Trump's casino was a money laundering concern shortly after it opened

Story highlights

  • Trump's Taj Mahal casino broke anti-money laundering rules in the 1990s
  • It was the preferred spot for Russian mobsters to gamble
  • Episodes like this in Trump's business past will get more scrutiny from Senate investigators

(CNN)The Trump Taj Mahal casino broke anti-money laundering rules 106 times in its first year and a half of operation in the early 1990s, according to the IRS in a 1998 settlement agreement.

It's a bit of forgotten history that's buried in federal records held by an investigative unit of the Treasury Department, records that congressional committees investigating Trump's ties to Russia have obtained access to, CNN has learned.
    The casino repeatedly failed to properly report gamblers who cashed out $10,000 or more in a single day, the government said.
    Trump's casino ended up paying the Treasury Department a $477,000 fine in 1998 without admitting any liability under the Bank Secrecy Act.
    CNN obtained 417 pages of Treasury Department documents under the Freedom of Information Act. The records included the 1998 settlement, draft and final copies of a similar settlement in 2015, and exchanges between the Trump casino lawyers and federal regulators.
    The 1998 settlement was publicly reported at the time, and the Associated Press noted it was the largest fine the federal government ever slapped on a casino for violating the Bank Secrecy Act.
    But key details of the casino's cash reporting violations are missing from the publicly released documents, including the identities of the gamblers and casino employees involved in the transactions.
    The congressional committees had asked the Treasury Department's financial crimes enforcement network, or FinCEN, to provide any information it has on Trump, his businesses, his top officials and campaign aides.
    House and Senate investigators both said they had obtained access to data housed at Treasury's FinCEN -- which will include details of these violations and potentially more, according to sources familiar with the investigation.
    Congressional investigators say they are interested in the global network of Trump's finances to determine if FinCEN's data shows connections between Trump associates and Russia.
    The White House declined to comment, referring questions to the Trump Organization.
    In a statement, the Trump Organization said it "has had no involvement with the Taj Mahal, or any other Atlantic City property, for over a decade and has no knowledge of the events referred to in your email."
    The 1998 settlement agreement itself, at just two-pages, is short on details. It only shows that the Taj Mahal "failed to file" currency transaction reports "within the time period required." It states that Trump's casino, which opened in April 1990, made the violations sometime before December 1991.
    In the settlement agreement, the casino disputed "any willful failures" to comply with the Bank Secrecy Act.
    Normally, if a gambler cashes out $10,000-plus in a single day, the casino must fill out a form listing their name, physical address, Social Security number, and birthdate. The casino has 15 days to send the form to the IRS.
    According to a dozen anti-money laundering experts, casinos often run into these problems. But getting caught with 106 violations in the casino's opening years is an indicator of a serious problem, they said.
    The violations date back to a time when the Taj Mahal was the preferred gambling spot for Russian mobsters living in Brooklyn, according to federal investigators who tracked organized crime in New York City. They also occurred at a time when the Taj Mahal casino was short on cash and on the verge of bankruptcy.
    Trump took on an enormous amount of debt to launch what was -- at the time -- the world's largest, most flamboyant casino.
    The Taj Mahal emerged from bankruptcy in late 1991, and Trump sold 50% of his stake to bondholders.
    There were also financial issues at a second location in Atlantic City, The Trump Castle Hotel Casino, according to a 1991 New Jersey Gaming Enforcement report.
    In the report, regulators described an incident on December 18, 1990, the day Trump owed an $18.4 million interest payment.
    An attorney named Howard Snyder walked into the Castle casino with a certified check for $3.35 million drawn from a bank account belonging to Fred C. Trump. Snyder exchanged the check for 670 of the casino's gray gambling chips, which he put into a case. He then walked out of the casino.
    By not cashing out the chips, the transaction amounted to a loan, regulators said.
    New Jersey gaming regulators charged Trump's operation with violations of the state's Casino Control Act for not disclosing his father as a financial backer.
    "The Castle failed to notify the Commission and Division in writing of the fact that the Fred Trump transaction would create a new financial source," the regulators said it their report.
    Regulators imposed a $30,000 civil penalty on the Castle.
    Trump's third gambling operation in Atlantic City, the Trump Plaza Hotel and Casino, had a better record. When the IRS audited its cash reporting in 1998 and 1999, it found that the casino correctly filed 99.99% of the time, according to a filing with the Securities and Exchange Commission.
    FinCEN caught the Trump Taj Mahal dodging anti-money laundering rules again two decades later. In 2015, it fined the casino $10 million.
    In the consent order, the casino admitted it "willfully violated" the Bank Secrecy Act's "reporting and recordkeeping requirements from 2010 through 2012."
    There was "apparent laundering of funds" using slot machine tickets, according to the 2015 consent order. And the casino didn't keep track of gamblers who deliberately cashed out in smaller payments to avoid having to report it to the federal government.
    By then, however, Trump's involvement with the Taj Mahal was in name only. He had departed Atlantic City in 2009, maintaining a small stake in the casino's parent company.