Should duo’s gambling have raised flags?

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Should duo’s gambling have raised flags?

Missing money

A criminal complaint filed against Amy Scarpelli says she embezzled $5,215,000 from the U.S. Bank in Miamisburg, beginning in 2010. Here are the year by year totals as documented in a federal affidavit:

2010 (April 1 to Dec. 31): $65,000

2011: $602,000

2012: $1,903,000

2013: $2,091,000

2014 (Jan. 1 to April 23): $554,000

 

‘Icon’ rewards

Some of the perks that come with “Icon” status, the top rewards level at Penn National Gaming establishments:

  • Annual 3-night trip to any Penn National casino (other than a player’s primary casino)
  • $500 airfare reimbursement toward cruise or casino trip
  • Annual complimentary cruise on Carnival Cruise Lines
  • Celebration dinners
  • Preferred parking
  • Personal host
  • VIP lounge access, where available

Source: Penn National Gaming

The Dayton Daily News has extensively chronicled the saga of Amy Scarpelli, who federal investigators say used her position as manager of a Miamisburg bank to embezzle millions of dollars to support a lavish lifestyle. The newspaper’s reporting revealed that even as federal investigators closed in, Scarpelli was getting treated with privileges and perks at an Indiana casino.

Accused bank embezzler Amy Scarpelli and her domestic partner were treated like royalty at the Hollywood Lawrenceburg casino.

They gambled so extensively on the Indiana riverboat, beginning in 2009, that they earned “Icon” status. That is the highest of five levels in the casino’s “Marquee Rewards” program that provides perks such as complimentary cruises, free hotel rooms, dinners and airfare reimbursement.

But while the high-rolling lifestyle of Scarpelli and partner Deanna Leis caught the attention of the casino, which noted that the two were losing more than they were winning, there is no evidence the information was forwarded to authorities, or that any legal red flags were raised.

“It’s something we don’t talk about,” said Bob Tenenbaum, spokesman for Penn National Gaming, which operates the casino. He added that casinos “work with local law enforcement when appropriate.”

Casinos are required to report suspicious activity, according to Steve Hudak, spokesman for the U.S. Treasury’s Financial Crimes Enforcement Network, or FinCEN.

“When they suspect something illegal is going on, they are obligated to report a Suspicious Activity Report,” Hudak said. “We get over a million SARs every year about suspicious activity, mostly from banks but plenty from casinos.”

But SAR reports are subjective, meaning casinos have discretion in such cases. It’s not clear if the casino filed any Suspicious Activity Reports involving Scarpelli, but charges weren’t brought against her until earlier this month, more than five years after she began regularly visiting the casino and plunking down huge sums of cash.

How casinos vet high-rollers could soon change. The U.S. Treasury is championing a regulation that would require casinos to take a closer look at how big-money players acquire the funds they bring into gambling venues.

“You cater to your customers and know everything about your high-rollers,” Jennifer Shasky Calvery, director of the Financial Crimes Enforcement Network, said during a speech at the 2013 Global Gaming Expo. “You can and should get information about their sources of funds to meet your obligations to identify and report suspicious activity …

“When some casinos say that probing their customers about their activities outside of the casino will drive customers away, I sense that they feel that it is not their responsibility to protect their institutions, and our financial system as a whole, from being used by illicit actors.”

Scarpelli, who is accused of embezzling $5.2 million from the Miamisburg branch of U.S. Bank, appeared in federal court in Dayton on Thursday.

Hudak said casinos are supposed to have anti-money laundering programs in place. In addition to Suspicious Activity Reports, law enforcement investigators can examine Currency Transaction Reports, which are required for any cash transaction of $10,000 or more.

Scarpelli and Leis met this $10,000 threshold more than 300 times.

Casino records obtained by the U.S. Secret Service show that Scarpelli deposited in excess of $10,000 into casino machines a total of 179 times — deposits totaling nearly $2.9 million. If she loaded $9,000 into a slot machine, that money would not show up in the report.

Leis, the government says, deposited in excess of $10,000 on 124 occasions, for a total of $1.8 million in CTR transactions.

Together, the two gambled nearly $20 million at the Hollywood, losing more than $1.1 million, according to investigators.

The Secret Service affidavit does not mention trips to other casinos, so their losses might have been even greater.

When asked if the couple gambled at more than one casino, Todd Bagby, resident agent in charge of the Dayton Secret Service office, said, “I’m quite sure they did.”

Losses pile up

The affidavit says that Scarpelli and Leis favored slot machines and gambled at the Hollywood casino “roughly every three days” in 2009. By 2014, they were gambling “roughly every two days and often on a daily basis.”

“It was reported unanimously by the present Hollywood casino employees that both Scarpelli and Leis lost more currency in gambling at the casino than they won,” the affidavit says.

The affidavit outlines how Scarpelli and Leis began gambling seriously at the Hollywood in 2009 — a year before Scarpelli allegedly began embezzling from the bank she managed.

Scarpelli was escorted out of the bank on April 18 and fired April 30. She was arrested Oct. 2.

The amount Scarpelli stole, the government says, increased each year before reaching $2 million in 2013.

At the same time, her gambling losses were piling up. Scarpelli lost $15,235 at the casino in 2009 before losing $325,000 in 2012 and $201,000 in 2013. Leis, whom the Secret Service says has not been employed since 2008, lost $231,000 in 2012 and $162,000 in 2013.

Christine Reilly, senior research director at the National Center for Responsible Gaming, says Scarpelli likely has a gambling problem.

“It obviously did something for her — it either made her feel better or less chaotic,” Reilly said. “From afar we can’t diagnose what’s going on, but clearly (this) is a situation where you have excessive gambling and really bad consequences, and in spite of those consequences the person can’t stop.”

Scarpelli’s attorney, Dennis Gump, says Scarpelli needs help.

“The obvious impression we’re given from what we’ve read is this is an addiction just like heroin, just like alcohol or other drugs,” Gump said. “I assume a professional will address that when the time comes.”

Icon status

To reach “Icon” status at a Penn National Gaming property, a gambler has to accumulate a minimum of 400,000 “tier points” every six months on a player’s card. Hollywood players earn points by spending money at a casino or racino.

“The more they play, the more rewards they get,” Tenenbaum said. “It not only encourages people to come back, but it’s also done for competitive reasons. If they’re going to gamble, you want them to come to your facility, not somebody’s else’s.”

The Horseshoe Cincinnati, owned by Caesars Entertainment, has four levels in its Total Rewards program: Gold, Platinum, Diamond and Seven Stars. Customers can earn 10,000 points by signing up for a Visa card and charging $750 in the first 90 days. They also can earn one “reward credit” for every $5 played on slot machines.

Among the rewards offered by the Rivers Casino in Pittsburgh are no-fee ATM transactions. The Diamond level at Soaring Eagle Casino in Mount Pleasant, Michigan, features free cash checking.

The Hollywood catered to Scarpelli and Leis. When sifting through the trash at the West Carrollton home the two women shared, investigators found a Hollywood flier offering $2,000 in “free play” in April 2014.

Casinos entice customers with free play, which they deduct from their revenue totals before they are taxed. Last month, the Hollywood Lawrenceburg gave out more than $1.2 million in free plays to its customers.

Investigators also found “a ton of tickets” for a March 27, 2014, drawing at the Hollywood, which the affidavit says is “another perk to get large gamblers to the casino.”

Gamblers were invited to put their tickets into a bucket for several money drawings between 6 and 9 p.m. that night.

Tough to spot

Identifying that someone has a gambling problem is a tough call, according to experts. Casinos and racinos do not ask customers about their finances when they sign up for rewards programs.

“Whenever you look at how much people are losing, nobody knows the context,” said Reilly of the National Center for Responsible Gaming. “You don’t know what their personal wealth might be. A very wealthy person could lose a lot of money, but it doesn’t make a dent. But someone who doesn’t have a lot of money could lose $50 and be in trouble.”

Gambling addictions “never happen overnight,” Reilly said. “It sneaks up on people. One day you’re gambling recreationally, then you fall into it. … Clearly, it’s pretty obvious something is going on (in Scarpelli’s case). People are not driven to commit illegal acts unless they’re desperate.”

Casinos offer voluntary exclusion programs for problem gamblers. A total of 2,046 gamblers are on the active VEP list in Indiana, while Ohio’s list includes 1,179 people. The lists include names of people who have banned themselves from casino gaming.

Tenenbaum noted that people have different gambling thresholds.

“Whether you’re gaming responsibly or not does not necessarily have anything to do with how much you’re gambling,” he said. “Obviously, some people can afford to gamble a lot more than other people.”

The Ohio Casino Control Commission, which oversees four casinos, has gaming agents on the job 24 hours a day.

“Our agents have encountered instances where people are using casinos to attempt to launder money that has been gotten illegally,” the OCCC’s Jessica Franks said. “They do work closely with a lot of local law enforcement agencies, and state and federal. We’ve been involved in cases where we get notice to ‘keep an eye on a guy for us.’ ”

Big spenders

Ironically, Scarpelli’s luck at the casino seemed to turn just as federal investigators began closing in. After losing big at the casino every year from 2009, she basically broke even this year.

“She was probably convincing herself that she could go win it back, which is distorted thinking because we all know the odds are with the house,” Reilly said.

The losses weren’t enough to keep Scarpelli and Leis from enjoying a lavish lifestyle, investigators say.

Leis bought a $200,000 house at Lake Waynoka, about 40 miles southeast of Cincinnati, according to the affidavit. She paid cash for the house in May 2013.

Scarpelli and Leis also built a $72,000 pole barn at the site, storing boats, campers, motorcycles and a pair of classic Chevrolet Camaros there, investigators say.

Scarpelli and Leis reported gambling winnings in 2011 and 2012, the affidavit says, although the state of Ohio does not allow gamblers to offset winnings with losses for tax purposes. The couple lost more than $700,000 combined those two years, investigators said.

With gambling venues expanding rapidly in the Midwest, the Secret Service expects more of its cases will take investigators into casinos.

“We’ve had probably between five and 10 cases where our suspects frequented casinos, maybe because of addiction problems or to launder funds,” Bagby said. “I think we’ll be working more and more with them in the future.”

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