CNMI Casino Abuses Turkish H-2B Workers and Is in Desperate Financial Condition

By David North on December 1, 2020

When you mix the H-2B (foreign worker) program with the crooked politics of casinos along with the wayward ways of the Commonwealth of the Northern Mariana Islands (CNMI), a U.S. territory just north of Guam, you get quite a noxious stew.

But that's not our lede, which is: "Imperial Pacific Casino Forces Turkish H-2B Workers to Eat Chinese Food."

The H-2B employers, who had promised the Turks their own kind of food, were also charged with not paying overtime, not paying them at all recently, and denying them pay stubs. These construction workers have sued on these counts and others, according to an article in the Marianas Variety, the hard-charging local daily newspaper.

Meanwhile, although the Imperial Pacific, on the main CNMI island of Saipan, appears to be failing financially, just like an earlier casino on the nearby island of Tinian, the Department of Homeland Security, via the EB-5 program, is facilitating the funding of yet a third casino, again on Tinian, whose population is about 6,000.

That's not the extent of the DHS support of the casinos in these islands, routinely managed by Chinese Mainland operators, it also (with the State Department) runs a CNMI-and-Guam-only conditional parole (CP) program for the Chinese that facilitates the arrival of the customers of the Imperial Pacific. A Chinese national wanting to come to the rest of the U.S. needs a visa, but not if he wants to visit Guam or the CNMI.

Not only does the CP program ease the travel of the casinos' customers, it also was used to bring illegal alien workers to the construction site. Other workers there were on the federal H-2B program, and a local one called CW-1.

But there's more DHS involvement: Although the island of Tinian is literally within sight of the main island in the group, Saipan, which has a port of entry, little Tinian has an international port of entry of its own, all through the courtesy of DHS. Can one fly from, say, Toronto to Martha's Vineyard? No. You would have to change planes in Boston. But one can fly from the Chinese Mainland directly to Tinian and go through a tiny DHS (Customs) operations there.

Bloomberg Businessweek, in an excellent piece of investigative journalism nearly two years ago, headlined its expose: "A Chinese Casino Has Conquered a Piece of America: Construction workers maimed and killed. Millions paid to the Governor's family. An impossibly lucrative gambling operation. And all on U.S. soil."

Since that was written, the casino has either fallen on hard times, or at least it says it has when pressed to pay contractors' bills and local taxes. The Bloomberg account dealt only with the Imperial Pacific, not the other two casinos in the islands.

Why DHS should put its stamp of approval on EB-5 moneys for one casino, and foreign workers for two of them in the Marianas (which is the most Third-Worldish of our territories) is hard to fathom. Given the background of casinos, generally, and of the CNMI government in the recent past (one of its recent governors was impeached for fraud by the usually complacent legislature) and with the islands' decades-long foreign worker scandals, you might think that DHS would be careful, but it was not. Why bring in workers from Turkey, for example, when there are literally billions of workers in the well-populated landscape between Ankara and CNMI, i.e., in all of Asia?

I must admit, however, the detail of promising the Turkish workers Turkish food, and then delivering Chinese, would not have been in my crystal ball.

Why Casinos in These Islands?

A little background is in order.

The Marianas (total population 57,000) consists of three resource-starved but populated islands, and a dozen ones with no or very few people. For centuries, they were under the thumb of the Spanish crown, then they were a German colony for 15 years, then a Japanese colony from 1914 through World War II (which saw a lot of fighting on Saipan), then a U.S.-managed U.N. mandate, and more recently (at the islanders' choice) a largely self-governing U.S. territory. The main island is Saipan, the location of the Imperial Pacific; the other two populated islands are Tinian and Rota.

Since the islands have little to offer economically, the local government (run by the indigenous population, the Chamorros) are eager to expand their economy from a tourism base — its one advantage is that it has the "closest warm beach to Tokyo". Some 20 years ago, before China joined the World Trade Organization (WTO), and when the U.S. immigration law was not yet extended to the islands, it hosted a number of Chinese-owned garment-making sweatshops, with the work being done by badly exploited Chinese women. There is no point in making clothes in CNMI now that China is in the WTO.

Hence the attraction of casinos to CNMI, but these are not the Las Vegas kind, designed to provide entertainment as well as gambling. While the glitz is there, the economic driver of the CNMI casinos is different, and that is what some critics consider money laundering. The players arrive with large amounts of alien money, buy chips with the cash, join in a game in which there are few gains and few losses, and later convert the chips into U.S. money. Bloomberg writes that when the casino was new it handled "more than $2 billion a month in VIP bets".

Problems Caused by the Casinos

According to the Bloomberg article, the labor and on-site work-safety practice were deplorable:

Imperial Pacific International Holdings Ltd. [and its contractors] ... was building a gargantuan casino with a crew of hundreds of Chinese, scores of them working illegally on tourist visas. So many laborers were getting hurt that [some physicians at the hospital] began keeping an unofficial spreadsheet, separate from standard hospital records: a grim catalogue of broken bones, lacerations, puncture wounds, dislocated limbs, and eyes penetrated by flying metal.

The account tells of a workman who had been fatally injured being brought to the hospital without his work clothes, in an effort to pass him off as a careless tourist; and, in another case, a Chinese construction worker with a broken back being rushed not to the hospital, but to a plane to carry him back to China.

As in many other parts of the world, Chinese-run construction projects are often staffed by Chinese workers rather than local ones. In this case, in addition to the illegal aliens, there were some H-2B workers (the Turks, for example) and many other non-local workers, mostly Chinese and Filipinos, who work in the loosely administered CW-1 program.

The reference in the Bloomberg headline to "millions paid [by Imperial Pacific, or its allies] to the governor's family" has nothing to do with the impeached governor (who was an old Jack Abramoff chum, Benigno Fitial), but to the family of Ralph Torres, the current governor, also a Republican. Since local law prevents the actual sale of land to anyone but a member of the native-born population, there is a trade in 99-year leases. In one of a series of Torres-family-linked transactions, Bloomberg reported:

[T]he largest, worth about $4 million, has been a windfall for a man named Serafin Camacho. The governor is first cousin to Camacho's wife, Lillian, and godfather to his adult son, Joel who's a member of the Saipan zoning board, which will rule on Imperial Pacific's future development. ... [T]he deals paid out immediately, even though the lease for one doesn't begin until 2042. [Emphasis added.]

Meanwhile the FBI has raided both the governor's office and the casino, looking for evidence. How often does a U.S. reader hear of a governor's office being raided by the FBI?

Imperial Pacific's Money Problems

The finances of Imperial Pacific are now a shambles, according to this spirited report by the website, which writes about casinos:

Saipan casino operator Imperial Pacific International (IPI) has bought itself six more months in which to craft new excuses for not paying its bills.

On [October 8], the Commonwealth of the Northern Mariana Islands (CNMI) Lottery Commission voted to allow IPI to defer for six months its required $20m payment to the Community Benefit Fund (CBF). The payment was (over)due October 1, meaning IPI will now have until April Fools' Day — a little on the nose, guys — to come up with another reason for not paying.

For the record, the $20m annual CBF payment is a condition of IPI's CNMI casino license, yet the company — which pays zero tax on its gaming revenue — appears to have made little effort to honor this modest commitment. Records are sketchy, but CNMI pols claim the company was already $37m in arrears before this latest payment came due.

IPI has been bleeding red ink for years now, as most VIP gamblers lost interest in traveling to IPI's unfinished Imperial Pacific resort, while the few who did show tended to skip town without paying their sizable credit markers. The pandemic-related closure of Imperial Pacific in March merely poured gasoline on an already raging dumpster fire.

Imperial Pacific's Legal Problems

Although the local government is relaxed in its supervision, to say the least, and DHS has seemingly turned a blind eye to the casinos' numerous missteps, the FBI and the U.S. attorney are on the case. A year or so ago, U.S. Attorney Shawn Anderson filed a superseding indictment of three executives associated with Imperial Pacific: Liwen Wu, Jianmin Xu, and Yan Shi.

The indictment included a single count of violating the RICO conspiracy law, a single count of conspiracy to harbor illegal aliens, 32 counts of harboring illegal aliens, 31 counts of employing them, and five counts of "international promotional money laundering". One of the many charges was that the casino used workers who had arrived from China on the CP program, though employment on that visa is forbidden.

The case has not come to trial as yet, and the U.S. attorney has filed several motions, all approved, to seal the case for 90-day intervals on the dual grounds that no arrests have been made and that the investigation is continuing. For more on this, see case 1:18-cr-00008 in the Pacer system.

In addition, years ago, there was another effort by Chinese interests to run a casino; this one was on Tinian and was called Tinian Dynasty. After years of controversy, and many unpaid bills, it went out of business. More on that later.

EB-5 Decisions on Yet Another Casino

It is within the context of the failed Tinian Dynasty, and the grim atmosphere of the failing Imperial Pacific casino, that DHS has decided to let EB-5 money be used to build a third casino, this one also on tiny Tinian Island. This is the Tinian Ocean View Resort and Casino and the middleman entity bringing the immigrants' investments is the American Northern Marianas Regional Center (ANMRC). Its website (as of November 30) said:

  • ANMRC is America's Top EB-5 Regional Center;
  • Tinian Ocean View Resort and Casino is an [sic] Rare Expedite Approval Project by USCIS;
  • The Shortest I-526 Processing time was 9 days;
  • With a cap of 285 EB-5 investors, currently, over 100 investors have participated in Phase I construction;
  • 93 investors I-526 were approved; others are in processing; The average I-526 processing time is 6 months; No I-526 denial till now;
  • The project is safe under strict supervision of USCIS, SEC, CPA and TCGCC.

Think about the care taken in this kind of enterprise when a half-million investment (since raised to $900,000) could be decided on in nine days. I am not sure what CPA stands for in this context, but TCGCC is the Tinian Casino Gaming Control Commission, which is probably just as rigorous and disciplined as all the other CNMI governmental institutions.

The website's text raises two questions: (1) If the regional center has raised at least $46.5 million (93 x $500,000), why is there not a casino already being built? (2) Given the availability of a slightly used casino, now empty, (the late Tinian Dynasty) why not buy that property, probably for pennies on the dollar, and refurbish it for a few million?

The Tinian Ocean View, at the moment, is a hotel; when one calls them one learns that the casino has not yet arrived, if it ever will.

Will the new Biden administration take a new look at a third casino in CNMI? We will see.

Historical Note. As to the close proximity of the two islands, I can bear personal witness. A little over 20 years ago, when I was with Interior's Office of Insular Affairs, I took a small plane (an aerial taxi) from Saipan to Tinian to look at the Tinian Dynasty. I sat in the co-pilot's seat with the controls locked as we went from one island to the other. I was one of three passengers and am alive today only because the pilot did not have a heart attack on that five- to 10-minute flight. As we lifted off from the Saipan airport, I could easily see Tinian to the south of us.

The casino was glitzy but sparsely attended; I had decided earlier that I would let myself lose $20 and then quit. I got bored and left after losing $16.

A different Tinian landing strip, incidentally, was used when the Enola Gay took off with the atom bomb on August 6, 1945.

The author is grateful to the insights provided on this matter by a friend of a friend who has visited these islands recently.