Financial Crime Online » gambling

Game rigging in Europe

admin — Sat, 21 Nov 2009 08:50:29 +0000

Most countries ban some types of gambling. The type of gambling ‘games’ that are allowed are usually strictly regulated and mostly (semi) government owned. That does not mean that the odds are fair. In sports betting, game rigging is a real concern. And obviously, when you speak about big bucks, there will be big criminals to make serious cash or to clean some dirty money. Tennis, baseball, soccer, everywhere.

In Taiwan (heavy on gambling) , specially trained prosecutors watch baseball games for signs of game rigging. Professional baseball game rigging and related underground gambling have been rampant over the past two decades since Taiwan’s Chinese Professional Baseball League (CPBL) was launched in 1990. Over the years, some coaches and players have been detained and indicted for game rigging. In some cases, the coach instructed the pitcher and the other players on the team how to play in order to produce game results in line with the team owner’s plan. This allowed underground gambling rings to net huge winnings from their bets.

The German police is investigating 200 soccer matches for evidence of game rigging. The games include three Champions League ties, 12 matches in the Europa League, formerly the UEFA Cup, one qualifying game for the under-21 European championship. All took place this season. UEFA, the international soccer association, is involved in the investigation. By bribing players, coaches, referees and officials to influence matches, the gang is thought to have earned as much as 10 million euros (15 million dollars) in huge bets with bookmakers in Europe and Asia, primarily in China. The investigations allegedly targets around 200 individuals. 15 have been arrested thus far. More than a million euros in cash and property were seized.

Two of those arrested in Thursday included two Croatian brothers living in Berlin, Ante and Milan Sapina, who were at the centre of a match-fixing scandal that rocked Germany in 2004, newspapers said. The 2004 German scandal saw referee Robert Hoyzer jailed in 2005 after admitting receiving almost 70,000 euros (104,000 dollars) and a plasma television from the Croatian brothers to throw games.

http://financialcrimeonline.com/archives/14

http://www.chinapost.com.tw/taiwan/local/tainan/2009/04/09/203655/Tainan-prosecutors.htm

http://news.yahoo.com/s/afp/20091121/ts_afp/germanyeuropecrimegamblingfblger

Chinese laundering in Vegas

admin — Sun, 24 May 2009 15:17:37 +0000

Earlier this month, two former Bank of China managers were sentenced in a Nevada court in the US to over 20 years in jail for defrauding the Bank of China and laundering the funds through US bank accounts and casinos in Las Vegas. The two men are accused of sending millions of dollars in illegal wire transfers from ‘their’ Bank of China to a dozen or so sham companies they controlled all over the globe. The total fraud amounted to around $485 million and was detected in 2001 by auditors of the Bank of China. Authorities say that after the Bank of China suffered more than $170 million in losses by speculating on foreign currency, one of the managers began to siphon corporate assets to mask some of the losses and to enrich himself. It probably started as a Nick Leeson, but when it seemed almost too easy to wire the money out of the bank, it (really) got out of control. During a 3 year period the bank was systematically leaking funds to shelf companies without detection.

According to the FBI, the discovery of the fraud led to a run on the bank which had the potential to destabilize the financial sector in South China. The managers fled China after the heat became too much for them to take. Using fake identities they received visas and entered the US. There -in a coffeeshop to be more specific- they married US born Chinese women to secure their legal status in the US.

At the time of his arrest in 2004, one of the managers was working as a cook in a Chinese restaurant while his -original- wife was waiting tables. What happened? Out of money? Were there more people involved in the scheme and were these guys just a part of it? Keeping of low profile? Where all the money went is still not clear. After the arrests some houses in British Colombia were confiscated but hundreds of millions seem to be still floating around. Was the booty laundered in Las Vegas? From a legal point of view it was. The business men visited casinos on a regular basis and placed bets up to $80k. And doing so with stolen money technically makes it money laundering. Was it really an attempt to provide a fake legitimate explanation for their wealth? Probably not… more like spending the treasure. And not a wise thing to do if you don’t want to draw any attention to you (being a cook in a Chinese restaurant would better do that trick).

More on laundering and gambling in this blog: click ‘gambling’ in the ‘tag cloud’.

http://financialcrimeonline.com/archives/164

http://financialcrimeonline.com/archives/12

http://www.usdoj.gov/opa/pr/2009/May/09-crm-446.html

http://www.mefeedia.com/entry/video-xu-chaofan-and-xu-guojin-going-to-jail/17802309

http://www.fbi.gov/page2/april04/042904china.htm

Laundering while playing

admin — Sat, 04 Apr 2009 14:35:53 +0000

The Asia Pacific Group on Money Laundering (APG) issued a report that focuses on the vulnerabilities of the gambling and gaming sector. Although the report does not bring new insights to the problem it is a solid description of the money laundering risk of the industry and the current state of anti money laundering efforts. You can find some more entries on gambling and laundering in this weblog (hit ‘gambling’ in the tag cloud in the left sidebar).

Included are some short real life examples of how criminals applied the techniques described in the report, such as this one:

A cargo consignment addressed to a person contained approximately 3.4 kilograms of black opium resin, concealed within the contents. The person was arrested when attempting to collect the consignment. Further investigation revealed the person to be a regular customer of a casino, having conducted approximately 50 betting transactions, predominantly chip cash outs totalling AUD 890 000. Very little casino gaming play was recorded for the person and it was assumed that he used the proceeds from previous importations to purchase chips and claim the funds as winnings.

The report has an off topic description on how to accumulate vast amounts of points on your credit card award program (don’t try this: APG classifies it as a scam and you probably will not make friends doing it):

A jurisdiction reported a credit card point scam where casino chips are purchased using credit cards. The chips are then cashed out and instead of crediting the credit card, casinos usually issue cash or a casino cheque. The balance on the credit card is eligible for consumer points. The balance on the credit card is paid back using the cash or cheque received from the casino. This method enabled large amounts of credit card points to be accumulated in a short period of time and can be used for merchandise purchases.

All in all a solid update on the relation gambling/money laundering but no shocking new insights. The oldest tricks still work….

http://www.apgml.org/documents/docs/6/Casinos%20Typologies%20Report%20Web%20March%202009.pdf

Honest Illegal Gambling ?

admin — Sun, 25 May 2008 13:54:00 +0000

Betting is not allowed in a lot of countries and in most states of the US, so by definition here only criminals supply betting facilities. The US states that allow gambling (most well know is Nevada) regulate the gambling industry very strictly. The sheer amount of money flowing through casinos itself makes them interesting for organized crime. But no more on money laundering in casino’s now.

The discussion on crime control in numerous areas, also in gambling, is between legalizing and regulating on one hand and banning and suppressing on the other. Alcohol, drugs and gambling all score differently on these 2 options.

But crime concerns also touch upon the regulated gambling industry. The NY Times published a story today on Betfair, a UK online gambling firm. Betfair is like ebay for gamblers. Users can set their odds and match their bets with other users. It operates in 80 countries and does a lot of bets a day. That is why Betfair has a lot of data to analyze gambling behavior. During the tennis match between Arguello (ranked 87) and Davydenko (seated 4) Betfair detected irregular bets. Davydenko’s odds got longer while leading the match. More and more money came in on Arguello. Davydenko resigned with an injury, leaving underdog Arguello as winner. Betfair reported the data to ATP. A subsequent report by ATP, “Review of Integrity in Professional Tennis” recommended an investigation on 45 other suspicious matches (the tip of the iceberg according to the report) and the endorsement of an anti-corruption body for sports.

Soccer games in Europe are known to have been infested by game fixing practices. Goalies, other players and referees are have been bought to lose games (never heard of someone being bought to win…). Add baseball, boxing, basketball, football, cricket; what is the grip of organized crime on sports ? If you imagine the amount of cash you can make by influencing major games, you would say this opportunity has been seized…

Experts estimate fixed games to be 1% of total. Over 2% of US Division I football players reported to have been asked to influence the outcome of games for gambling purposes. Illegal gambling in the US only is estimated at $150 billion a year according to the NY times.

The FBI has its own ‘sports bribery program’ and focuses on fixing sports games. In the course of time, all sports seem to have been infected by game rigging criminals. And without betting, fixing games is ofcourse not very interesting from a financial point of view.

Let’s compare with the financial markets. Although you don’t know all inside details on a company, you can get a lot of details on the price of options, stock and the supply and demand on the stock exchange. This will give an indication of how the market feels about the stock price. With a real time overview of the amount of bets being placed and their odds, you could detect information asymmetry, as you could detect insider knowledge in financial markets. This could enable you to take a bet (if you can legally gambling in the country you live at least) and follow the sentiment in the market and whatever is going on at the moment…. Good luck !

If honest legal gambling is more difficult than expected; let’s forget about honest illegal gambling. And don’t play poker with your friends; they will cheat as well : ).

http://www.nytimes.com/2008/05/25/sports/othersports/25betfair.html?_r=1&hp&oref=slogin
http://www.library.ca.gov/crb/97/03/Chapt11.html
http://www.betfair.com/
http://query.nytimes.com/gst/fullpage.html?res=9507E2DF153BF93BA25752C0A961958260
http://www.fbi.gov/hq/cid/orgcrime/lcn/sports.htm

Laundering in casinos

admin — Fri, 23 May 2008 01:34:00 +0000

The classic image of a money launderer ? High rolling in a casino, laundering his money while having a martini.

This week a drug trafficker in Ontario pleaded guilty to money laundering by feeding bills into casino slot machines, playing for a bit, then cashing out. When the machine issued a stub for the remaining credit, it would be taken to the cashier for a cheque to be issued by the casino. The cheque could then be deposited in a bank account as legitimate “winnings.”

Not a method Pablo Escobar used I suppose. Buying chips, or having someone else buy them, and later claiming them as gambling profit is not the most foul proof laundering system. Most (regulated) casino’s by now have security professionals that will check the validity of the winning claim. And they will all file SAR’s/CTR’s if the amount involved exceeds $ 10k. And we all know that a significant money laundering operation is not about hundreds of thousands of dollars. Try feeding the proceeds of a reasonable XTC operations in a slot machine….

Of the 195,253 SARs in the USA in 2008 by the way, 183,072 were from depository institutions, 10,845 were from money services businesses, 1,260 were from securities and futures businesses, and 76 were from casinos. Not a lot. In the Netherland, 0.7% of SAR’s are related to casino’s. In Canada, FINTRAC reported 9 casino related suspicious transactions.

A real money launderer would of course own a casino, not play in it. Although I once encountered a criminal that claimed to have won the lottery. He had almost $ 1 mio, all legit (he said). Remember the ads you had in the good ol’ days (I will buy your winning lottery ticket and will pay you 10% more than you won..); perhaps someone got really lucky and gained a lot of dirty cash (and a money laundering problem for himself)… He got away with it (at least he paid taxes…). A bold approach, for a criminel to buy a winning lottery ticket at a premium and present it to the tax office. Still, what would a judge or jury do when presented with the complete Soprano cast that won lottery after lottery ? Lucky guys ? Will the unlikeliness of it be enough to sentence them all ? It won’t happen; but let me know if you encounter a lottery winning criminal. Imagine the chance of that : )

http://www.fincen.gov/news_room/rp/files/sar_tti_10.pdf

http://www.fincen.gov/news_room/rp/files/sar_tti_13.pdf