Money laundering case uncovers shady deals involving Saipan casino
Lobbyist wined and dined CNMI officials
By Bryan Manabat
Saipan—Federal authorities have seized assets from two Bank of Saipan accounts, which were linked to a wire fraud and money laundering case involving two politicians and two business owners.
The forfeiture complaint filed Dec. 30 by the U.S. Attorney’s Office for the Districts of Guam and the CNMI revealed under-the-table transactions including illegal political contributions supposedly in exchange for favorable official policy actions.
The complaint did not name the individuals involved in the case. They were identified in court filings only as “political figures” and “business partners.”
The circumstances narrated in the complaint reflected an incident on Nov. 7, 2019, when the FBI executed search warrants at the Office of the Governor, IPI and the office of Alfred Yue of Marianas Consultancy Services LLC, among other offices.
Marianas Consultancy Services LLC was a registered consultant of IPI.
On Nov. 6, 2019, Federal Judge Ramona Manglona issued a search warrant authorizing FBI agents to search multiple locations on Saipan for printed and electronic documents, tax papers, bank records, cash, jewelry, luxury items and other suspicious assets.
Subjects of the search warrant include Gov. Ralph Torres, first lady Diann Torres, his bothers Vincent, Victorino and Joaquin Torres, who own Torres Brothers Law Offices, his sisters-in-law Brenda and Rowina Torres, casino lobbyist Alfred Chi-Yam Yue, realtor Ron Li Anderson.
The civil complaint for forfeiture referred to two bank accounts that belonged to “MCS” and the funds were allegedly used in wire fraud and money laundering totaling $310,276.26.
Magistrate Judge Heather Kennedy ordered the seizure of funds from the two accounts on Jan. 6. The funds are currently in the custody of the U.S. Department of the Treasury, the complaint said.
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According to court documents, authorities seized $271,087.88 from “MCS account 1,” and $39,188.38 from “MCS account 2."
The holder of both MCS accounts was identified as “A.Y.” who is also the sole owner and operator of MCS.
The complaint mentioned a Chinese investment holding company identified only as a "foreign parent company," registered in Bermuda and headquartered in Hong Kong and maintains a subsidiary in the CNMI, where it was building a resort and casino in the CNMI.
Imperial Pacific International is the sole casino licensee in the CNMI and the developer of the now inactive gaming facility in Garapan.
The 21-page complaint cited bank records and campaign financial statements, which showed that between June 2014 and January 2019, A.Y. and MCS contributed more than $46,000 to political candidates, campaigns, inauguration committees and political parties, "including ‘individual 3’ and ‘individual 4.’"
The funds in question included a $10,000 contribution to an inaugural committee in January 2019.
The candidates’ campaign contribution statements failed to disclose A.Y. and MCS’s contributions to their campaigns.
Court filings also alleged that in November 2019, A.Y. arranged and partially paid for several overseas trips for CNMI government officials, including "individual 4" on at least one occasion.
A.Y. frequently met with government officials for golf, meals, drinks and karaoke, oftentimes footing the bill that went up as high as $1,000.
CNMI law bars CNMI government officials from accepting non-monetary gifts with a value greater than $50.
While A.Y. defined a portion of the money he received from the company as personal salary and business income from MCS, CNMI tax filings from 2014 to 2019 showed that A.Y. treated a substantial portion of the money as “business expenses,” such as payments for travel, golf, meals, drinking and karaoke with government officials.
Such expenses included nearly $200,000 for travel, meals, and entertainment, as well as at least $100,000 for non-specifically defined “other expenses."
MCS account records between 2014 and 2019 showed frequent cash withdrawals and encashments of checks made payable to A.Y., typically in the amount of $1,000.
Bank records for “individuals 1 and 2” showed numerous cash deposits typically amounting to $1,000.
A.Y. frequently met with “individuals 1 and 2,” and the meetings coincided with deposits of cash in increments of $1,000 into accounts belonging to individual 1 or individual 2, or to their business.
Individuals 1 and 2 are closely affiliated with individual 3, and evidence showed that individuals 1 and 2 frequently gave substantial amounts of money to individual 3.
In addition, according to CNMI tax and other records between 2016 and 2018, MCS spent more than $320,000 on “legal and professional fees," nearly half of which were, in fact, payments from MCS account 2 to persons in the CNMI who could influence policy involving the company, including one person close to individual 4.
Although several of these payees were purportedly hired as “consultants” to MCS, A.Y. did not ask, expect, or receive much in exchange for these fees.
In the case of the person close to individual 4, MCS paid that person $62,500 over one year. In exchange, that person provided MCS with less than eight pages of “memos,” much of whose content consisted of little more than publicly available information that was cut and pasted from sources readily found on the internet.
The complaint alleged that in exchange for the perks provided by A.Y., the CNMI government (through individual 3, individual 4, and other officials who benefitted from MCS’s largesse) "extended the company uniquely favorable treatment," such as allowing the company to escape liquidated damages after missing construction deadlines, extending the company’s operation and related deadlines with little or no penalty, amending regulations to accommodate the company’s development schedule, and deferring enforcement of tax, labor and other contractual obligations owed by the company to the CNMI."
In one example of particular importance, A.Y. managed to influence officials into dropping a requirement for the casino builder to either provide "verifiable proof that it was financially capable of completing its construction project, or to at least post a completion bond.”
As of the date of this complaint, the project is far from complete. It appeared that the company did not have enough money to finish the project. There was no completion bond in place to mitigate the damage, the complaint added.
A.Y.'s filings from 2015 through 2018 claimed MCS received no contributions and made no expenditures in furtherance of its lobbying activities, a claim directly contradicted by MCS’s own business records and tax filings.
The complaint also stated that from July 2014 to about November 2019., “A.Y. transferred more than 85 percent of the total funds in MCS Account 1 (89 percent of whose deposits at relevant times came from accounts in China) into MCS account 2, totaling approximately $1.579 million, effectively masking that the funds originated from foreign entities and from the company."
In addition, some of those transfers of funds from MCS accounts consisted of more than $10,000 in proceeds from the fraud scheme.