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U.S. v. Las Vegas Sands Corp.

 
:
Las Vegas Sands Corp.
:
DOJ Criminal
:
January 19, 2017
:
U.S. v. Las Vegas Sands Corp.
:
U.S. v. Las Vegas Sands Corp. (2017).
:
Las Vegas Sands was given a 25% discount off the bottom of the Sentencing Guidelines range after the DOJ credited the company for self-disclosing the violation, cooperating with the investigation, and making efforts to remediate the improper conduct.
:
Entertainment
:
China
:
2006; 2007; 2008; 2009.
:
Unnamed foreign officials.
:
Las Vegas Sands Corp. (“LVS”), a Nevada corporation, owns and operates integrated resorts and casinos in Asia and the United States through a network of subsidiaries. LVS maintains a class of publicly traded securities on the New York Stock Exchange.

According to the DOJ, from 2006 to at least 2009, LVS transferred approximately $60 million in payments to a Chinese consultant (the “Consultant”) to execute a series of business transactions described below. In doing so, the DOJ claims that LVS failed to devise and maintain a reasonable system of internal accounting controls over its operations in China and Macao.

First, in 2007, LVS allegedly sought to purchase a basketball team with the purported purpose of improving the company’s image in China and attracting visitors to the company’s casinos. However, according to the DOJ, the Chinese Basketball Association prohibited gaming companies such as LVS from owning a team. To circumvent the regulatory prohibition, the DOJ alleged that LVS used the Consultant as a straw man who purchased the basketball team on behalf of LVS. In order to execute the transaction, an LVS subsidiary in China allegedly transferred several million dollars to companies controlled by the Consultant, but the contractual documentation for these transactions did not accurately reflect the identities of the parties involved. Despite engaging a forensic accounting firm to review the payments to the Consultant, both the Consultant and an LVS executive were able to impede the accounting firm’s progress. Nevertheless, by the end of its review in February 2008, the accounting firm had uncovered over $700,000 in unaccounted-for funds.

Second, from 2006 through 2008, LVS allegedly used the Consultant as an intermediary to create a joint venture to develop a resort facility with a Chinese state-owned travel agency. As part of this joint venture, the DOJ claims that LVS agreed to acquire several floors of a large building in Beijing. LVS allegedly paid approximately $42 million—without proper approval by an authorized LVS employee—to the Consultant’s company to acquire the floors in the Beijing building. In addition, ignoring concerns of an employee in LVS’s finance department and of outside counsel, LVS allegedly paid the Consultant’s companies approximately $3.6 million as a pre-payment for a five-year lease of the Beijing building’s basement.

Notwithstanding the red flags raised by the transactions above, LVS allegedly continued to pay the Consultant millions of dollars over the course of 2008 and 2009 without any discernible business purpose or proper documentation.

On January 19, 2017, the DOJ announced that it had entered into a non-prosecution agreement with LVS to resolve alleged violations of the FCPA. According to the NPA, LVS agreed to pay a $6,960,000 criminal penalty to resolve the charges. The DOJ’s sanction was in addition to a $9 million sanction imposed by the SEC in 2016.
:
Non-prosecution Agreement
:
Las Vegas Sands paid a total criminal penalty of $6,960,000.
:
6,960,000
:
0
:
Issuer
:
U.S.
:
United States
:
Other Business Advantage
:
Not stated.
:
Cash, Wire/check
:
Customs Broker or Agent/Consultant
:
60,000,000
:
China
:
No
:
No