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a meaningful, intelligence gathering and organized crime control program.

I think that that issue alone is something that should be recognized by your subcommittee, by Mr. Sensenbrenner, who comes from Wisconsin, and who ought to be reminded that we have a few rural areas in this State also where all you can do is play bingo.

It's only Atlantic City where you have the casinos in the form that you see them here. But, nonetheless, New Jersey saw fit, and our organization saw fit, to develop programs that would give us the capacity to do what has been done since the casinos have come into being, and Colonel Dintino has, as an assignment, to not only develop his own expertise, but develop the strategies and the mechanisms that we use in New Jersey, to collect, collate, and then use our intelligence data effectively.

I'd like to thank you for the opportunity to testify before this subcommittee on an issue that directly impacts upon the economic fabric of the underground economy.

As Attorney General Kimmelman has so succinctly pointed out, the washing of ill-gotten money through the Atlantic City casinos is a problem of serious proportions, and requiring a change in the Federal regulations as they relate to the casino industry.

There is certainly a serious void in the Bank Secrecy Act, and, hopefully, this hearing and others which may follow will create an impetus for necessary change. I'd like to, for the record, expand upon Attorney General Kimmelman's remarks citing specific examples of career criminals who are washing moneys through the casinos.

I'll only submit to this subcommittee the more significant findings of our research into this problem. However, it should be recognized that there are numerous other cases that have been eliminated from my testimony for a number of reasons, such as active investigations being conducted, informant security involved, a variety of reasons why some cases should not be presented publicly at this time.

For the record, I'd like to say that between May 27, 1981, and November 21, 1981, an individual by the name of John Chabot, of Boca Raton, FL, deposited $151,000 in cash at the Playboy Casino.

Chabot is an alleged international narcotics trafficker, who was arrested piloting his private plane which contained 776 pounds of marijuana.

Moises Salti of Miami Beach, FL, is another known narcotics trafficker involved in the black market of U.S. currency in Cuba. He deposited $125,000 in cash at the Playboy Casino between April and June 1981.

Albert Tumbiolo, of West Babylon, NJ, deposited $175,000 in cash at Playboy between May 8 and June 1, 1981. Tumbiolo is an alleged loanshark, and controls a gambling network which pays tribute to the Luchese organized crime family.

John Bongiovanni, Sr., of Philadelphia, a documented loan shark and a close criminal associate of the Bruno family, deposited $125,000 in cash at Playboy between February and March 1982.

Jacob Leonard Watts of Conover, NC, deposited $232,000 in cash at Playboy in November 1981. Watts has a criminal history which contains arrests for larceny, attempted rape, assault with a deadly

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weapon, possession with intent to distribute marijuana, and other predatory crimes.

A recent Federal investigation in Baltimore, which the attorney general alluded to revealed that a significant narcotics distributor, Maurice King, had used the casinos in Atlantic City to launder profits from his drug business.

King stayed at Resorts three or four times, each time depositing approximately $20,000 in cash. King later made withdrawals for the same amount of money in a check payable to King's stockbroker.

After enough money had been accumulated, the stockbroker purchased a grocery store in the name of King's corporation, KRM Inc. The store was later used to launder heroin profits. King owned two grocery stores under KRM Inc., both located in Baltimore.

Maurice King was convicted in the Federal court for distributing heroin in 1981 and 1982. He had some involvement in the sale of cocaine, and controlled 50 to 60 percent of the heroin market in eastern Baltimore.

In addition to his drug arrests, King was arrested for possession of a deadly weapon, larceny, homicide, counterfeiting, armed assault, robbery, and theft by deception.

Daniel Marino of Brooklyn, NY, a soldier in the Gambino crime family, deposited $50,000 in cash at Caesar's on June 15 1983.

Stuart Holtzman of Fort Launderdale, FL, a convicted diamond smuggler, with arrests for larceny, embezzlement, fraud, and assault, deposited $25,000 in cash at Resorts on June 25 1983.

You can see where bringing this forward that the condition that has existed for years continues.

Dominick Spinala of Las Vegas, who is a close associate of Anthony Spilotro, the principal representative of the Chicago Mob in Las Vegas, deposited $40,000 in cash at the Claridge on June 20, 1983.

Anthony Granata, of Roselle Park, NY, a known cigarette smuggler for the Columbo crime family, deposited $10,000 in cash at the Nugget on June 10, 1983.

Granata has a lengthy arrest record for forgery, counterfeiting, weapons offenses, narcotics, bribery, and tax evasion.

Jerome Siegal of North Miami, FL, deposited $125,500 at Harrah's between June 25 and 27, 1983. And, Siegal is a documented international narcotics trafficker.

Perhaps I should end here. While I can cite a litany of others who are laundering moneys through the casinos in Atlantic City, it is quite apparent that the individuals thus far cited sufficiently demonstrate that the casinos are being used to launder illicitly acquired moneys.

Insofar as the casino industry is a financial marketplace in New Jersey, it, too, should be subjected to regulations that apply to the banking industry.

Without such regulatory oversight, regardless, I might add, of obvious subterfuge which will undoubtedly occur to avoid being reported, the casino industry is subjected to this blatant exploitation that is injurious to their image as a bona fide and morally worthy legitimate industry.

I concur with Attorney General Kimmelman in seeking a change in the current situation. [Complete statement of Colonel Pagano follows:

STATEMENT OF COL. CLINTON L. PAGANO Thank you for the opportunity to testify before this committee on an issue that directly impacts upon the economic fabric of the "underground economy.” As Attor. ney General Kimmelman has so succinctly pointed out, the washing of ill-gotten moines through the Atlantic City casinos is a problem of serious proportions and requiring a change in the Federal regulations as they relate to the casino industry, There is certainly a serious void in the Bank Secrecy Act and hopefully this hearing and others which may follow will create an impetus for necessary change. I would like to, for the record, expand upon Attorney General Kimmelman's remarks, citing specific examples of career criminals who are "washing” monies through the casinos. I will only submit to this committee the more significant findings of our research into this problem; However, it should be recognized that there are numerous other cases that have been eliminated from my testimony for a number of reasons (e.g.; active investigations are being conducted, informant's security is involved, etc.)

Between May 27, 1981 and November 21, 1981, John R. Chabot of Boca Raton, Florida deposited $151,000.00 in cash at the Playboy Casino. Chabat is a documented international narcotic trafficker who was arrested piloting his private plane which contained 776 pounds of marijuana.

Moises Salti of Miami Beach, Florida is a known narcotics trafficker and is involved in the "black market” of United States currency in Cuba. He deposited $125,000.00 in cash at the Playboy Casino between April and June of 1981.

Albert Tumbiolo of West Babylon, New York deposited $175,000.00 in cash at the Playboy Casino between May 8, 1981 and June 1, 1981. Tumbiolo is a documented "loanshark” and controls a gambling network which pays tribute to the "Luchese Crime Family.”

Josheph J. Bongiovanni, Sr. of Philadelphia, Pennsylvania is a documented loanshark” and a close criminal associate of the "Bruno Crime Family." He deposited $125,000.00 in cash at the Playboy Casino between February and March of 1982.

Jacob Leonard Watts of Conover, North Carolina deposited $232,000.00 in cash at the Playboy Casino in November of 1981. Watts has a criminal history which contains arrests for larceny, attempted rape, assault with a deadly weapon, possession with intent to distribute marijuana, and other predatory crimes.

A recent Federal investigaton in Baltimore, Maryland, revealed that a significant narcotics distributor, Maurice King, had used the casinos in Atlantic City to "launder” profits from his drug business. King stayed at resorts internatonal three or four times, each time depositing approximately $20,000.00 in cash. King later would make withdrawals for the same amount of money in a check, payable to King's stockbroker. After enough money had accumulated, the stockbroker purchased a grocery store in the name of King's corporation, "KRM Incorporated.” The store was then also used to “launder” heroin profits. King owned two grocery stores under "KRM Incorporated,” both located in Baltimore.

Maurice King was convicted in Federal court for distributing heroin during 1981 and 1982. He had some involvement in the sale of cocaine, and controlled fifty to sixty percent of the heroin market in eastern Baltimore. In addition to his drug arrests, King was arrested for possession of a deadly weapon, larcency, homicide, counterfeiting, armed assault, robbery and theft by deception.

Daniel J. Marino, of Brookly, New York, a “soldier" in the "Gambino Crime Family” deposited $50,000.00 in cash at Caesars Casino on June 15, 1983.

Stuart M. Holtzman of Fort Lauderdale, Florida, a convicted diamond smuggler with arrests for larceny, embezzlement, fraud, and assault, deposited $25,000.00 in cash at the Resorts Casino on June 25, 1983.

Dominic A. Spinale of Las Vegas, Nevada, who is a close associate of Anthony Spilotro, the principal representative for the "Chicago Mob” in Las Vegas, deposited $40,000.00 in cash at the Claridge Casino on June 20, 1983.

Anthony Granata, of Roselle Park, New Jersey, a known cigarette smuggler for the “Columbo Crime Family,” deposited $10,000.00 in cash at the Golden Nugget Casino on June 10, 1983. Granata has a lengthy arrest record for forgery, counterfeiting, weapons offenses, narcotics, bribery and tax evasion.

Jerome Siegal of North Miami, Florida, deposited $125,500.00 at Harrah's Casino between June 25–27, 1983. Siegal is a documented international narcotics trafficker.

Perhaps I should end here. While I can cite a litinany of others who are "laundering" monies through the casinos in Atlantic City, it is quite apparent that the indi

viduals thus far cited sufficiently demonstrate that the casinos are being used to "launder" illicitly-acquired monies. Insofar as the casino industry is a financial marketplace in New Jersey, it too should be subjected to the regulations that apply to the banking industry. Without such regulatory oversight, regardless I might add of the obvious subterfuges which will undoubtedly occur to avoid being recorded (e.g.; depositing $9,999.00 in cash to avoid the filing of a report), the casino industry is subjected to this blatant exploitation that is injurious to their image as a bona-fide and morally-worthy legitimate industry. I concur with Attorney General Kimmelman in seeking a change in this regulation.

Mr. HUGHES. Thank you, Colonel.

Colonel Dintino, I understand that you do not have a prepared statement, but you will be available for questioning. Am I correct in that?

Mr. DINTINO. Yes.
Mr. HUGHES. All right. Thank you.
Mr. O'Brien, welcome.

TESTIMONY OF THOMAS R. O'BRIEN, DIRECTOR, DIVISION OF

GAMING ENFORCEMENT Mr. O'BRIEN. Thank you, Mr. Chairman, Congressman Sensenbrenner, counsel, members of the staff of this subcommittee.

I, too, appreciate the opportunity to appear at this hearing, and as you will see, as a casino regulator, I share the views of Attorney General Kimmelman and Superintendent Pagano, that we must increase our vigilance to prevent the use of casinos by criminal elements.

Mr. HUGHES. Could you hold it for just a minute? We've got to change the stenographer's tape over here.

(Pause.]

Mr. O'BRIEN. As I started to say, you will see that I share the views of Attorney General Kimmelman and Superintendent Pagano that we must increase our vigilance to prevent the use of casinos by criminal elements to further their illegal ends.

I would like to comment that I share the subcommittee's disappointment that the casino industry has not seen fit to be represented at these proceedings. I think their views on the matter would be extremely helpful to the subcommittee.

I would like to begin by briefly commenting on the nature of the criminal element that we are dealing with in the laundering of money through casinos.

The attorney general has described some of the more noteworthy cases. However, as he has pointed out, they are only the tip of the iceberg.

It is the less significant cases that present the law enforcement community with its stiffest challenge. Why? Because, as you might suspect, most money launderers are sophisticated criminals.

They do not announce to the casino their criminal intent. Rather, they deliberately attempt to create an aura of legitimacy through their use of the legalized gambling establishments.

Many money launderers actively seek the status of a highroller, and they expect to be treated as such by employees of the casinos they patronize.

In order to create this trail of legitimacy, the sophisticated money launderer is willing to risk a certain percentage of his illicit profits before the laundering process is completed.

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The point to be made is that in the area of money laundering, the law enforcement community is dealing with a very difficult problem of detection.

In other words, it is not easy to trace the process of money laundering, although we have had some success in this area.

For example, in one instance, deposits in excess of $2 million were traced by the division of gaming enforcement and State police personnel to a well-known bookmaker with interstate organized criminal connections.

An alias had been used to hide this individual's true identity.

In other cases, we have been able to link fictitious accounts with people who have similar backgrounds, and, in fact, we are working on a number of such investigations at the present time.

But, this brings us to the central focus of today's public hearing. What steps can be taken to most effectively aid State and Federal authorities in the difficult task of detecting money laundering activities.

Now, on the one hand, are Federal regulations bringing casinos into the purview of the Bank Secrecy Act the best solution to the problem? Or, on the other, would expanded State regulations requiring additional record keeping and record reporting of large currency transactions between a casino and its patrons be more effective? Or, is the combination of approaches desirable?

There are presently five_kinds of currency transactions which will be captured by the Federal CTR's. The most common, of course, are the deposits of front money, and the withdrawals of front money by patrons.

Both of these transactions are presently covered by State regulations, and will be more effectively controlled by our proposed changes.

The third type is a normal exchange of currency for currency, which does not appear to be common, nor used to any great extent by the criminal element.

Exchanging currency for chips is a transaction that can occur only over the gaming table, and since by itself provides no benefit to the patron, should, perhaps, be excluded by any proposed changes in the CTR's.

This benefit is only received when the chips are exchanged for currency, and that can occur in Atlantic City only at the cage, and can, therefore, be monitored.

The division of gaming enforcement has reviewed current casino cage procedures at the nine operating casinos in Atlantic City pertaining to exchanges of currency for currency, or gaming chips for currency

With the exception of one establishment, all casinos in Atlantic City maintain some form of a currency exchange log at their casino cage for internal management purposes.

At the present time, the primary purpose for such a currency exchange log is to enable the casino to monitor its own credit players to ensure that cash is not going out the door while outstanding markers are remaining unpaid by the patron.

Requiring such a log to be maintained at the casino cage for purposes of documenting large cash transactions, and then standardiz

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