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Mirage facing fines in
massive clerical snafu

Apr 16, 2003 4:24 AM

By KEN WARD

A clerical snafu could cost The Mirage millions of dollars in fines, and at least four employees ”” including the chief financial officer ”” have already paid a heavy price.

Veteran CFO Bob Kocienski was ousted in the wake of reports that the hotel-casino failed to file nearly 15,000 anti-money laundering reports over a two-year period.

Sources also told GamingToday
that a controller and at least two other employees were terminated as the resort scrambled to clean up its cash-handling operations.

MGM Mirage spokesman Alan Feldman, declining to name names, said the manager responsible for filing the U.S. Treasury Department reports resigned and that two other executives were fired.

In another interview, Feldman said "several" employees have been fired, but he would not confirm their titles or the exact number of persons who lost their jobs.

Mirage officials, however, affirmed that Kocienski, a veteran financial officer previously at the Golden Nugget and the Las Vegas Hilton, is no longer with the company. Kocienski could not be reached for comment.

The transactions in question, exceeding $10,000 apiece, dated back to 2001. Each is subject to Regulation 6A reports that are submitted to the Financial Crime Network of the Treasury Department, which sends copies to the state.

Gaming Control Board Chairman Dennis Neilander said results of the feds’ ongoing investigation will be given to the state Attorney General’s Office to determine whether the employees will be prosecuted. Neilander said the Gaming Commission will decide whether action should be taken against the casino.

The federal civil penalty for failing to file is up to $100,000 per violation. The Mirage could also be fined $25,000 by the state for each report it failed to submit.

But The Mirage isn’t likely to get the max, Neilander said.

For starters, the state fines alone would surpass the resort’s total annual cash flow by some $200 million.

Still, parent company MGM Mirage warned of potential consequences in a recent filing with the Securities and Exchange Commission.

Industry insiders speculate that Mirage will negotiate a penalty "in the seven-figure range." The fact that the casino self-reported the violation could mean leniency, analysts say.

"I’ve never seen a case like this where there are 15,000 of these things stuck in a corner and no one knew about this,’’ Neilander said. "What’s troubling to me is the fact the situation didn’t get caught sooner. There were checks and balances in place that did not work.’’

Last week, Neilander added, "As a result of our investigation it doesn’t appear that there was any money-laundering activities. The individual responsible for filing these things had gotten himself so far behind that he didn’t know how to catch up.’’

A source told GamingToday that the apparent oversight has sent shockwaves through counting houses along the Strip.

"It looks like the guy responsible for filing the reports was a clerk and he was just doing it on his own,’’ said the source, a financial officer at a neighboring megaresort.

"No one [at Treasury] really looks at these forms, but you have to do it. And someone had to pay. This thing has people wondering about their job security and what’s really going on now.’’