Over the course of three years, MGM Grand took in more than $4 million in cash from an illegal bookmaking operation that federal officials say its former president allowed to operate freely inside the casino.

The hotel-casino even went so far as to offer free golf trips with other high rollers to now-convicted illegal bookmaker Wayne Nix and other free perks such as a free gift for his room and the extension of his gambling credit to encourage him to spend his money at MGM. Grand, according to federal documents made public Thursday as part of the criminal investigation into former MGM Grand president Scott Sibella. These high-profile events were called “Undercover Weekends” – a reference to Sibella’s appearance on the reality TV show “Undercover Boss”.

For his part, Sibella, 61, pleaded guilty Wednesday in Los Angeles District Court to failing to submit to federal officials reports of suspicious transactions that the casinos were required to make. In a 17-page plea agreement, Sibella admitted she knew Nix was running an illegal gambling business but still allowed him to gamble.

Sibella is scheduled to be sentenced May 8 and faces up to five years in prison and a $250,000 fine.

In a settlement with the Department of Justice, MGM Grand and The Cosmopolitan of Las Vegas were ordered to pay a combined fine of $7.45 million as part of a money laundering settlement for violations of the Bank Secrecy Act.

According to court documents, Sibella admitted to law enforcement in 2022 that he believed Nix was involved in illegal sports bookmaking, but “didn’t want to know because of my position. … If we know, we cannot allow them to gamble. … I didn’t ask him, I didn’t want to know, I guess, because he wasn’t doing anything to cheat the casino.”

Non-prosecution agreements

Under non-prosecution agreements with the Department of Justice, MGM Grand will pay a fine of $6.5 million and forfeit $500,000 in proceeds attributable to the violation, which will count toward the fine. The Cosmopolitan agreed to pay a fine of $928,600 and forfeit $500,000 in proceeds from the violation, which also counted toward the fine.

At the time of the accident, MGM Grand was owned by MGM Resorts International and Blackstone Group’s The Cosmopolitan. MGM acquired The Cosmopolitan for $1.625 billion in 2022.

In their respective settlements, MGM Grand and The Cosmopolitan each accepted responsibility for laundering Nix’s illicit funds and for failing to properly file suspicious activity reports on Nix, which conducted numerous millions of dollars’ worth of transactions at casinos between 2017 and 2020. MGM Grand also accepted responsibility. for the casino compliance department’s failure to use all available information when conducting Nix’s “know your customer” reviews.

Under the Bank Secrecy Act, casinos like MGM Grand and The Cosmopolitan are required to implement and maintain programs designed to prevent criminals from using casinos to launder the large sums of money that illegal activities can generate. For example, the law requires casinos to file reports documenting suspicious activity, such as cases where the source of a customer’s funds cannot be determined or are suspected to be related to a crime.

As part of its NPA, MGM Grand admitted that Sibella and two casino hosts knew of Nix’s illegal gambling activity, allowed Nix to continue gambling with MGM Grand and affiliated properties, they allowed Nix to present and use ill-gotten gains at the casino properties and provided Nix with fringe benefits to encourage him to spend his ill-gotten gains at the casino.

High roller golf trips

MGM Grand also admitted that Nix sometimes used golf trips with wealthy MGM Grand clients to solicit new customers for his illegal gambling business. By 2020, MGM Grand had accepted more than $4 million in cash that constituted illicit proceeds from Nix’s illegal gambling business, the Justice Department said.

MGM Grand also admitted that its anti-money laundering compliance program failed to instruct its compliance team to use all available information, as required by the Bank Secrecy Act, when conducting reviews to determine whether to file suspicious activity reports or to identify and verify customers. information, including the source of funds, for transactions deemed suspicious.

Compliance staff did not regularly contact marketing hosts, even when the compliance team failed to substantiate or identify the source of customer funds, despite the fact that other departments regularly contacted hosts in connection with the collection of funds owed to the casino , the Justice Department said. Due to deficiencies in its compliance program, MGM Grand failed to detect and report the extent of Nix’s suspicious activities and failed to prevent Nix’s money laundering.

“Mr. Sibella’s willful violation of his Bank Secrecy Act obligations to report suspicious activity jeopardized the credibility of the MGM Grand,” said Tyler Hatcher, Special Agent in Charge of Criminal Investigations for the Los Angeles office of ‘Internal Revenue Service.

“The Bank Secrecy Act requires reporting of suspicious activity to protect financial institutions from participating in money laundering activities that often benefit criminal or terrorist organizations,” he said.

Trust undermined

“While president of MGM Grand, Mr. Sibella undermined the trust and confidence of its employees, customers and regulatory agencies, and for that he will be held accountable,” Hatcher said. “Furthermore, the non-prosecution agreements with MGM Grand Hotel, LLC and The Cosmopolitan of Las Vegas should serve as a warning to other casinos and financial institutions that circumventing Bank Secrecy Act obligations can result in serious consequences, and we will investigate suspected noncompliance. “

Sibella first joined MGM in 2010 to direct The Mirage before moving to MGM Grand. He left MGM as part of that company’s cost-cutting acquisition strategy to become the top executive of Resorts World Las Vegas in April 2019, well before the $4 billion, 3,000-room resort opened in June 2020 Sibella was fired from Resorts World in September 2023.

The Nevada Gaming Control Board released a statement Thursday saying it was aware of the court actions involving Sibella in California.

“The NGCB has been monitoring the situation and will ensure that all individuals and entities involved in Nevada’s gaming industry are held to the highest standards,” oversight board Chairman Kirk Hendrick said in an emailed statement.

It is unclear whether Sibella will continue to be licensed in the state in the future, as Sibella suggested in a statement released Wednesday.

Gaming license applicants face tough regulatory scrutiny when applying for the license, but are not automatically disqualified by convictions or guilty pleas.

Nix, the illegal bookmaker, pleaded guilty in April 2022 to one count of conspiracy to operate an illegal gambling business and filing a false tax return. His sentencing is scheduled for March 6.

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X.