatic assault rifle in Las Vegas, court docket paperwork state. He pleaded responsible to the weapons cost in April and was sentenced to time served.
The steepest forfeiture penalty went to Han, now 50, who was ordered to repay $500,000. Han instructed the courts he was granted asylum within the US in 2019 after struggling spiritual persecution in China for beginning a church in his house, in accordance with court docket data.
The stiffest jail sentence went to Zhang, now about 45, who’d claimed through his lawyer in court docket that he had no thought he was doing something flawed. The choose handed Zhang 15 months in jail and ordered him to repay $150,000 – a formality as authorities had already seized that quantity within the raid.
Fuller, the previous detective with the Las Vegas police division, mentioned it’s necessary to acknowledge the hurt within the crime.
“You just can’t go take cash from anybody, because what ends up happening is, you end up taking it from Pablo Escobar,” mentioned Fuller, who now works as a particular agent for the IRS. “It’s basically the same thing that took place in the ’30s with Al Capone and all that, all the bankers and everybody. ‘Oh no, I, I don’t sell drugs. I’m not in organized crime. I just set up companies for people. I just move money.’”
Last fall, a little over two years after the final of the 4 males have been sentenced, Wynn casino signed the non-prosecution settlement and admitted to its staff’ involvement in a vary of schemes, together with these catering to high-rolling Chinese gamblers. The casino, in a assertion to NCS, mentioned it was unaware of the small print of the 4 particular person felony instances as they performed out in court docket.
The settlement additionally highlighted earlier instances courting again to 2014 during which the Wynn casino “knowingly and intentionally conspired” with people – some with connections to Latin America – to arrange illicit methods to get cash to gamblers on the casino and to recruit international gamblers from locations the US has recognized as “major money laundering countries.”
In one other scheme – referred to within the doc as “human head gambling” – patrons who have been prohibited by anti-money-laundering legal guidelines from playing would stand behind a proxy gambler and provides orders. One such patron had suspected connections to a transnational organized crime group.
Wynn casino’s involvement within the illicit exercise wasn’t restricted to casino hosts – it additionally included a firm advertising and marketing government and a senior government of a firm affiliate, the settlement says.
In its assertion, Wynn mentioned it has since made enhancements outlined in its settlement, together with including high-level workers members to an workplace devoted to imposing anti-money-laundering legal guidelines, and establishing an impartial compliance committee whose members are unaffiliated with the corporate.
When Zhang and Han pleaded responsible in early 2020, they have been the primary within the US to be prosecuted for this type of underground banking, in accordance with the DOJ.
Today, networks of Chinese underground bankers are the first cash launderers for not solely the Mexican drug cartels, however organized crime teams around the globe, together with varied Italian mafia teams, mentioned Vanda Felbab-Brown, an skilled on worldwide organized crime with the Brookings Institution.
“Over the past eight years or so, you have this big explosion of Chinese money laundering in the states, in Mexico, in Europe,” she mentioned.
Wynn isn’t the one casino that has been caught aiding criminals who evade banking legal guidelines.
In Australia, Crown Resorts casino was hit with a $300 million fine (in US {dollars}) in 2023 for operating afoul of anti-money-laundering legal guidelines and persevering with a enterprise relationship with a junket operator regardless of the casino’s consciousness of allegations the agency was related to Chinese organized crime. “The company that committed these unacceptable, historic breaches is far removed from the company that exists today,” Crown Resorts mentioned in a assertion on the time.
In Canada, the place this type of crime has been rampant, a 2022 report by a authorities fee established to look into the problem revealed a frequent scheme in Vancouver that carefully mirrors what investigators say was occurring at Wynn: drug traffickers and Chinese mortgage sharks promoting hockey baggage crammed with cash to Chinese gamblers who would wheel them into casinos to play a card sport referred to as baccarat.
Messenger, the gaming-compliance skilled, mentioned he wasn’t shocked that the historic Wynn settlement and comparable instances haven’t attracted a lot public curiosity.
“The general public don’t typically have high expectations when it comes to the casino industry,” he mentioned. “Everyone has Netflix. They’ve seen ‘Casino’; they’ve seen the other movies.”
The casino business, nevertheless, has taken discover, and the tradition of compliance with legal guidelines to forestall cash laundering is bettering, he mentioned.
Even so, Messenger mentioned, casinos – with their giant volumes of cash and intensifying strain to spice up foot visitors and herald high-rollers as on-line playing positive factors in recognition – stay a wealthy venue for rinsing felony proceeds.
“We see many, many cases of criminal funds or criminals attempting to deposit funds into the casino environment,” he mentioned. “Not for the purposes of entertainment, but for the purposes of creating layers, creating explanations.”
Those felony funds come from a enterprise that has left a path of devastation.
DEA official Brian Clark famous that the rise of Chinese cash laundering coincided with a drug epidemic that in recent times has claimed over 100,000 lives yearly within the US – the overwhelming majority from opioids comparable to fentanyl.
“It’s all being fueled from this money laundering trade,” he mentioned, “and it results in the death of Americans.”