Mirage employee admitted to lying about cash forms

By Liz Benston

Wednesday, May 28, 2003 | 10:58 a.m.

A former Mirage employee in charge of filing required forms on large cash transactions with the federal government admitted he lied to his supervisors about having mailed the forms to hide the fact that he was months behind, investigators say.

An affidavit filed last week in Las Vegas Justice Court by the Nevada Attorney General's office, which was used to arrest former Mirage manager Christopher Morishita, says that Morishita lied to immediate supervisors on multiple occasions when asked if he had filed the forms.

Mirage controller Brian Burtenshaw said he learned Morishita's department was behind during the summer of 2001, the affidavit said. Several weeks later, Morishita told Burtenshaw that "everything was up to date," it said.

Another Mirage controller, Scott Torman, said Morishita never revealed problems with the filings, the affidavit said. Torman said he questioned Morishita about a transaction log. Morishita admitted to Torman that he was behind but indicated that the forms were "always filed immediately."

Morishita also admitted that he deceiving internal auditors about having filed the forms, the document said. He then admitted lying to internal auditors about where he kept postal return receipt cards that would have verified that the forms had been received by the Internal Revenue Service, it said.

Burtenshaw and Torman have since left the Mirage and Morishita has been terminated. Bob Kocienski, chief financial officer at the Mirage, also has left the company

The four employees could not be reached for comment. Nine people have either left the company or have been fired in connection with the reporting violations, MGM MIRAGE spokesman Alan Feldman said, declining to name the employees.

Chief Deputy Attorney General Elizabeth Quillen, who is leading the prosecution against Morishita, declined to comment on why Morishita acted as he did when he apparently understood the consequences.

Various sources have speculated on those motives but revealing them outside the courtroom would be "unfair," Quillen said.

Morishita was arrested last week by Gaming Control Board agents in connection with the investigation and faces an arraignment June 23 in Las Vegas Justice Court on four felony counts of failing to maintain records and report cash transactions.

The Attorney General doesn't expect to make other arrests in connection with the Mirage investigation.

It is the first time criminal charges have been filed for violations of Regulation 6a, a state law requiring casinos to file Currency Transaction Reports on transactions of $10,000 or more with the Financial Crimes Enforcement Network of the U.S. Department of the Treasury.

The affidavit sheds further light on a related complaint filed late Friday by the Gaming Control Board against Mirage owner MGM MIRAGE.

The complaint alleges a breakdown in the company's regulatory control system and several instances in which internal and external auditors improperly signed off on the company's reporting system without checking further into whether the documents had actually been filed.

The Mirage resort failed to file about 14,900 cash transaction reports with the federal government from April 20, 2001 through October 6, 2002 and from November 23, 2002 through January 6, 2003, according to the complaint. It also failed to file one report in 2000.

From the second quarter of 2001 through the third quarter of 2002, the Mirage's internal auditors filed a compliance checklist with gaming regulators that indicated the company had filed the reports correctly and that copies of the reports were properly maintained on the premises, according to the board's complaint.

"Had a review of the documents been properly conducted, the internal auditors would have found that the original (currency reports) had not been filed with the IRS and there were no copies of the (reports)," the complaint said.

Regulators have since determined that the forms were filled out but weren't mailed off to authorities.

MGM MIRAGE has initiated a series of new internal auditing procedures as a result of the errors, Chief Executive Officer Terry Lanni said in a statement Friday.

"As the state investigation confirmed, this matter did not involve money laundering but was instead a very serious administrative oversight," Lanni said.

The company voluntarily reported the errors to the Gaming Control Board in February following a notice from the agency that a cash reporting audit was upcoming. Casinos must file the documents within 15 days of the transaction.

The casino's annual self-audit, which requires the property to spot check a sample of reports filed at some point during the year, turned up no irregularities, the complaint said.

The company's internal auditors said they reviewed reports from December 22, June 23 and Sept. 27 in 2001 and from Feb. 9, April 6 and July 2, 2002 and "improperly concluded" that the documents had been filed by deadline, it said.

In addition, MGM MIRAGE's independent accountants performed only one review of the internal audit department in 2001 and failed to conduct any walk-throughs in 2002, it continued.

Arthur Andersen served as the company's independent accountant during the periods in question. After news detailing Andersen's involvement in the Enron accounting scandal, MGM MIRAGE last year ditched Andersen for Deloitte & Touche.

Last May, Deloitte & Touche announced it had acquired the majority of Andersen's gaming business and hired the top Las Vegas partners away from the crumbling accounting giant.

Tom Roche, Deloitte's national gaming industry director and the former head of casino compliance at Andersen, could not be reached for comment Tuesday.

MGM MIRAGE last week agreed to pay $5 million in fines to regulators for failing to file the reports. The penalty marks the largest in Nevada casino history and is five times the $1 million paid by Binion's Horseshoe in 1993 for cash reporting violations. The agreement is subject to final approval by the Nevada Gaming Commission.