A grand reopening for The Gardens Casino — to show off the fruits of a $90 million renovation — could take place later this month, but state gambling regulators want to revoke the licenses that allow the casino’s principals to operate.

An accusation, dated Oct. 17, outlines California Bureau of Gambling Control officials’ contention that the casino and key figures there, including Chief Executive David Moskowitz, should be denied gambling licenses.

State officials allege that casino operators failed to disclose to California officials that the operators failed to comply with a federal anti-money laundering law, which in their view, would justify revoking the licenses that allow the venue and its trustees to operate. The Gardens Casino has already admitted to deficiencies in its ability to obey the federal law, according to state and federal officials.

“In view of that nondisclosure and admitted violations of federal and state laws, respondents continued licensure undermines the public trust that licensed gambling does not endanger the public health, safety and welfare,” the accusation reads.

A hearing to decide the casino’s fate has yet to be scheduled. In the meantime, Gardens Casino can remain open with a provisional license, said California Gambling Control Commission spokesman Eric Petosky. That license is valid through Nov. 30, 2018.

Gardens Casino personnel were not available to comment Wednesday. A woman in the casino’s legal department said comment from the casino’s general counsel may be available today.

The casino is a major employer and source of revenue to Hawaiian Gardens’ city government.

Federal penalty

The Financial Crimes Enforcement Network, or FinCEN, is part of the Treasury Department and announced its issuance of a $2.8 million fine against Gardens Casino this past July. That fine followed Internal Revenue Service examinations and casino management’s admission of failures to abide by the Bank Secrecy Act that resulted, in the government’s words, in making the casino “susceptible to money laundering and terrorist financing activity.”

The Bank Secrecy Act is a 1970 law requiring business to keep records that enable law enforcement officials investigating money laundering to track illegal transactions. For example, the law mandates that businesses report single or related cash transactions whenever $10,000 changes hands.

FinCEN reported that Gardens Casino was in violation of this law over a period extending from September 2009 through July of last year. Gardens Casino’s managers did not implement controls needed to follow federal law despite a 2011 IRS examination and a 2013 consultant’s review that brought problems to light.

Those problems included casino personnel’s failures to keep track of exactly who was involved in cash transactions there, according to FinCEN. In one case, a woman known only as “Michelle” was referred to in 15 suspicious activity reports and five currency transaction reports, but casino personnel had no records of her actual identity.

The same “Michelle” and others believed to be her agents were able to continue activities at Gardens Casino even though she did not identify herself to casino employees on at least three separate occasions. According to FinCEN, casino managers told the IRS they did not think they had to prevent Michelle or others who refuse to provide identification from transacting business there and that doing so may result in customers switching to other Southern California casinos.

“Michelle” wasn’t the only the only case of someone doing business at Gardens Casino without sufficient records being kept.

Eighty percent of suspicious activity reports filed between Jan. 1, 2013, and Sept. 18, 2014, from Gardens Casino referred to at least one unknown subject being involved in transactions. What’s more, 347 cash transactions involving unknown parties between Oct. 1, 2013, and Dec. 31, 2013, were for amounts between $9,000 and $10,000, which FinCEN observed are just short of the level that triggers mandatory reporting.

The FinCEN’s consent agreement with Gardens Casino reports that casino operators admitted to those and other violations described within the document. In addition to the fine, the agreement also required the casino provide a risk assessment report to the government and to hire an external auditor.

State proceedings

Gardens Casino’s license renewal request went before the California Gambling Control Commission during a mid-November meeting. Petosky, the commission’s spokesman, said commissioners issued the provisional license pending further proceedings.

The allegations against Gardens Casino are set to go before an administrative law judge at some point in the future, Petosky said. A provisional license allows Gardens Casino to stay open through Nov. 30, 2018, depending upon when the licensing issue can be resolved.

Gardens Casino has nearly completed a $90 million renovation that involved the construction of an entirely new casino building. Gov. Jerry Brown visited the casino in December 2013 to help casino owners celebrate the beginning of their project.

At the time of the governor’s appearance, casino operators expected to spend $45 million on the project. The amount doubled over the course of renovations, which involved construction of a large kitchen, VIP area and gaming space large enough to accommodate 5,000 to 7,000 customers.