False Shuffle Trips Up Blackjack Players

January 18, 2011

They do quite a bit of surveillance at casinos.  They got video cameras. They got folks walking the floors, keeping an eye on things.

Some say, if they catch you cheating, they have a dark alley, a lead pipe, and a very convincing way of making you promise to play fair. 

Frankly, those policing casinos do a better job than those policing our stock markets.  Yeah, I know, there's gambling and then there's investing - but, c'mon, loaded dice or Bernie Madoff, a rigged game is still a rigged game.

In "Wall Street Blackjack Player Busts, Busted, and Barred" (BrokeAndBroker.com / May 23, 2010), I reported about the arrest of  five players and the dealer at a blackjack table at the Mohegan Sun Casino in Connecticut.  It seems that the six were under in-house surveillance that allegedly caught them cheating.  The players and dealer were initially charged with committing a sixth-degree larceny on September 20, 2008.

Or so the allegations went - however, as to four of the players charged, the prosecution dropped all charges. In some sense, the house went bust.  On the other hand, the odds are always in the house's favor. Lady Luck did not smile favorably upon the remaining two defendants.

In October 2008, Rory Shaffer, the 28-year-old blackjack dealer, and 21-year-old Samuel M. Pierce, one of the five arrested players, were charged in Connecticut's Norwich Superior Court with first degree larceny, cheating while gambling, and conspiracy to commit first degree larceny. Allegedly, Pierce and Shaffer engaged in a scheme to steal $16,000 from a casino whereby Pierce was allowed to keep chips that he bet on losing hands.

You know, I sort of like that idea of keeping your losing bets. Just imagine if we could do the same thing in the stock market  - you buy a stock, the stock goes down, but, hey, no problem, you get to keep your initial investment.  Wouldn't it be more fun investing if "all bets are off" was the rule when you lost money!

FINRA Cuts the Deck

Anyway, back to young Mr. Pierce who was snagged in that blackjack mess at the Mohegan Sun Casino.  In 2007, Pierce apparently started a Wall Street career and from July 24, 2008, through January 19, 2009, he was an Associated Person with Financial Industry Regulatory Authority ("FINRA) member firm Citigroup Global Markets, Inc. (Citigroup).  Okay, so here's an interesting twist: When Pierce allegedly got nabbed at the Mohegan Sun Casino, FINRA had this rule (from its predecessor the National Association of Securities Dealers or "NASD") that stated:

NASD Conduct Rule 2110: Standards of Commercial Honor and Principles of Trade:

A member, in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade.

How did Pierce's playing blackjack become a securities-industry regulatory issue? Hey, I just report this stuff; don't look to me for explanations about the mysteries and politics of securities regulation.  Remember, FINRA is the same industry cop that missed virtually every recent, major Wall Street fraud, even when folks were frantically calling with tips. But, hey, a 28-year-old alleged card cheat certainly seems to have caught their attention. Not prepared to tolerate a dastardly card-shark in its midst, FINRA pursued Pierce for violating Rule 2110. 

Pursuant to a FINRA Letter of Acceptance, Waiver and Consent (AWC #2008015405101, March 9, 2010), without admitting or denying the findings, Pierce settled FINRA's regulatory case against him by agreeing to a Bar. Notably, only the alleged criminal blackjack scheme is referenced by FINRA.  Why? Oh, minor detail: There was never any criminal conviction.

Pierce's attorney, David T. Grudberg, of Jacobs, Grudberg, Belt, Dow & Katz, P.C. of New Haven, Ct. advised me that Pierce was participating in Connecticut's pretrial program for accelerated rehabilitation ("AR"), which gives certain first-time offenders probation for up to two years, during which time the criminal prosecution is suspended. If the defendant satisfactorily completes the probationary period he may then apply to the court for dismissal of the charges against him.

As matters presently stand,  Pierce has not admitted to any criminal conduct and the State has not proven any criminal conduct.  Accordingly, Pierce continues to be entitled to the presumption of innocence.  Further, all charges against Pierce will likely be dismissed if he complies with the terms of the AR.  As a matter of law, in two years, his arrest and the charges against him may well be rendered non-events.

Sanctimonious Hypocrisy ?

As you may have inferred, FINRA's regulatory case against this kid is just a bit too sanctimonious and hypocritical for me.   It's also yet another troubling example of how Wall Street regulation seems more about frying the small fish but giving wide berth to the big whales. I mean, seriously - what the hell are "high standards of commercial honor" and "just and equitable principles of trade" when it comes to Wall Street? 

Speaking of blackjack, did you hear about this recent criminal case?

The Tran Organization

On May 24, 2007, a three-count indictment was unsealed, charging Van Thu Tran and 13 others each with

  • one count of conspiracy to participate in the affairs of a racketeering enterprise;
  • one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and
  • one count of conspiracy to commit money laundering.

The indictment also charged five separate individuals each with 

  • one count of conspiracy to commit several offenses against the United States, including conspiracy to steal money and other property from Indian tribal casinos; and
  • one count of conspiracy to commit money laundering.

NOTE: The charges contained in the indictments are merely accusations and defendants are presumed innocent until proven guilty at trial beyond a reasonable doubt.

On January 14, 2011, Tran, 45, the co-founder of a criminal enterprise known as the Tran Organization, pled guilty in federal court in San Diego to conspiring to participate in the organization's scheme to cheat casinos across the country out of millions of dollars. 

In her plea agreement, Tran admitted that around August 2002, she, along with co-conspirators Phuong Quoc Truong, Tai Khiem Tran and others, created the Tran Organization (a criminal enterprise), based in San Diego and elsewhere, for the purpose of cheating  casinos.  Frankly, Tran and her co-conspirators did a bang-up job because she admitted to obtaining up to $7 million during the scheme.

The False Shuffle

To date,  three separate indictments have alleged that the defendants and others executed a "false shuffle" cheating scheme at casinos in the United States and Canada during blackjack and mini-baccarat games. Allegedly,  members of the criminal organization bribed casino card dealers and supervisors to perform false shuffles during card games, thereby creating "slugs" or groups of unshuffled cards.  After tracking the order of cards dealt in a card game, a member of the organization would signal to the card dealer to perform a "false shuffle," and members of the group would then bet on the known order of cards when the slug appeared on the table. By doing so, members of the conspiracy repeatedly won thousands of dollars during card games, including winning several hundred thousand dollars on one occasion.

Oh, I see - something like insider trading on Wall Street.  Sure seems to cut down on the risk of losing, no?

The indictments also allege that the members of the organization used sophisticated mechanisms for tracking the order of cards during games, including hidden transmitter devices and specially created software that would predict the order in which cards would reappear during blackjack games.

And on Wall Street we would call that a trading algorithm.  Of course, maybe some of the geniuses who create these sophisticated programs could significantly enhance their results if they had some crew feeding them the order of third-party stock sales and purchases. According to some recent federal indictments, I think that's how some hedge funds manage their high returns.  Who knew - this whole scheme was based upon cheating casinos.  Stock markets. Casinos. Gee - maybe there are more similarities between those two enterprises than we thought. 

To date, 42 defendants have pleaded guilty to charges relating to the casino-cheating conspiracy, including: Van Thu Tran, Phuong Quoc Truong, Tai Khiem Tran, Anh Phuong Tran, Phat Ngoc Tran, Martin Lee Aronson, Liem Thanh Lam, George Michael Lee, Tien Duc Vu, Son Hong Johnson, Barry Wellford, John Tran, Willy Tran, Tuan Mong Le, Duc Cong Nguyen, Han Truong Nguyen, Roderick Vang Thor, Sisouvanh Mounlasy, Navin Nith, Renee Cuc Quang, Ui Suk Weller, Phally Ly, Khunsela Prom, Hop Nguyen, Hogan Ho, Darrell Saicocie, Bryan Arce, Qua Le, Outtama Keovongsa, Leap Kong, Thang Viet Huynh, Don Man Duong, Dan Thich, Jimmy Ha, Eric Isbell, Brandon Pete Landry, James Root, Jesus Rodriguez, Jason Cavin, Nedra Fay Landry, Connie Holmes, and Geraldo Montaz.

These defendants admitted to targeting, with the aid of co-conspirators, a combined total of approximately 29 casinos in the United States and Canada during the course of the conspiracy, including:

  1. Beau Rivage Casino in Biloxi, Miss.;
  2. Casino Rama, in Orillia, Ontario, Canada;
  3. Foxwoods Resort Casino in Ledyard, Conn.;
  4. Gold Strike Casino in Tunica, Miss.;
  5. Horseshoe Casino in Bossier City, La.;
  6. Horseshoe Casino and Hotel in Tunica;
  7. Isle of Capri Casino in Westlake, La.;
  8. Majestic Star Casino in Gary, Ind.;
  9. Mohegan Sun Resort Casino in Uncasville, Conn.;
  10. Palace Station Casino in Las Vegas;
  11. Resorts East Chicago Hotel and Casino in East Chicago, Ind.;
  12. Sycuan Casino in El Cajon, Calif.;
  13. Cache Creek Indian Bingo and Casino in Brooks, Calif.;
  14. Emerald Queen Casino in Tacoma, Wash.;
  15. Imperial Palace Casino in Biloxi, Miss.;
  16. Argosy Casino in Baton Rouge, La.;
  17. Trump 29 Casino in Coachella, Calif.;
  18. Isle of Capri Casino in Bossier City.;
  19. Agua Caliente Casino in Rancho Mirage, Calif.;
  20. Spa Resort Casino in Palm Springs, Calif.;
  21. Pechanga Resort and Casino in Temecula, Calif.;
  22. L'Auberge du Lac Casino in Lake Charles, La.;
  23. Nooksack River Casino in Deming, Wash.;
  24. Barona Valley Ranch Casino and Resort in Lakeside, Calif.;
  25. Caesars Indiana Hotel and Casino in Elizabeth, Ind.;
  26. Monte Carlo Resort and Casino in Las Vegas;
  27. Harrah's Casino in Lake Charles;
  28. Golden Moon Casino in Choctaw, Miss.; and
  29. Viejas Casino in Alpine, Calif.

Two other defendants, Ha Thuy Giang and Tammie Huynh, pled guilty to tax offenses stemming from the investigation, and Khai Hong Tran admitted to the offenses alleged in a 2007 U.S. indictment when he pled guilty to casino-cheating offenses in Canada.

On Dec. 15, 2010, Mike Waseleski, a former casino card dealer, was found guilty by a federal jury in San Diego for his role in the Tran Organization's cheating scheme to steal approximately $1.5 million from Resorts East Chicago Casino. Waseleski's sentencing is scheduled for March 28, 2011.

At sentencing, scheduled for April 11, 2011, Tran faces a maximum penalty of 20 years in prison, a $250,000 fine, forfeiture of certain assets, and payment of restitution to the victims. 

According to federal prosecutors, with the exception of two fugitives, every member of the organization has now been convicted.

So?? Ya wanna double-down on that Apple short you put on last week?