Jeff Mitchell
Phone: (213) 894-0698
E-mail: [email protected]
United States Department of Justice
United States Attorney’s Office
Central District of California
1100 United States Courthouse
312 North Spring Street
Los Angeles, California 90012
January 9, 2024
Daniel B. Levin
Munger, Tolles & Olson LLP
350 South Grand Avenue, 50th Floor
Los Angeles, CA 90071
Re: MGM Grand Hotel LLC
Dear Mr. Levin:
The United States Attorney’s Office for the Central District of California (the “USAO”)
agrees that if the MGM Grand Hotel, LLC (“MGM Grand” or the “Company”) fully complies
with all of its obligations under this Agreement, the USAO will not criminally prosecute the
Company, or any of its parents, subsidiaries or affiliates, during the term of this Agreement or
thereafter for any crime related to the conduct described in the Statement of Facts attached hereto
as Attachment A (“Statement of Facts”), or relating to information disclosed by the Company to
the USAO or known to the USAO prior to the date on which this Agreement was signed that is
part of the course of conduct described in the accompanying Statement of Facts, including
violations of 18 U.S.C. § 1956(a)(1): Laundering of Monetary Instruments; 18 U.S.C. § 1957:
Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity; 31
U.S.C. §§ 5318(h), 5322: Failure to Maintain an Effective Anti-Money Laundering Program; 31
U.S.C. §§ 5318(g), 5322: Failure to File Suspicious Activity Reports; or for a conspiracy to
commit those any of those offenses under 18 U.S.C. § 371 or 18 U.S.C. § 1956(h).
The USAO and MGM Grand Hotel, LLC, a limited liability company headquartered in
Las Vegas, Nevada, doing business as “MGM Grand - Las Vegas,” hereby enter into this non-
prosecution agreement (the “Agreement”).
The USAO enters into this Agreement based on the individual facts and circumstances
presented in this case, and including consideration of the following factors:
(a)
the Company received cooperation credit for certain cooperative steps including
voluntarily making current employees available for interviews and making voluntary document
disclosures, and providing to the USAO relevant facts and information about the individuals
involved in the conduct described in the Statement of Facts;
Non-Prosecution Agreement
RE: MGM Grand Hotel LLC
January 9, 2024
Page 2
(b)
the Company no longer employs or is affiliated with the individuals implicated in the
conduct at issue who are referenced in the Statement of Facts;
(c)
the Company has timely engaged in remedial measures, as described in Attachment
B. Those efforts include (i) enhancing its Anti-Money Laundering Compliance Program
covering the Company and affiliated properties (“AML Compliance Program”) and a
commitment to continue to enhance its compliance program; (ii) submitting to an external
compliance review for two years, with provision of written reports to the USAO on its progress
and experience in enhancing the AML Compliance Program (“External Compliance Review”),
as described in Attachment C; (iii) establishing amended protocols for the internal audit
department to review and evaluate the AML Compliance Program; and (iv) conducting a
lookback for the eighteen-month period between January 1, 2022, and June 30, 2023, of
Suspicious Activity Reports (“SARs”) previously filed by the Company and affiliated properties
that reported that the source of funds was unknown (“Lookback SARs”);
(d)
the nature and seriousness of the offense, in particular, involvement by a senior
executive of the Company, as well as at least two marketing hosts, in continued service of a
customer known to be engaging in criminal activity and laundering the proceeds of his criminal
activity, including large amounts of cash, at the Company and its affiliates, willful failures of the
same senior executive and hosts to report suspicious activity to the compliance team, which fell
within their duties at the casino, leading to and causing the Company’s failure to file SARs
relating to transactions by that customer at the Company, and the failure of the compliance team
to reach out to the marketing hosts or review the customer’s credit—even though for at least
three years, the compliance team recognized that the customer’s source of funds was unknown
and unexplained;
(e)
the Company has agreed to continue to cooperate with the USAO in any ongoing
investigation of the conduct of the Company and affiliates, and their current or former officers,
directors, employees, agents, business partners, distributors, and consultants relating to violations
set forth in the Statement of Facts; and
(f)
accordingly, after considering (a) through (f) above, the USAO and the company
believe that an appropriate resolution of this case is a non-prosecution agreement for the
Company and an aggregate discount of 20% from the low end of the otherwise applicable United
States Sentencing Guidelines (“U.S.S.G.” or “Guidelines”) advisory fine range.
The Company admits, accepts, and acknowledges that it is responsible for the acts of its
then-officers, directors, employees, and agents as set forth in the Statement of Facts and
incorporated by reference into this Agreement, and that the facts described in the Statement of
Facts are true and accurate. The Company and the USAO agree not to make any public
statement contradicting any of the facts set forth in the Statement of Facts. Upon the USAO’s
notification to the Company’s counsel of a public statement by any then-current agent or
employee of the Company that in whole or in part publicly denies a statement of fact contained
Non-Prosecution Agreement
RE: MGM Grand Hotel LLC
January 9, 2024
Page 3
in the Statement of Facts, the Company may avoid breach of this Agreement by publicly
repudiating such statement within three days after notification by the USAO.
This Agreement shall apply to and be binding upon the Company and its successors and
assigns.
For a period of two (2) years from the date that this Agreement is executed, the Company
shall, subject to applicable laws and regulations: (a) cooperate fully with the USAO, Homeland
Security Investigations, the Internal Revenue Service – Criminal Investigation (“IRS-CI”), and
any other law enforcement agency designated by the USAO regarding matters arising out of the
conduct covered by this Agreement, as set forth in the Statement of Facts; (b) assist the USAO in
any investigation or prosecution arising out of the conduct covered by this Agreement by
providing logistical and technical support for any meeting or interview; (c) use its best efforts to
secure the timely attendance and truthful statements and testimony of any officer, director, agent,
or then current employee of the Company at any meeting or interview or before the grand jury or
at any trial or other court proceeding regarding matters arising out of the conduct covered by this
Agreement; and (d) provide the USAO, upon request, all non-privileged information, documents,
records, or other tangible evidence located in the United States regarding matters arising out of
the conduct covered by this Agreement about which the USAO or any designated law
enforcement agency inquires.
The Company’s obligations under this Agreement shall have a term of two (2) years from
the date that this Agreement is executed. The parties agree that for the two-year term of this
Agreement, the Company shall: (a) commit no felony under U.S. federal law; (b) truthfully and
completely disclose non-privileged information in response to USAO requests relating to any of
the conduct covered by the Agreement, as set forth in the Statement of Facts; and (c) bring to the
USAO’s attention all conduct by, or criminal investigations of, the Company relating to any
felony under U.S. federal law of which the Company’s senior management is aware.
The parties agree that the Company will continue to strengthen its AML Compliance
Program by enhancing and causing to be enhanced the AML Compliance Program, amending
and causing to be amended procedures for internal audit, and implementing and causing to be
implemented the eighteen-month SAR lookback provision, as well as by submitting to the
External Compliance Reviewer’s review, evaluation and reporting, as described in Attachments
B and C and Section (d) herein.
The parties agree that the Company has voluntarily agreed to pay a fine of $6,527,728 to
the United States, which represents the parties’ agreement to an amount that is twice the
gambling revenue the Company derived from Wayne Nix for the conduct described in the
Statement of Facts after the application of a 20% cooperation credit. The Company agrees to pay
this sum to the United States Treasury within ten (10) days of executing this Agreement. The
Company has agreed to forfeit $500,000 in proceeds traceable to the violations set forth in the
Statement of Facts, and specifically agrees to pay the Internal Revenue Service the amount of
Non-Prosecution Agreement
RE: MGM Grand Hotel LLC
January 9, 2024
Page 4
$500,000 by transmitting to IRS-CI a check made payable to the Department of the Treasury (the
“Forfeited Funds”), with reference “Nix Investigation Forfeiture,” within 60 days of the full
execution of this Agreement, and understands that the United States shall proceed with the
administrative forfeiture of the Forfeited Funds and dispose of the Forfeited Funds in accordance
with law. The Company further agrees not to contest forfeiture of the Forfeited Funds and waives
any and all notice requirements with respect to the Forfeited Funds, including, but not limited to,
those notice requirements set forth in 18 U.S.C. § 983(a), and the Company understands that
such proceedings shall be completed without notice to them or their counsel. The parties agree
that the Forfeited Funds will be counted towards the monetary fine.
The Parties agree that the Company will spend at least $750,000 in new funding over a
two-year period on MGM’s and its affiliates’ compliance program (the “Compliance Funds”).
Permissible uses of the Compliance Funds include hiring additional compliance personnel;
purchasing resources and tools, including software to improve the compliance function; and/or
paying the fees and costs of the External Compliance Reviewer. Annually, starting one year from
the execution of this Agreement, MGM will submit an attestation to the USAO stating how it
spent Compliance Funds in the prior year. The parties agree that the Compliance Funds will not
be counted towards the monetary fine.
The parties agree that, if, during the term of this Agreement, the USAO in good faith
determines that the Company has committed any felony under U.S. federal law, that the
Company has deliberately given false, incomplete, or misleading testimony or information in
connection with this Agreement (excluding any testimony or information that is provided by
Company employees who are not acting within the scope of their employment and at the
direction of the Company when providing such testimony or information), or that the Company
otherwise has violated any provision of this Agreement, the Company shall thereafter be subject
to prosecution for any violation of federal law of which the USAO has knowledge, including
perjury and obstruction of justice. Any such prosecution that is not time-barred by the applicable
statute of limitations on the date that this Agreement is executed may be commenced against the
Company, notwithstanding the expiration of the statute of limitations during the term of this
Agreement plus one year. Thus, by signing this agreement, the Company agrees that the statute
of limitations with respect to any prosecution that is not time-barred as of the date this
Agreement is executed shall be tolled for the term of this Agreement plus one year.
The parties agree that: With the exception of any confidential settlement communications
exchanged pursuant to Federal Rule of Evidence 410, all statements made by the Company,
through its designated representatives, to the USAO or other designated law enforcement agents,
including in the Statement of Facts, and any leads from such statements or testimony, shall be
admissible in evidence in any criminal proceeding brought against the Company, and the
Company agrees to waive any claim under the United States Constitution, any statute, or any
other federal rule that such statements or any leads therefrom are inadmissible or should be
suppressed.
Non-Prosecution Agreement
RE: MGM Grand Hotel LLC
January 9, 2024
Page 5
In the event that the USAO determines that the Company has breached this Agreement,
the USAO agrees to provide the Company with written notice of such breach prior to instituting
any prosecution resulting from such breach. The Company shall, within thirty (30) days of
receipt of such notice, have the opportunity to respond to the USAO in writing to explain the
nature and circumstances of such breach, as well as the actions the Company has taken to
address and remediate the situation, if necessary, which explanation the USAO shall consider in
determining whether to institute a prosecution.
The parties agree that this Agreement is binding on the Company and the USAO but
specifically does not bind any federal, state, local, or foreign prosecuting, enforcement,
administrative, or regulatory authority, including any other component of the Department of
Justice other than the USAO. The USAO will, however, bring the extent of the Company’s
cooperation and its enhanced AML Compliance Program to the attention of other prosecuting
and investigative offices, if requested to do so by the Company.
The parties agree that either the USAO or the Company may disclose this Agreement to
the public. The Company may disclose this Agreement to its regulators or other government
agencies.
//
//
//
Non-Prosecution Agreement
RE: MGM Grand Hotel LLC
January 9, 2024
Page 6
With respect to this matter, from the date of execution of this Agreement forward, this
Agreement supersedes all prior, if any, understandings, promises, or conditions between the
USAO and the Company. No additional promises, agreements, or conditions have been entered
into other than those set forth in this Agreement and none will be entered into unless in writing
and signed by all parties.
JOSEPH MCNALLY
First Assistant United States
Attorney
MACK E. JENKINS
Assistant United States Attorney
Chief, Criminal Division
JEFF MITCHELL
Assistant United States Attorney
Major Frauds Section
RACHEL AGRESS
Assistant United States Attorney
International Narcotics, Money
Laundering and Racketeering
Section
DAN G. BOYLE
Assistant United States Attorney
Environmental Crimes and
Consumer Protection Section
Non-Prosecution Agreement
RE:
MGM Grand Hotel LLC
January
9,
2024
Page 7
I,
the undersigned, am an officer as stated below and have authority to sign and bind MGM
Grand Hotel, LLC.
On
behalf
of
MGM Grand Hotel, LLC, on whose behalf I am signing this
agreement: I have read this Agreement carefully; I have discussed
it
fully with Daniel B. Levin,
the attorney for
MGM
Grand Hotel, LLC; I understand the terms
of
this Agreement; I
knowingly and voluntarily agree
to
these terms after a thorough discussion with Mr. Levin; I
do
so
free from force, threats, or coercion; no promises, representations, agreements, commitments,
or inducements have been made except those set forth in this Agreement; and I am satisfied with
Mr.
Levin's representation
of
MGM Grand Hotel, LLC
in
this matter.
AGREED AND CONSENTED TO: MGM Grand Hotel, LLC
Date:
I have carefully reviewed and discussed this Agreement with my client, MGM Grand Hotel, LLC,
through its officers, including John McManus, the Secretary Officer. To the best
of
my
knowledge, Mr. McManus is an officer
of
MGM Grand Hotel, LLC, who
is
duly authorized to
execute this Agreement on behalf
of
MGM Grand Hotel, LLC, and that Mr. McManus is doing so
knowingly and voluntarily. APPROVED
AS
TO FORM:
Date:
DANIEL
B.
LEVIN
Attorney for MGM Grand Hotel LLC
A-1
Attachment A
Statement of Facts
The following Statement of Facts is incorporated by reference as part of the Agreement,
dated January 9, 2024, between the USAO and the Company. The USAO and the Company
agree that the following facts are true and correct.
At times relevant to this Agreement:
A. The Bank Secrecy Act
1. The Bank Secrecy Act (“BSA”), codified at Title 31, United States Code
§§ 5313–5326, as implemented through related federal regulations, was enacted by
Congress to address criminal money laundering activities utilizing financial institutions.
2. Title 31, United States Code, Section 5318(g), and related regulations, required
financial institutions, including casinos, to file with the Department of the Treasury a
“Suspicious Activity Report” (“SAR”) for any transaction conducted through the casino that
involved at least $5,000 in funds, and the casino knew, suspected, or had reason to suspect
that the transaction (or a pattern of transactions of which the transaction was a part):
(i) involved funds derived from illegal activity or was intended or conducted in order to hide
or disguise funds or assets derived from illegal activity as part of a plan to violate or evade any
federal law or regulation or to avoid any transaction reporting requirement under federal law
or regulation; (ii) was designed, whether through structuring or other means, to evade any
regulations promulgated under the BSA; (iii) had no business or apparent lawful purpose or
was not the sort in which the particular customer would normally be expected to engage, and
the casino knew of no reasonable explanation for the transaction after examining the available
facts, including the background and possible purpose of the transaction; or (iv) involved use
of the casino to facilitate criminal activity.
3. SARs were to be filed with the Financial Crimes Enforcement
Network (“FinCEN”), a bureau of the Department of the Treasury.
A-2
4. Regulations promulgated under the BSA, Title 31, United States Code, Section
5318(h), including Title 31, Code of Federal Regulations, Sections 1010.312,1021.210, and
1021.410(a), required certain casinos to develop, implement, and maintain a written, effective,
risk-based anti-money laundering program reasonably designed to prevent such casinos from
being used to facilitate money laundering, including by requiring casinos to develop
procedures for using “all available information” to identify and verify customer information
and to determine occurrences of transactions or patterns of transactions that warrant the filing
of a SAR, including transactions involving funds derived from illegal activity. The program
was required to have policies and procedures governing the verification of customer
identification, the filing of reports including SARs, and assuring compliance with these and
other BSA requirements via internal controls and independent testing and training, as well as a
five-year retention of records period specified by the BSA.
B. The Money Laundering Statutes
5. The money laundering statutes, codified at Title 18, United States Code,
Sections 1956–57, were also enacted by Congress to prohibit criminal money laundering
activities.
6. Title 18, United States Code, Section 1956(a)(1) prohibited persons from
conducting financial transactions involving the proceeds of certain unlawful activities
knowing that the transaction involved the proceeds of unlawful activity with the intent to
promote the carrying on of the specified unlawful activity or was designed to conceal the
nature or source of the proceeds.
7. Title 18, United States Code, Section 1957 prohibited persons from knowingly
engaging in monetary transactions in criminally derived property of a value greater than
$10,000.
//
//
A-3
C. Background – MGM Grand
8. MGM Grand was a limited liability corporation headquartered in and
organized under the laws of the State of Nevada and operated as a Nevada casino licensed and
regulated by the Nevada Gaming Control Board, in Las Vegas, Nevada.
9. The MGM Grand managed a hotel with 5,044 guest rooms. The MGM Grand
had more than 5,000 employees as of March 2019. The MGM Grand had one of the largest
gaming floors in all of Las Vegas. It offered more than 1,100 slot machines for gaming as well
as a 13-table poker room and table games. It also offered a race and sports book allowing its
customers to bet on a range of sports, including soccer, football, boxing, MMA, and more.
10. Money was exchanged for chips at the casino cage or at the gaming tables.
Casino chips were small discs used as currency in casinos for gaming purposes. To obtain
casino chips, customers could present MGM Grand money in the form of cash, money orders,
cashier’s checks, wire transfers, personal checks, or business checks. In addition, MGM
Grand provided chips to some customers based on credit, i.e., a “marker.” When an MGM
Grand customer wished to obtain chips on credit, the Company’s credit department would run
a background check on the customer, which could include obtaining credit reports, calling
banks, public record searches, contacting marketing hosts, and contacting unaffiliated casinos
to determine the credit worthiness of the customer. Money owed on markers could be paid in
the form of cash, money orders, cashiers’ checks, wire transfers, personal checks, or business
checks.
11. As a licensed gaming establishment with an annual gaming revenue of more than
$1,000,000, MGM Grand was a “financial institution” within the meaning of the Bank Secrecy
Act, Title 31, United States Code, Section 5312(a)(2)(x), and required to file SARs with
FinCEN. MGM Grand’s parent company maintained an anti-money laundering compliance
program (“AML Compliance Program”) and compliance team that covered MGM Grand and
affiliated U.S. properties, and was responsible for developing written policies, training, and
monitoring of the generation and reporting of SARs.
A-4
D. Wayne Nix
12. Wayne Nix was a resident of Orange County, California. Sometime after 2001,
Nix began operating an illegal bookmaking business within the Central District of California
that accepted and paid off bets from bettors in California and elsewhere in the United States
on the outcomes of sporting events at agreed-upon odds (the “Nix Gambling Business”). Nix
used associates (referred to as “agents”) and a Costa Rican website called Sand Island Sports
to expand his business and track the bets of his customers.
13. Nix would travel frequently from his home and base of operation in the Central
District of California to casinos in Las Vegas, Nevada, with illicit cash proceeds from the Nix
Gambling Business. The cash typically comprised high-domination bills, and, at times, Nix
transported the cash in duffle bags, brown paper bags, or leather purses. Nix presented illicit
cash proceeds to casinos and used illicit proceeds to place personal gambling bets at the
casinos and to pay off markers at casinos. Nix would also solicit new customers for the Nix
Gambling Business from marketing hosts at the casinos he frequented. Nix at various times
offered casino hosts a commission or gratuity for referring casino customers to Nix and the
Nix Gambling Business.
14. The President of MGM Grand, Scott Sibella, and two casino hosts were aware
that Nix ran the Nix Gambling Business and continued to allow Nix to present and use illicit
proceeds at MGM Grand, and/or other affiliate properties. Not only did Sibella and the two
hosts continue to allow Nix to present illicit proceeds to the casino and/or at other affiliate
properties, but they would provide Nix complimentary benefits at the casino, including meals,
room, board, and golf trips with senior executives and other high-net-worth customers of the
casino to further encourage Nix to patronize the casino and spend his illicit proceeds at the
casino. Nix at times used the golf trips with MGM Grand’s high-net-worth customers to
solicit new customers for the Nix Gambling Business.
15. MGM Grand assigned to Nix two marketing hosts, Host A and Host B, who
knew that Nix engaged in bookmaking by taking bets from customers on sporting events. Host
A-5
A maintained regular contact with Nix, went to dinner with Nix, invited Nix to casino-
sponsored events, and even flew to California to encourage Nix to return to Las Vegas, stay at
MGM Grand, and use the illicit proceeds at MGM Grand. Host A was aware that Nix was
paying off markers at casinos affiliated with MGM Grand in cash. For example, on one
occasion on November 20, 2018, via telephone, Nix told Host A that he would be paying off
markers at two affiliate casinos in cash.
16. Until his departure in March 2019, Sibella approved complimentary rooms,
food service, and event tickets for Nix, and invited Nix on marketing trips with the purpose of
encouraging Nix to gamble at MGM Grand. Not only was Sibella aware that Nix ran the Nix
Gambling Business, but Sibella placed bets directly with Nix and one of Nix’s agents. Nix
assigned account number R3507 on the Sand Island Sports website to Sibella to track Sibella’s
betting history.
17. Both Sibella and Host A were aware that MGM Grand customers placed large
bets with the Nix Gambling Business. For example, on March 14, 2018, via text message, Nix
told Host A that he would be very upset if he heard that an MGM Grand customer was “in
Vegas before he pays me” for a gambling debt owed to the Nix Gambling Business. On
January 29, 2019, via telephone, Nix told Sibella that another MGM Grand customer known
to Sibella had placed a $5 million bet on the Super Bowl with the Nix Gambling Business.
E. Failure to File SARs regarding Nix
18. Under the AML Compliance Program, MGM Grand’s employees on the
business and marketing side were responsible for affirmatively reaching out to the compliance
team in the event they observed suspicious activity. Despite being trained and required to do
so, neither Sibella nor Hosts A or B reported to compliance personnel or law enforcement the
source of the illicit proceeds that Nix used while gambling at MGM Grand. As a result of this
failure, MGM Grand did not file one or more SARs regarding the source of Nix’s funds
related to transactions by Nix at MGM Grand or its affiliated properties, even though Sibella
and Hosts A and B knew, or reasonably should have known and deliberately ignored, signs
A-6
that the funds were proceeds of unlawful activity. At various points, Nix’s play at MGM
Grand and its affiliated properties involved a pattern of illegal transactions of over $100,000
within a twelve-month period.
19. The AML Compliance Program included a Risk Based Assessment (“RBA”),
which identified and ranked money-laundering risks and prescribed programs to address those
risks. However, during the relevant timeframe, the RBA, did not assign any risk for situations
in which its customers repeatedly conducted large cash transactions with large-dollar
denominations at the casino. In addition, in February 2017, MGM Grand’s parent company
performed an internal audit of its AML Compliance Program. The internal auditors
recommended, after activity by a customer was deemed suspicious, that a risk-based approach
be used to determine whether to continue monitoring the customer. Specifically, the auditors
recommended that compliance consider, among other factors, the number of SARs filed in a
rolling 12-month period, threshold of transactions, as well as the nature of the activity. The
auditors advised that failure to consider these factors when SARs had been previously filed
regarding a customer might allow similar suspicious activities to go undetected and thus
unreported. The executive director of compliance declined to adopt the recommendation to
apply a risk- based approach to examine continuing activity of customers already deemed
suspicious and responded that its current approach of monitoring high-risk areas, such as
subpoenas, negative news, structuring analysis, and book wagering analysis, was sufficient.
The executive director also noted that there were procedures for identifying refused-name
patrons who then would be subject to the current monitoring approach.
20. Due to these policies, the compliance team did not conduct an analysis to
determine occurrences of additional large-denomination cash transactions or patterns of such
transactions that would warrant the filing of SARs in relation to Nix. Beginning in 2017,
MGM Grand compliance personnel first became suspicious of Nix’s source of income after
Nix presented $50,000 in cash at the cage of an MGM Grand property because small
denominations comprised more than $5,000 of the cash. MGM Grand compliance
investigated Nix’s business and determined that it could not substantiate where Nix obtained
A-7
such a large amount of cash, and in particular such a volume of small denominations. Despite
suspicions about Nix’s source of funds beginning in 2017, no SARs were filed regarding Nix
after that time for multiple cash deposits that did not involve small denominations.
F. Failure to Use All Available Information
21. Under the AML Compliance Program, MGM Grand’s employees on the business and
marketing side were responsible for affirmatively reaching out to the compliance team in the event
they observed suspicious activity, and the company trained marketing hosts on their obligation to do
so.
The compliance team performed “know your customer” (“KYC”) reviews of certain
MGM Grand and U.S.-affiliate customers where defined criteria were met. The AML
Compliance Program, however, failed to instruct the compliance team to use all available
information, as required by the BSA, when performing those KYC reviews to determine
whether transactions or patterns of transactions warranted the filing of a SAR, or to identify
and verify customer information, including source of funds, for transactions found to be
suspicious. Specifically, from at least May 1, 2014, through October 31, 2017, the AML
Compliance Program did not require the compliance team to consult with the marketing hosts
at MGM Grand and U.S. affiliates about information available to them in relation to KYC
procedures and procedures for determining whether transactions or patterns of transactions
warranted the filing of a SAR, or identifying and verifying customer information, including
source of funds, for transactions found to be suspicious. From approximately October 31,
2017, through the present, the AML Compliance Program instructed compliance team
personnel to reach out to the marketing departments only in certain scenarios (checks/wires
received from a third party, issuing checks or wires in exchange for cash). In other
scenarios—including where heightened KYC measures were deemed necessary due to risk, as
indicated, for example, by a customer’s high volumes of cash transactions, large amounts of
small-denomination bills, negative news, unjustified source of funds, or other potential
suspicious activity—compliance team personnel were instructed to look only at records of
customer activity and historical data already on record, surveillance and security reports,
public sources, and subscriber databases. Even when a customer’s conduct was deemed
sufficiently suspicious to file an SAR with FinCEN, the AML Compliance Program did not
A-8
instruct its compliance team to contact marketing department personnel for information
available to them on the customers’ source of funds. In contrast, the marketing departments,
including hosts, at MGM Grand and U.S. affiliates regularly interacted and socialized with
customers—including, but not limited to, during private and intimate events and trips which
gave them personal knowledge of their customers’ employment and source of funds.
22. In practice, compliance team personnel did not regularly reach out to the
marketing hosts even where the compliance team could not substantiate or identify the
customer’s source of funds. This occurred despite the fact that during the same timeframe,
the collections, credit, and hospitality personnel would routinely reach out to casino hosts in
connection with collection of moneys owed, lines of credit, and hospitality compensation and
gifts.
23. From time to time, the compliance team performed KYC reviews of Nix;
however, those reviews did not use all available information because the compliance team
did not contact Nix’s marketing host or review his credit file. The KYC reviews identified
certain of Nix’s transactions as suspicious and attempted to determine the source of his funds
through publicly available information. The compliance team was unable to determine Nix’s
source of funds but did not inquire with the marketing host, who had regular interactions with
Nix, or take any additional steps, even though other departments within the Company
routinely reached out to the marketing hosts and contacted other casinos to obtain
information on Nix. Specifically, from at least 2017 through 2020, collections, credit, and
hospitality personnel at MGM Grand and affiliated U.S. properties routinely reached out to
Nix’s host in connection with collection of moneys owed, lines of credit, and hospitality
compensation and gifts. However, despite their suspicions and inability to verify Nix’s
source of funds for transactions conducted with large amounts of small-denomination bills,
compliance team personnel took no additional steps to verify the source of funds and did not
examine Nix’s other transactions including use of large amounts of large-denomination bills.
Specifically, despite findings by the compliance committee on multiple occasions that public
records and private databases could not substantiate or justify Nix’s source or type of funds,
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the compliance team personnel never attempted to reach out or obtain additional information
from Nix’s host about Nix’s source of funds.
24. FinCEN had previously published an enforcement action against Desert Palace,
Inc. d/b/a Caesars Palace (“Caesars”) for failing to use all available information to identify and
evaluate potentially suspicious activity or otherwise incorporate it into the casino’s anti-money
laundering controls, in violation of the BSA. Specifically, Caesars’ marketing department
would typically obtain information about the casino’s wealthy patrons for marketing purposes,
but Caesars did not use this information to identify and evaluate potentially suspicious activity
or otherwise incorporate it into the casino’s anti-money laundering controls. MGM Grand was
aware of the FinCEN enforcement action against Caesars’ and the anti-money laundering
failures leading to it. The parent company even advised employees at MGM Grand and its
U.S.-based properties of the FinCEN enforcement action against Caesars in its anti-money
laundering training programs, but nonetheless, failed to modify its own AML Compliance
Program to require its compliance team to use available information in the possession of its
own marketing departments.
25. Because of these deficiencies in the AML Compliance Program, MGM
Grand failed to detect and report the extent of Nix’s suspicious activities and failed to
prevent Nix’s money laundering.
26. By 2020, MGM Grand accepted $4,079,830 in cash in illicit proceeds from the
Nix Gambling Business.
B-1
Attachment B
Except as may otherwise be agreed by the parties in connection with a particular
transaction, the Company agrees that in the event that, during the term of two years during which
this Agreement is binding, it sells, merges, or transfers all or substantially all of its business
operations as they exist as of the date of this Agreement, whether such change is structured as a
sale, asset sale, merger, transfer, or other change in corporate form, it shall include in any
contract for sale, merger, transfer, or other change in corporate form a provision binding the
purchaser, or any successor in interest thereto, to the obligations described in this Agreement.
The purchaser or successor in interest must also agree in writing that the USAO’s ability to
determine there has been a breach under this Agreement is applicable in full force to that entity.
Nothing herein shall restrict the Company from indemnifying (or otherwise holding harmless)
the purchaser or successor in interest for penalties or other costs arising from any conduct that
may have occurred prior to the date of the transaction, so long as such indemnification does not
have the effect of circumventing or frustrating the enforcement purposes of this Agreement, as
determined by the USAO.
Enhancements to MGM Grand’s AML Program
1. Within 90 days of the date of signing this Agreement, MGM Grand will
implement and cause the implementation of, enhancements to the AML Compliance
Program through updates to the Risk Based Analysis (“RBA”) and implementation of those
updated policies, as described in Exhibit A to the Company’s June 1, 2023, letter to the
USAO and below, including but not limited to the following enhancements:
a. Where available, credit (marker) applications that a patron has completed
with MGM Grand will be considered in connection with Know Your Customer (“KYC”)
reviews;
b. During the course of any due diligence review, KYC review, or Financial
Investigations Department review or investigation, in addition to public sources, compliance
personnel will review and consider the entire customer gaming account, including, where
available, the credit file containing any credit (marker) applications, bank account information,
bank statements and/or tax returns, gaming activity at other U.S. properties, and any other
Suspicious Activity Reports (“SARs”) filed for customers at other U.S. properties affiliated
with MGM Grand (“Customer File”);
B-2
c. If, in the course of a KYC review or other review of the Customer File,
compliance personnel are unable to ascertain the source of funds for a patron, compliance
personnel will request information about the patron’s source of funds from the patron’s host, if
applicable;
d. If a patron’s source of funds cannot be determined, the KYC review will
be submitted for SAR consideration;
e. Annually, compliance personnel will determine the top 25 aggregated cash
patrons for the prior calendar year, and perform a customer due diligence review to determine
each patron’s source of funds;
f. A customer presenting cash in a transaction amount specified in the
Company’s June 1, 2023, letter to the USAO, will be required to provide written
documentation attesting to the source of the cash, and that statement will be placed in the
Customer File and subject to review by compliance personnel;
g. Compliance personnel will be required to list any prior SAR filings, for at
least the prior two years, for the specific property, and any affiliated property, in the SAR
narrative included in a SAR filing;
h. When it is determined that there is sufficient evidence to file a SAR for a
patron involving an insufficient or lack of information about the patron’s source of funds, and
that patron has prior SAR filings related to source of funds, compliance personnel will escalate
the issue within the compliance department to determine next steps. Those steps may include
requesting that the patron complete an information form regarding the patron’s employment and
source of funds. Additional documents may be requested from the patron to support the
customer attestation, as warranted;
i. The Company will create a risk indicator in its RBA for customers
engaged in a level of gaming activity that is inconsistent with information in the Customer
File related to the customer’s occupation, assets, or sources of funds, as noted in the
FinCEN Guidance, FIN-2010-G002, Casino or Card Club Risk-Based Compliance
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Indicators (June 30, 2010);
j. The Company will create a risk indicator in the RBA for customers
engaged in large cash transactions as previously described in Exhibit A of MGM’s June 1,
2023, letter to the USAO; and
k. Compliance personnel will establish protocols for reasonably documenting
in the Compliance files any risk-based assessment, reasoning or decision by the compliance
personnel, the Compliance Committee, Financial Investigations Department, or U.S. Program
Coordinator: (i) not to present a SAR for filing following a complete investigation; (ii) not to file
a SAR elevated to the Compliance Committee for consideration; and/or (iii) not to end a
customer relationship elevated to the Compliance Committee for consideration. Documentation
shall include memorialization of what KYC or due diligence has been undertaken to determine a
customer’s source of funds, including but not limited to which documents from the Customer
File have been reviewed, which hosts, marketing personnel, or business executives have been
consulted with, and which information or documents have been requested from the customer, as
well as the rationale behind any decision.
2. To the extent not already required, the Company will require annual trainings on
the Bank Secrecy Act/Title 31 and Anti-Money Laundering laws and the Company’s AML
Compliance Program, including the process and criteria for filing Suspicious Activity Incident
Reports (“SAIRs”) and SARs for all Casino Marketing, property executives, compliance, cage,
and credit personnel, and those with authority to approve complimentary casino benefits for
customers (including promotional chips, complimentary hotel rooms, and promotional trips).
3. The Company will amend and cause to be amended protocols for the Internal
Audit Department’s annual reviews of the AML Compliance Program, such that any proposed
programmatic updates that Compliance Department declines to adopt are reviewed for
consideration and final decision by the Compliance Committee, or another independent
committee outside the Compliance Department, after such committee considers input from
Internal Audit and the Compliance Department.
B-4
4. The Company will conduct and cause to be conducted a lookback for the
eighteen-month period between January 1, 2022, and June 30, 2023, covering the Company and
affiliated properties, of SARs for amounts over $2,000,000 that are on the list provided to the
Company by the USAO on or about October 2, 2023, where it can be reasonably be determined
that the SAR reported that the source funds was unknown or unjustified, or unsubstantiated
(“Lookback SARs”). For the Lookback SARs, a supplemental review and due diligence will be
performed using all available information including information in the Customer File, as well
as any information provided by hosts, in accordance with the current AML Compliance
Program, to determine the accuracy of customer information and occurrence of any additional
transactions or patterns of transactions required to be reported pursuant to the BSA. Where
warranted or required, or where additional material information is found relating to source of
funds which was not included in prior SARs, the Company will make or cause to be made
supplemental SAR filings.
C-1
Attachment C
External Compliance Review
1. MGM Grand agrees to retain or cause to be retained an outside, independent firm
approved by the USAO via the process described in Paragraph 2 of this Attachment, to conduct
an external compliance review (“External Compliance Reviewer”), to review, evaluate and
report on the Company and its affiliates’ compliance with the enhancements to the AML
Compliance Program, amendments to internal audit procedures and the eighteen-month SAR
lookback provision of the Agreement (“SAR Lookback”), through up to four weeks of on-site
review over the course of the two-year period of the Agreement, reviewing relevant amendments
to manuals and policies, sampling of relevant populations, and the authoring of two reports.
2. By no later than 20 business days from the date this Agreement is executed,
MGM Grand shall submit to the USAO three candidates to serve as External Compliance
Reviewer (the “Reviewer”). The USAO shall have sole discretion to approve which candidate
shall serve as Reviewer. In the event the USAO rejects all proposed Reviewers, MGM Grand
shall propose an additional two candidates within 30 days after receiving notice of the rejection,
and shall continue this process until a reviewer is approved by the USAO. MGM Grand and the
USAO will use their best efforts to complete the selection process within 60 calendar days of the
execution of this Agreement. MGM is responsible for paying the fees for the Reviewer, which
shall not exceed $375,000 per year.
a. The Reviewer shall have experience and expertise with anti-money
laundering policies and AML compliance programs, including experience or familiarity with
AML programs in the gaming industry.
b. In providing nominations for Reviewer candidates, the Company shall
provide the USAO with (a) a description of all candidates’ qualifications and credentials (and
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those of their team, where applicable); (b) a written certification by the Company that it will not
employ or be affiliated with the proposed Reviewer, the proposed Reviewer’s firm, or other
professionals who are part of the proposed Reviewer’s team during the term of this Agreement
and for three years following the termination of this Agreement; (c) a written certification by the
proposed Reviewers that they have no conflict of interest that would prevent them from
accepting the Reviewer position and that they are not a current or recent (i.e., within the prior
two years) employee, agent, or representative of the Company and hold no interest in, and has no
relationship with, the Company, its subsidiaries, affiliates or related entities, or its employees,
officers, directors, or outside counsel retained in this matter; (d) if a Proposed Reviewer is an
attorney, a written certification from the proposed Reviewer that he or she has notified any
clients that the candidate represents in a matter involving the USAO, and that the candidate has
either obtained a waiver from those clients or has withdrawn and counsel in the other matter(s);
and (e) a statement from the Company identifying the Reviewer candidate that is the Company’s
first choice to serve as the Reviewer.
3. The External Compliance Reviewer’s retention is conditional on the following:
a. The External Compliance Reviewer is independent of the Company and its
affiliates, and no attorney-client relationship shall be formed between the External Compliance
Reviewer and the Company or its affiliates;
b. The External Compliance Reviewer shall have access to all non-privileged
documents and information of the Company and its affiliates that the External Compliance
Reviewer determines are reasonably necessary to assist in the execution of its duties;
c. The External Compliance Reviewer shall have the authority to meet with
any officer, employee, or agent of the Company and its affiliates when doing so is reasonably
C-3
necessary to carrying out the External Compliance Reviewer’s functions, as described in
Paragraph 3(e) of this Attachment; and
d. The Company shall use its best efforts, and cause its affiliates to use their
best efforts, to have compliance personnel cooperate and meet with the External Compliance
Reviewer as requested.
e. The External Compliance Reviewer shall conduct a review and evaluation
of the Company and its affiliates’ compliance with: (i) the enhancements to the AML
Compliance Program set forth in Paragraph 1(a) through 1(k) of Attachment B; (ii) the
amendments to internal audit procedures set forth in Paragraph 2 of Attachment B; and (iii) the
eighteen-month SAR Lookback set forth in Paragraph 3 of Attachment B. The review and
evaluation shall consist of an on-site review of up to two weeks occurring no later than 270 days
from the date the Agreement is executed (“First On-Site Review”), and a second on-site review
of up to two weeks occurring no later than 270 days from the first day of the First On-Site
Review (“Second On-Site Review”). The specific duration of the on-site reviews shall be left to
the Reviewer’s discretion. During the on-site reviews, the External Compliance Reviewer may
interview compliance personnel and review manuals and policies to determine whether the AML
Compliance Policy and internal audit procedures have been adequately amended to comply with
the terms of the Agreement. During the on-site reviews, the External Compliance Reviewer may
also conduct statistically significant sampling of Customer files, CTRs, Suspicious Activity
Incident Reports, SAR filings and backup materials, Compliance Committee meeting minutes,
FID Committee meeting minutes, and/or employee training files from the prior year, to
determine whether the amended AML Compliance Program and internal audit procedures are
being implemented in a manner that complies with Paragraphs 1(a) through (1)(k) and 2 of
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Attachment B, and whether the SAR Lookback described in Paragraph 3 of Attachment B is
being implemented by compliance personnel in a manner that complies with the terms of
Paragraph 3 of Attachment B.
f. During the two-year period covered by the Agreement, the External
Compliance Reviewer shall conduct and prepare two follow-up reports to be submitted to the
Company, its affiliates, and the USAO, as described below:
i. By no later than one year from the date the Agreement is executed,
the External Compliance Reviewer shall submit to the USAO and the Company a written report
(“First Report”) setting forth: (A) a complete description of changes to the AML Compliance
Program and internal audit procedures from those in place prior to execution of the Agreement,
including those described in Paragraphs 1(a) through 1(k) and 2 of Attachment B; (B) a
description of the steps undertaken to determine whether the amended AML Compliance
Program and internal audit procedures are being substantially implemented in a manner that
complies with the terms of the Agreement, including as set forth in Paragraphs 1(a) through 1(k)
and 2 of Attachment B, and the steps undertaken to determine whether the SAR Lookback is
being substantially implemented by compliance personnel in a manner that complies with the
terms of Paragraph 3 of Attachment B; (C) recommendations to the Company and the USAO
concerning additional steps the External Compliance Reviewer reasonably believes are necessary
for the Company to fully comply, or cause compliance, with the terms of the Agreement, if any
(“Recommendations”). Within 30 days of receiving the First Report, the Company and the
USAO may submit comments to the Reviewer, copying the other Party, regarding the First
Report and any Recommendations contained therein.
C-5
ii. By no later than 315 days from the date the First Report is
submitted, the External Compliance Reviewer shall submit to the USAO and the Company a
second written report (“Second Report”) setting forth: (A) further changes, if any, to the AML
Compliance Program or internal audit procedures following submission of the First Report; (B)
responses to any comments from the USAO and the Company on the First Report; (B) a
description of the steps undertaken to determine whether the amended AML Compliance
Program and internal audit procedures are being substantially implemented in a manner that
complies with the terms of the Agreement, including as set forth in Paragraphs 1(a) through 1(k)
and 2 of Attachment B, and the steps undertaken to determine whether the SAR Lookback is
being substantially implemented by compliance personnel in a manner that complies with
Paragraph 3 of Attachment B; (C) a conclusion as to whether the amended AML Compliance
Program and internal audit procedures are being substantially implemented in a manner that
complies with the terms of the Agreement, including as set forth in Paragraphs 1(a) through 1(k)
and 2 of Attachment B, and whether the SAR Lookback is being substantially implemented by
compliance personnel in a manner that complies with the terms of Paragraph 3 of Attachment B,
and any findings that the Company and its affiliates are not in substantial compliance with the
terms of the Agreement. Within 30 days of receiving the Second Report, the Company and the
USAO may submit comments to the Reviewer, copying the other Party, regarding the Second
Report.
4. The First Report and Second Report shall be transmitted by the External
Compliance Reviewer to the Chief of the Major Frauds Section, United States Attorney’s Office,
Central District of California, 312 N. Spring Street, Suite 1100, Los Angeles, California 90012
and the Company simultaneously. Such reports will be preliminary until the Company is given
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the opportunity to comment as set forth in Paragraphs 3.f.i and 3.f.ii, and the External
Compliance Reviewer has reviewed and provided to the USAO responses to such comments,
upon which such reports shall be considered final. The External Compliance Reviewer may
extend the time period for issuance of the reports with prior written approval of the USAO.
5. The Company shall consider all Recommendations contained in the First Report
submitted by the External Compliance Reviewer to the USAO, and either adopt the
Recommendations or provide a written explanation as to why it determines not to adopt a
Recommendation and/or any alternative steps the Company is taking in response to a
Recommendation.
6. To the extent findings are made by the External Compliance Reviewer that the
Company and its affiliates are not in substantial compliance with the terms of the Agreement and
the Company disagrees with the finding(s), the Company and the External Compliance Reviewer
may present the issue to the United States Attorney for his consideration and final decision,
which is non-appealable. If the United States Attorney makes a final decision, which is non-
appealable, that the Company is not in substantial compliance, the USAO may, but is not
required to, extend the period of the Agreement for an additional year for the Company to come
into compliance with the terms of this Agreement. If, after a year, the External Compliance
Reviewer determines that the Company is still not in compliance with the terms of this
Agreement, the USAO may declare the Company in breach of the Agreement, pursuant to the
terms and conditions within the Agreement.
7. The External Compliance Reviewer shall, as requested by the USAO, cooperate
fully with the USAO, Homeland Security Investigations, IRS-CI, and any other law enforcement
agency designated by the USAO, and, as requested by the USAO, provide information about the
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Company’s compliance with the terms of this Agreement. The Company agrees that, upon notice
to the Company, the External Compliance Reviewer may disclose his or her written reports, as
directed by the USAO, to any other federal law enforcement or regulatory agency in furtherance
of an investigation of any other matters discovered by, or brought to the attention of, the USAO
in connection with the USAO’s investigation of the Company or the implementation of this
Agreement.
8. The Company agrees that if the External Compliance Reviewer resigns or is
unable to serve the balance of the term, a successor shall be chosen through the process
described in Paragraph 2 of this Attachment and approved by the USAO, within forty-five (45)
calendar days. The Company agrees that all provisions in this Agreement that apply to the
External Compliance Reviewer shall apply to any successor External Compliance Reviewer.
9. These External Compliance Reviewer’s reports will likely include proprietary,
financial, confidential, and competitive business information. Moreover, public disclosure of the
reports could discourage cooperation and impede pending or potential government investigations
and, thus, undermine the objectives of the reporting requirement. For these reasons, among
others, the reports and the contents thereof are intended to remain and shall remain non-public,
except as otherwise agreed to by the parties in writing or as otherwise provided by law.
Right to Inspection
10. During the pendency of the Agreement, with regard to patron activity beginning,
ending, or passing through the United States, the USAO, upon request, may inspect compliance,
marketing, or finance records, including Customer Files, located at MGM Grand and MGM
Grand’s affiliates in the United States. The Company will also provide the USAO any requested
casino, compliance, marketing, or finance records, including records stored in the Patron system
(“Customer Files”), located in the United States within ten business days of the request, or, if
C-8
the material is voluminous, provide the USAO with an anticipated schedule for production
within ten business days.
11. The review and reporting requirements imposed on the Company under
Attachments B and C will terminate upon the expiration of the two-year period covered by the
Agreement.
