Was Stephen Paddock A Money Launderer?

A while back, RCG wrote something interesting in the comments:

If anyone doubts the news reports that Paddock reported millions in gambling winnings on his tax returns be my guest. It’s rather absurd and the media is not reliable. But to the extent that fact is true, Paddock was not a professional gambler, he was a money launderer. Take dirty cash to the casino, buy chips, gamble for a while, lose a little bit, go to cash out, “could you write me a check please?” Then deposit a check from a casino, tell the IRS you won the money gambling, pay taxes, and viola, clean dollars.

He is right, but I will add something which most people will not have had the experience to realize.

It is never that easy. If it was, somebody used it, the government found out, and that hole was either plugged or intentionally left open and monitored.

I have done everything possible to be anonymous, so I have the experience of sitting down with a well-paid professional, examining all of the obvious machinery available, from international legal to international banking, and trying to hide from everyone, including the government.

What you realize very quickly as you wargame scenarios is that the government is not new to this game. You are not the first person to sit down and try to figure out a way to make dollars appear in your bank account and be legit but be untraceable, and make your activity nearly impossible to track. You can’t even do that easily with legitimate income without a whole other fake business, and even then if you pop a flag they will come in and unravel it in about a second.

Even if you could find a method and execute perfect tradecraft from the beginning (and everybody makes mistakes, let alone a neophyte), this is not the government’s first rodeo. People far smarter, better trained, more motivated, and more importantly, more experienced, have been doing this for decades, and learning firsthand what works and what doesn’t. The mob, the cartels, even parts of big business, have all hired the best lawyers, former spooks, and former law enforcement to help them try to find out the best methods to overcome the machine’s vast tentacles for various reasons.

And as they did it, the government has been tracking them down, learning how they did it, and finding ways to overcome their games as fast as they come up with them. Once the government identifies a method, it will get flagged at multiple levels in such a way anyone who tries it will set off alarms and get enough scrutiny to figure out exactly what is going on. Then, your very attempt to avoid scrutiny can actually bring it down on you – in spades.

Case in point – every chip in a casino has an RFID chip today (link 1, link 2), and it ends up tied to you when it is “bought,” and the tokens you turn in will be tied to you when you cash out. Don’t think it isn’t all in a database tied to the video security footage and cell phone GPS-tracking/call data, probably grabbed from stingrays operated by agents permanently stationed in the casinos. It would not even surprise me if when you walk up to the counter a covert reader pulls the data off your credit cards, and as you move from table to table covert RFID readers in the tables and laid in objects along walkways are cataloging where those chips are going, to link it to the cell data and the video.

Take a rack of chips and hand them to a confederate who adds them to his chips, making them change hands and mix with other RFID chips on a walkway instead of at a table, and that will get flagged, examined, and forwarded where it needs to go. Put the chips in an RFID shield, and I bet it will be noted exactly where they went off grid and who had them last, and the surveillance video footage will get flagged too to see just what happened. And you thought those ever-present casino surveillance cameras were only to catch cheats ripping off the casino. The government is not just going to leave a wonderful, easy, super-safe way to launder money just laying out there.

Then there are suspicious activity reports, which casinos have to file, above and beyond the simple notifications of transactions over $10,000, and probably like banks, transactions below $10,000 which appear to be structured. There are people scrutinizing those. Paddock was throwing off the first two, and maybe the third as well, according to news reports. Then there are the banks which will report everything as well.

And that assumes that the casinos never run detailed background checks on major players, overturning every stone in their lives, in conjunction with law enforcement partners, to know who they are dealing with and stay on the government’s good side. Ask a foreign bank who refuses to deal with the IRS how helping Americans evade US Government scrutiny works out. You cannot open a bank account in some places if you are a US citizen, because banks which don’t share data with the US government don’t want the headaches that would come with being useful to Americans who want to hide their money. I’ll bet if you opened a casino and didn’t give the government full access, a myriad of regulation violations would turn up and your casino would disappear in no time.

I wouldn’t talk about any of that for security reasons, but if I know it as a non-professional, everybody who is trying to launder money knows about it, so it is all open knowledge in those circles.

And that ignores what happens when someone in DC keeping tabs on such things takes a look through the flagged events, scratches their chin, decides you might be interesting, and puts you on the list of people who might be interesting. Then if you have a secret you are really fucked.

And yet the Feds said Paddock was wholly unknown to them, despite his clearly throwing off flags with his suspicious activity reports.

My own impression is, if he was into something illegal, he would have been wrapped up with a bow and turned into a Christmas present for some lucky US Attorney. At the very least the government would know everything about him.

Which raises the question, if he wasn’t into something illegal, or even if he was, why would reports say that he’d go to Vegas, get anal about playing two specific poker machines that happened to be side by side for a specific 12 hour period of time, and walk out with millions in cash, without any overt government scrutiny that we know about, and with the casinos comping him, desperate to have him come back again to take more casino money?

There are a million possible theories. My favorite? He was a money launderer who was turned into an agent by Fedguv, and he provided solid evidence to use for prosecutions against somebody big. But he got made, and this was how the cartel, or the mob, or the political deep state simultaneously eliminated him, and prevented the overt government Law Enforcement machinery from ever using any of the evidence – by discrediting Paddock and turning the entire op into a Class I clusterfuck.

Everything else was just collateral damage. Think after the biggest mass-shooting in American history the US Government will enter evidence, gathered by Paddock, that would reveal the op and its deadly end results, into any court where an opposing counsel will immediately leak it to the media?

But we’ll never know.

My guess is that whatever the truth, this story will now disappear down the memory hole.

And in these days, that is just how things go.

Tell everyone about r/K Theory, because there is just no hiding it from anyone