Star sold ‘dummy’ hotel rooms to cover Chinese gaming money

Star Entertainment issued receipts for ‘dummy’ hotel rooms of up to $250,000 a night as part of a deliberate effort to evade currency flight laws in China and funnel funds into its casinos, the Federal Court has heard.

Star Casino in Sydney.

Star Entertainment issued receipts for “dummy” hotel rooms of up to $250,000 a night as part of a deliberate effort to evade currency flight laws in China and funnel funds into its casinos, the Federal Court has heard.

Simon White SC, counsel for Austrac, said Star allowed gamblers using China Union Pay cards to evade the prohibition of money being sent from China to Australian casinos by transferring money via the company’s hotel business.

Austrac is seeking a $400m fine against Star for money laundering breaches, despite warnings from the troubled casino giant the penalty could force it into liquidation.

“CUP prohibited the card to be used for gambling purposes and Star’s senior management knew that,” Mr White told the court.

“What the senior management therefore did was they required the patron to swipe their card outside of the casino at a terminal in the hotel area. The money that was debited from the card would then be transferred to the (casino) cage.

“An invoice was then issued, not in respect of gambling, but in respect of hotel rooms, which were dummy rooms in some cases, to make it look as though the patron was paying for hotel accommodation.”

Mr White said this was high risk money laundering “deceiving not only the issuer of the card but also the NAB, the banker for Star, which was constantly inquiring about why such large amounts for one-night stays in a hotel room for $250,000 were occurring.

Alvin Chau, founder and chairman of Suncity.

Mr White said that there was a “deliberate courting” of risk by Star’s senior management in relation to money laundering breaches “where billions and billions of dollars were coming into the casino environment.”

Joanne Shepard, counsel for Austrac, said that at the time China was increasing its regulation on capital flight as part of a crackdown on gambling, so it was becoming more difficult to get money from Chinese patrons.

“What Star did instead of accepting China was a high-risk jurisdiction, which required additional controls and concern because of the subterfuge that would be required to send money to Australia, they actually facilitated it through increasingly more obscure ways for the flow of funds from China to Australia,” said Ms Shepard. “If there is a law in a country which prohibits you, for example, from taking out more than $20,000 a year or whatever it might be, and you are hellbent on getting say a million dollars out, that means that you have to engage in subterfuge. So that’s a level or a layer of risk because already there is some covert behaviour taking place in order to evade the capital flight laws.”

Ms Shepard said there were no specific flags on large volumes of cash going through Star’s casino, and large cash transactions were not seen as a risk.

Mr White said Star also had failed to give appropriate consideration to the risks posed by high risk-customers, including Macau-based Alvin Chau who ran the Salon 95 private gaming room inside Star Sydney.

“Looking at the services desk at Salon 95, money was being put into esky bags and there was no understanding of the origin of the money or the source of the money,” said Mr White.

“Third parties were coming into Salon 95 and taking money away, which was prohibited because they weren’t playing a junket.

“There was no gaming activity going on, people were holding up blankets to movie cameras so that they couldn’t see what was being done behind the blanket.”

In 2023, Mr Chau was sentenced to 18 years in jail in Macau after being convicted of operating illegal gaming activities, and running a criminal organisation.

Originally published as Star sold ‘dummy’ hotel rooms to cover Chinese gaming money