SpyCast 8.15.23
Ep 598 | 8.15.23

"The Gambling Capital of the World: Intelligence, Las Vegas Style!" – with James Lockhart and Keith Michaels


Andrew Hammond: Welcome to "SpyCast," brought to you from the home of the world's preeminent collection of intelligence and espionage-related artifacts, the International Spy Museum. I'm your host Dr. Andrew Hammond, the museum's historian and curator. Every week, we delve into the past, present, or future of this most fascinating of topics, coming up next on "SpyCast". Wow.

James Lockhart: So I don't know if you remember, Keith, but our first -- one of our first observations you and I are, going back to 1994, at this major strip property was if you show up in a suit, and you walk around like you own it, nobody --

Keith Michaels: Yep.

James Lockhart: -- no one is going to stop you or question you.

Keith Michaels: Is going to question you.

Andrew Hammond: This week's episode is on intelligence Las Vegas style. Besides being a location for nation-state sponsored intelligence activities in both fact and fiction, casinos are big business. Huge sums of money are at stake. As such, they effectively run surveillance and counterintelligence operations against their clientele and, more specifically, anyone who may be tempted to try to cheat them. To discuss this, who better to join us than the former director of gaming surveillance, a major strip hotel, Keith Michaels, and former gaming surveillance operator turned intelligence historian, James Lockhart. Whether it's Caesars Palace, the Tropicana, the Bellagio, or MGM Grand, someone may be watching you. In this episode, we discuss professional surveillance operations in Las Vegas, casino counter intelligence, Vegas as a site of nation-state intelligence activity, and how corporations displace the mafia in Sin City. The original podcast and intelligence since 200, we are "SpyCast." Now sit back, relax, and enjoy the show. Okay, I'm so pleased to be doing this podcast with both of you gentlemen on intelligence and casinos. So I just wondered if you could just tell our listeners just a little bit more about how you came to be interested in this topic or why you're knowledgeable about it.

Keith Michaels: Yeah, I can jump in. I had a brief background with the Las Vegas Metro Police Department, and, you know, there was -- there was something that I learned relatively quickly is that my interest in unraveling some of these complicated issues and from an investigative perspective was certainly something that was unique to me and was something I was really driven to kind of stumbled into the surveillance realm in the gaming industry in Las Vegas as a matter of my background. And, hey, let's put this person there because they seem to have some understanding of investigative oversight. So kind of stumbled into it, but very quickly realized how much I love the environment.

Andrew Hammond: James?

James Lockhart: I was drawn to it as a fan of Ian Fleming's James Bond novels, Casino Royale.

Andrew Hammond: Really? Wow.

James Lockhart: Set in a casino. When I learned about it, what was going on in, and it was, you know, mysteriously known as the eye or the eye in the sky. I grew up in Las Vegas. I was in high school there. After a brief stint in military service, in the Marines, I was just drawn into it. I got my entry point came not from gaming knowledge at first. That came later. But because I could write, I could write well, I could kind of figure out investigations, put information together, and do reports on. So I fit right in and stayed for about five years or so. Keith was in for about 30?

Keith Michaels: Not quite that long, but still in the industry in a -- in a different capacity. So some of my engagement now still crosses lines from time to time with the -- with the surveillance and the security side.

Andrew Hammond: So it's pretty fair to say that both of you have actually conducted intelligence, counterintelligence, in Las Vegas?

James Lockhart: Absolutely.

Andrew Hammond: So this is one of the things that I'm trying to explore on the podcast, the ways in which intelligence is not just about the nation-state, especially anymore. So we're going to go on later on to discuss some famous nation-state examples. But just for our listeners that are -- that are wondering what's going on here, could you just tell them about casinos, as a sight of espionage of intelligence? So we're going to dig in more to what you guys do, but just tell us is there a famous example from history where the CIA, the FBI, the KGB have been involved in Las Vegas, maybe recruiting spies, conducting counterintelligence operations? Yeah, just give us a juicy story to get started.

James Lockhart: We could start with one. There was one -- this was at a very widespread property with multiple branches around Las Vegas called Station Casinos, Station's properties. And we were in collaboration with -- voluntary collaboration -- with the FBI to identify and get photographs, video footage, other identifying features of a major figure in organized crime, narcotics. And we were part of the overall setup that got this person, photographed him on film, mannerisms and everything that they collect. When they're very passively just getting information on this person. It was about 20, 20ish years ago. Yeah, this is everything from vehicles, license plates, walk, gait, sitting down, conversations, photos from multiple angles, video, part of an intelligence collection effort of a larger operation that we only knew a little of.

Keith Michaels: Yeah, there were -- there were a number of opportunities. In fact, I've often commented about the fact that it was interesting that in my -- I think in my surveillance days, it was -- I had the opportunity to work with a much more diverse group of law enforcement and others from the US Postal Inspectors Office to the attorneys general from multiple states, FBI, DEA, gaming jurisdictions from multiple jurisdictions. I was reached out to once. There was a group that were conducted -- were in the midst of a mini baccarat scam, where the functionality of the process was they would get a dealer inserted, hired, into a particular property, a dealer that could deal the game of mini baccarat well. And then he would perform a false shuffle, and in the game, for everyone's understanding, the casino operators often provide a sheet of paper to track all of the cards that come out of the shoe. It helps. It makes the players believe that it helps them to track what is referred to as the third card, which is an integral part of the game of baccarat. So we allow them to track every card that comes out of the shoe an eight, six, or eight-deck shoe. And so once that shoe was done, the dealer would perform a false shuffle, keeping a slug of about 50 to 60 cards unshuffled.

Andrew Hammond: What's a slug? Sorry, is that just like a grouping of cards?

Keith Michaels: Correct.

Andrew Hammond: Okay.

Keith Michaels: So we've got this grouping of cards about 50 or 60 cards that has not been randomized through the shuffle process, a manual shuffle process on the game. Bearing in mind when that slug shows up, once it's loaded back into the shoe, as soon as you see one, two, three cards, and you have that order because you wrote them down during the previous shoe, now you know the outcome of all of the hands until that slug has been utilized, until those 50 or 60 cards have been used up. So now all of a sudden your bedding goes from table minimum, let's say $50 a hand, to table maximum at $1,000 a hand or $5,000 a hand for every player sitting on, for all six spots on a -- on a mini baccarat table, so extremely lucrative. Takes a long time to set up. You've got to get a dealer through the employment process and everything else. Well, the Ontario Provincial Police were on to this group as well as the FBI so because they were hitting casinos, Canada and United States and South America. And they were digging through their trash one night and found a notepad from one of the properties that I was working for at the time, just like they put in a hotel room next to your nightstand. So they reached out to me and said, "Hey, these guys have been in your hotel because they have a notepad from the nightstand." So we started looking for the false shuffle, which is challenging to say the least to be able to see from a surveillance perspective. We started looking for the aggressive play, the jump from a minimum bet to a maximum bet. But the interesting thing that threw us, the most challenging loop in all of this was the dealer inserted this slug, if you think of six or eight decks of cards in a -- in a shoe that they are manually delivered out of, he would put this slug towards the back portion of the shoe so that by the time it presented itself on the game, he had already been tapped out on a break. So every time we saw these, what looked like money movements that were commensurate with knowing the cards in the shoe, it was a different dealer on the game. So it really took us a minute to -- actually we were on this case with Nevada Gaming Control for about 40 days. And every time we thought, okay, we've seen the false shuffle. We've seen this. We think it's about to go down. You know, it's three o'clock in the morning. A couple of times, I've got my daughter with me in a car seat. We're rushing into the hotel to try to take this whole group of people down, including the dealer.

Andrew Hammond: Wow.

Keith Michaels: And then it wouldn't come to fruition, until one night it finally -- all the pieces were in place. It finally went down. It was -- it was literally a tables overturned in the middle of the casino, people on the floor, against the walls. It was a pretty big deal. But we took down a significant group of this broader organization that was -- that was -- when OPP reached out to me, they said they were already up 30 million oe what they had scammed North American casinos out of.

Andrew Hammond: And just them, bear with me for a second, Keith, I just want to help our listeners get their head around this. Can you just in a couple of sentences just explain to people that don't know what baccarat is.

Keith Michaels: So the reality of the game, as any other game, it's a game of chance. The first two cards out of the shoe, cards are delivered to the banker location. Cards are delivered to the player location. And then there is a third card rule that says, depending on the value of the combination of the first two cards will determine whether or not a third card is delivered on either side, to the banker side or to the player side. And then ultimately, the hand that is closest to nine is the winning hand. If you go over nine, you lose. And so again, simple game of choice, but very popular in Asian circles. Also very popular -- this particular casino in Las Vegas had the largest Asian table games play off of the strip. It was a locals property. So very significant Asian table games play for a non-strip property.

James Lockhart: Baccarat is the game featured in Ian Fleming's fiction.

Andrew Hammond: Yeah, yeah.

James Lockhart: It's in Casino Royale, and it's in the opening scene of Dr. No, the famous scene where Connery introduces himself. That's a baccarat table.

Andrew Hammond: Yeah, I think Casino Royale really helps you be there. I think Fleming does a great job of describing what it was like to be in that particular -- that particular hotel.

James Lockhart: Well, Fleming, I have reread that, again, of course since my time in surveillance, and Fleming's description of gaming procedures, tradecraft operations, is spot on. He knew games.

Andrew Hammond: Wow, and that's one of the interesting things about the job that you guys had because it was quite interesting for me to learn that you really have to know the games inside and out. You have to know so much. There's a -- there's a whole lingo involved. It's just like -- it's just like espionage or intelligence. There's a certain language that people use to refer to it. There's certain rules of the game, the certain ways that people try to manipulate the game. And you have to know all of that back to front, inside out, and be able to recite it in your sleep. Is that just a gradual process, or is it an exam before you begin to do it, you have to pass it? Or yeah, how does -- how does that onboarding of knowledge take place?

James Lockhart: If you don't have the basic knowledge of at least the common games like blackjack, and dice, and roulette or the wheel, you're not going to be able to work very effectively in a surveillance room. You get a phone call from someone in the pit. If you don't know what that is, you're already a little lost. And they say, look, somebody's past posting on the columns, on the wheels. Can you check that out? You have to know what that is. It's a felony, right? Or somebody talked about sliding dice or any number of things. If you're not in touch with the tradecraft of how they deal the games, if you can't look at a game and glance out of the know, are they dealing it right? Are they dealing it improperly? Is there some cheating going on? Is the integrity of the game being violated at a glance? Then you're in trouble. Now, the more complicated games, baccarat, mini-baccarat, pai gow, any number of others. You know, some people are in the progress of learning those, but I think, at a minimum, you've got to know blackjack, dice, and roulette.

Andrew Hammond: Keith?

Keith Michaels: Yeah, interestingly enough, your question, Andrew, makes me think about there was a -- one of the chief of enforcement also named Keith, at the time, was mindful of the fact that because the enforcement officers, their primary training through many of the years was from a law enforcement perspective. So, you know, weapons training, this training, report writing, handcuffing, all of that stuff. And what they realized that there was a gap in understanding, and so an enforcement agent would respond to a property to resolve or to look into a dispute or a challenge on a game. So dice or pie gow tiles, which is the Chinese dominoes. And again, complicated. There's a verbal aspect to dice that you can't hear through the surveillance equipment because the United States Supreme Court decided, back in the 70s, that there is an expectation of privacy on a dice game so where some of the properties had begun to mic the dice games, they had to take those out. So the chief at the time said, you know what? I want my guys to walk into a surveillance room to look at the footage and to understand that what they're looking at. And so I started teaching games, dice, and some roulette and pai gow tiles to enforcement agents at the hotel I was working at, at the time, at the Tropicana. And then eventually found myself teaching those games and some other game protection related activities in the Enforcement Division Academy. And we used the community college, one of the local colleges had a gaming lab set up with fully functional machines, like, you know, completely accurate table games, camera systems, everything. So I would go there and teach classes of new gaming control board enforcement agents to make sure that they had a better understanding when they walked into a surveillance room and had to, for the time being, make a determination on a case.

Andrew Hammond: And just sticking with that example, for a second there, for the full shuffle, just so I can completely understand it. The cards and that slug, those 50 cards, they're still got -- they're not going to be in the order when you buy a new deck of cards, seven of diamonds, eight of diamonds, nine of diamonds. They're still going to be randomized, but it's just someone already knows what the randomization is, and it stays that way. So it doesn't get any further.

James Lockhart: When they open a new pack, it's all in where like you say, but they mix it up. They shuffle it around. But it's not just one deck that we're talking about. It's multiple decks.

Andrew Hammond: Yeah, yeah.

Keith Michaels: Yeah, so it's eight decks. And one of the -- one of the things -- it's kind of like technology today. We see that there are a large group of people that would just rather, for example, the hotel environment. There's a lot of people that would just rather make the reservation online, check in online, use their phone as their key card. The less people they have to talk to, the better. But on the baccarat, in particular, in some of those games, part of the allure of the game is that they do this massive wash of all the cards when -- once they -- the shoe is emptied, they get to the cut card. Now they have to combine all eight decks again from the discard rack onto the table. And they wash them all, and they break them down, and they put a stack. It's basically a half circle in front of the dealer, and they pull from a clock perspective. They pull from the 11 o'clock stack and the two o'clock stack, and they intermingle those. So what they do with one of those stacks that they pull from the two o'clock side and the 10 o'clock side is, when they riffle them, they are not -- they are then pushing those cards through so that they don't come out mixed. they come out exactly as they were when they did the riffle. And ultimately, they end up -- they can keep track of that one slug, that 50 to 60 cards, basically a deck. They can keep track of that through all these manipulations, and then they know exactly where it is when they load all eight decks back into this shoe that, you know, that allows you to pull out one card at a time. They know where that slug is. And it's 2/3 of the way back in this particular case. So by the time that dealer gets that far into the shoe, he's been tapped out by the next dealer that's going to come on the table. And it makes it harder to identify him.

James Lockhart: And to put this in a little more, you know, plain language, we're talking about people who are very highly skilled with card tricks, magician tricks, illusionist, sleight of hand, that sort of thing.

Andrew Hammond: Okay, so it's not just -- it's not just some chump with a born to lose [inaudible].

James Lockhart: No, no, no, I mean, in some cases, Keith, correct me if I'm wrong, but you got to -- you got to watch footage back in slow-motion to catch it. I mean, it's, they're good.

Andrew Hammond: Wow.

James Lockhart: And the people who practice for hours and hours and hours over a long period of time.

Andrew Hammond: Let's take a quick second to make sure everyone is up to speed on the rules of the game baccarat, which happens to be James Bond's game of choice. Don't worry, we won't get into the nitty gritty. I'll just tell you what you need to know. The object of the game is to get as close to nine as possible, and baccarat aces are worth one. Hands and face cards are worth zero, and all other cards are worth their face value. In the event that the cards equal a number higher than nine, drop the first digit. So a 14 for example becomes a four. To begin the game, players must place a bet on either of three outcomes: your hand winning, the bankers hand winning, or a tie. Two cards are dealt for the bank and two for each player. Let's say that I'm a dealer, and Erin sets the hand at my baccarat table. She makes her bet, and I deal the hands. She's feeling confident. She bets on the player. Erin's hand has a king and a six, so she has six. Not too bad actually. And my hand is an eight, under nine. So I have 17. Drop the first digit, I have seven. I win, and I take Erin's money. So you can see how knowing the order of the cards in this game with help you. Better luck next time, Erin. How many people were in this gang?

Keith Michaels: My recollection is we believe it was somewhere around 50 to 60 people. The group that we took down that night because there was players. There were lookouts. There was a transcriber. So during the shuffle, that mix, big, elaborate process, they took all of the tracking cards from the players, gave them to this guy. He would walk all the way down to the end of the casino, in this particular case down to the sports book, get a new clean piece of paper, write down the numbers nice and neat and tidy so everyone -- and make multiple copies. So he would transcribe during the shuffle. He would get back to the table because he knew we had a little bit of time because it was going to be deeper in the shoe. So he get back to the table, make sure everybody got a copy, so it was pretty well organized.

Andrew Hammond: Wow, that's incredible. And it's kind of interesting because just to put it in spy terms, the dealer that has been recruited to get through the process, it's almost like they've got a mole on the inside --

Keith Michaels: Sure.

Andrew Hammond: -- that they've -- that they've planted inside. So really, really fascinating. I'm just curious. Like doing this job and learning all of this stuff and watching all of this, these sophisticated games that people are playing, you must have like packed up a few tips yourself for how to -- how to like gamble, or is it like in the drug trade? Is it like don't get high on your own supply? Do you never play the tables?

James Lockhart: Yeah, yeah, yeah. Keith, did you ever -- did you ever sit down at a blackjack table and play and try to count? So I had once, and I lost big time.

Keith Michaels: I had a property president. And generally, the surveillance groups will report to a -- to our corporate entity because there's the potential to have to investigate anybody on the property. So we have a direct report to a corporate like internal affairs or, you know, corporate surveillance or something. But there's a dotted line to the property president because he oversees all of those operations. And I had a particular property president that, you know, Las Vegas, you know, employment meetings and executive committee meetings were probably a little bit different than some places we would, you know, we eat in our own restaurants. We drink our own booze. You know, back in the day, there were very few restrictions, and so, but when we would go out to another property, he would always say to me, "Hey, I want to go play blackjack, and I need you to stand behind me and tell me what to do." Because he knew I could count cards for him, and I could tell him when to, you know, increase his bad split, double down, stand based on card counting, and some, you know, some good basic strategy. But yeah, other than that, I didn't -- I didn't partake.

Andrew Hammond: And help me understand this. Is card counting actually -- is it illegal? And if it's not illegal, is it just if you figure out that someone is doing it in a -- in a casino then, they're not allowed to play anymore? What's the status of card counting?

James Lockhart: If they just use knowledge from their own mind, it's not illegal.

Andrew Hammond: Okay.

Keith Michaels: Yeah, as long as there's no, yeah, machine, if there's no machine. If you find it, you're never really 100% sure you find it. You can identify someone who's playing a game as if they were counting cards. And maybe they're winning. Maybe they're [inaudible]. And you just, at least in my experience, you would inform the pit, and then they would decide what they were going to do with it or not. If someone who was very greedy, they might ask them to stay here and play any game but blackjack. If it was someone who wins some, lose some, they'd kind of just tolerate it because you would never really know for certain what is going on in the mind of this person. Are they really counting cards? Are they just getting lucky, right? But I believe the Supreme Court in the state of Nevada ruled that card counting in itself was not illegal. It's not a crime.

James Lockhart: Yeah, just normal card counting is not illegal. But as is common in most states around the US, private property retains that right to refuse service to anyone. In fact, one of my early-on cases new to the gaming surveillance world, I was -- and this was in the 90s. I was always kind of intrigued by the fact that, you know, post-9/11, there was a real big deal made about facial recognition for terrorists and people that we knew were bad guys. And it was just the -- if you -- if you paid any attention to that, you know, tech world and technology and crime and investigation, it was really kind of a lot of focus on facial recognition. And now it's going to be used at airports, and it's going to be used in all these places. And the federal government is, you know, doing everything they can to keep you safe with their latest and greatest technology. And I thought we've been using that to catch card counters for five years. So it's not a new -- not a new thing by any stretch. But we had a guy that was in this book of known card counters. And his first name was Jordan. And so I called the pit and said, "Hey, you know, BJ14 C3, that's Jordan so and so." And the shift manager calls me back. And again, I was new to this environment. And he's like, "You called about the card counter." And I said, "Yeah," I said, "He's a known guy." And they're like, "Yeah, we know. He's here all the time." And I'm like, "So why do you let him play?" He said, "Well, because consistently across the board, whatever he wins in blackjack, he loses twice as much in dice."

Andrew Hammond: Okay. So his -- so his blackjack was funding his dice game. Wow.

James Lockhart: Yeah.

Andrew Hammond: That's really interesting, and I'm just wondering now. So I'd like to understand the infrastructure of this operation inside the hotel. Help me understand it. So you've mentioned the pit. You've mentioned, you guys are looking at cameras, like analyzing everything. But there's more parts to your job. You're doing investigations. You're writing reports, those sorts of things. But help me just understand the whole landscape, the whole ecosystem, in the hotel that's trying to prevent people rigging the system.

James Lockhart: All right, a big picture overview. It's a hybrid state of Nevada private corporation operation designed to protect the integrity not only of the casino games and gaming operations in an individual property, but reputation of the gaming industry as a whole. So the state is involved in setting up -- you would call it -- if we're translating it for our audience, the state is involved in big-time setting up the intelligence requirements through state legislation. When has to be watched, when has to be reported, how it works, who has access to this information? Who gets the reports, etc.? And you've got this semi-autonomous surveillance room set up, surveillance system, really, a whole capability, that is the tip of the spear or the eyes and ears of monitoring this, which is really pervasive around each individual properties. And there's some collaboration between properties in networks, like the Surveillance Information Network, and others, a sharing of information. And it's mostly focused on money moving through the casino, being collected by the casino, being counted and reported in taxes, etc., people buying in, cashing out, playing, and some of the rules are consistent with international standards of moving money. So if it's over $10,000, that triggers a need to fully identify people and record what's going on. So it's a mix of these things. That's our start with the big picture overview.

Andrew Hammond: So the core of the intelligence operation is this surveillance room that's semi-autonomous?

Keith Michaels: Yes.

James Lockhart: I'd say so, yeah.

Andrew Hammond: Yeah. And what's the pit?

Keith Michaels: The pit is -- and I apologize -- the pit is a grouping or a layout of table games. So it could be like, where I'm at today, they have an entire pit. So it's 12 gaming tables that make up a pit. And this particular casino, they have a pit totally dedicated to roulette games. So everybody in that area is just playing on multiple different roulette games.

James Lockhart: So imagine that the collection of the table games are organized in semi-circles or circular oval like shapes, which could be the image of a pit, right, a hole in the ground. And in the center of that, is a pit boss. You have one person who is the supervising floor. He's usually in a suit or sheet with separate floor supervisors assigned to two or three games at a time. And so there are multiple levels of surveillance going on inside the pit. But there are multiple pits, obviously, you know, in a casino, as well.

Andrew Hammond: And all of those, the people that work in the pit, the pit bosses, and the -- I'm assuming the dealers as well, they are -- they are all also eyes and ears that are watching out for anything that's improper. So there's the technical part of it, and then there's the sort of human intelligence part of it, if you want to put it like that.

James Lockhart: They could go both ways. But yeah, I mean, ideally, and this is something I was -- we were talking about before, you know, James Olson, CIA's chief of counterintelligence, and some advice he gave. He talked about owning the street. You have to own the street. Now, for casino intelligence surveillance operations, that's accomplished not only through this surveillance system, but close communications, constant communications, really, with the pit boss, with floor supervisors who are a different level of eyes and ears on the ground watching individual games. They're feeding information up through phone calls, usually, but cannot go the other way around, or there are room -- if, you know, insider threat problems if you got to. You know, I'll give you one quick example at the Casino Royale where I worked. We had information from a neighboring property, I believe was the Imperial Palace, that one of our dealers was arriving in their casino nightly and cashing in about $2,000 worth of our checks in exchange for foreign checks. You can exchange checks from one casino to another for their checks and play on their tables, about $2,000 a night. Well, his tips were only about $100, $150 a night. So once we found out about it, that begged the question, well, where's he getting $2,000 in our checks every night, right? And closer inspection, we saw him dealing roulette, and also, very cleverly, you know, using a sleight of hand movement, palming 100 at a time, folding his arms as the roulette wheel spun, and everyone is watching the roulette wheel. And as they're watching it, he kind of -- one of his hands that had palmed the checks would drop them into an inside waistband pouch where he had kind of a baggie, and he just collected this. And every night, I mean, do the math, because it'd be going on for months, right? So that's $10,000 a week or so that this guy was just taking. And of course, once we found him and caught him and set up a sting with the gaming [inaudible] and took him down in the -- on the casino floor in front of everybody to make a point that you can't get away with it.

Andrew Hammond: Wow.

James Lockhart: But, you know, actually he did -- he did get away with it for a time. But the point is, is that these people who are kind of the frontline of the surveillance operation of protecting the integrity of the game, they could be involved in compromising it as well. And when you find something like that, the first question that you start pursuing in surveillance, you can because it's isolated from everything else is how far does this go? So why was this guy getting away with this for so long? So was the floor supervisor in on it, and is he profiting from it? Is the pit boss maybe getting some kind of a, you know, a return on this? Sometimes people in the pit could really be the crucial link though. There's also a pit clerk, someone who's like a secretary in the pit, who basically writes the requests for the fills and takes the credits and takes phone calls and basically does just a business, the paper business of the pit. And we got a call at a major strip property, where Keith and I were once, from a pit clerk who told us about a scheme from a floor person who would supervise the roulette wheel who had been fired for dishonesty. And he came back with a plan that involved this pit clerk. He thought he'd recruited her. She was like a walk-in agent for us. She came and told us the whole thing because she couldn't live with that. And he had a security guard also, and his plan was to request a fake fill of about $500,000 in casino checks for a -- for a baccarat, high roller of baccarat table, and have it delivered to this pit where the pit clerk would have given it to the pit boss who would have said, no, I didn't order it. Let's send it back. And then the security guard would have walked it back, but handed it off to this roulette floor person who had been fired, and he would walk out. We watched him do the dress rehearsal of this -- I don't know -- two or three times before the whole thing fell apart. It was kind of comical because, in the end, his -- when he tried to execute at the security guard he'd recruited was things had not gone according to plan. There was a shift change in security. And so there was a security guard who didn't know anything about it. And when he took the fake fill to the pit, the pit said we didn't order it. He just took it right back to the cashier's cage and then our ringleader, the roulette floor person, went to the cage with a -- like a .357 Magnum pointed at him, just demands, in a panic, "Give me all the money." He puts it in a -- he didn't think it through too well -- puts it in a plastic shopping bag, and he's running out this property which has a very big front desk area with marble and just big. And you can kind of see the bag that's carrying $500,000 in checks is stretching, stretching, stretching, and then suddenly it breaks, and these checks just spill out all over this whole marble floor. And you see 20, 30 guests just diving down because each one of these checks was, you know, $100 or more. And he ended up getting a cut, but we would have known nothing about that had it not been for the pit clerk who acted as a walk-in and just called, I don't know, conscious and said, you know, "This guy's asked me to do this, and I don't want to be involved in it."

Andrew Hammond: The mob and Las Vegas have went hand in hand ever since it was glint in Bugsy Siegel's eye. It did exist before as a desert stop-over for GIs. Sorry, I couldn't resist quoting Hyman Roth from The Godfather II, but it was Bugsy's vision that made the strip what it was today, including the oldest hotel still in operation, the Flamingo. Bugsy was an influential member of the National Crime Syndicate, which was largely made up of Jewish gangsters like Siegel and the Italian-American mafia like Lucky Luciano, and a founder of its enforcement arm, Murder, Inc. Vegas would go on to be considered an open city for mafia families across the United States. I.e., it was not under the ownership of any one of them. The Chicago mob was strongly represented and controlled several casinos. Some listeners may remember this from the movie Casino, starring Robert De Niro and Joe Pesci. And fight the demise of the mafia in Vegas, as suggested in the movie, is linked to the demise of the enforcer, Anthony "The Ant" Spilotro. He was also the person who set up the so-called Hole in the Wall Gang who burgled by, well, making holes in the walls of banks. As you may recall from the movie, him and his brother actually were found buried on top of one another in an Indiana cornfield for running afoul of the bosses back home. As my grandfather used to say, "If you fly with the crows, get shot with the crows." So the eye, that's like an informal name for all of the cameras, the technical surveillance network. Is that correct?

Keith Michaels: Yeah, it's often referred to as the -- as the eye in the sky.

Andrew Hammond: And so we've got the eye in the sky, and this is the thing that you see in the movies back in the day. It would be people on walkways over the tables with a pair of binoculars and so forth. That's correct?

James Lockhart: That's the 70s. That's the 70s.

Andrew Hammond: Yeah.

James Lockhart: If you go back to the Bond movie, Diamonds are Forever, Diamonds are Forever, there are some scenes of, I think, Felix Leiter is in the FBI in that one. But they're at the Circus Circus Hotel. And you see that they're up in the catwalks with binoculars looking down. And it was that way, of course, before there were video cameras and VCRs. That's how you did surveillance.

Andrew Hammond: And just for the insider threat. So this is quite interesting to me. So you have the example of this Asian gang. They insert a mole. So it's someone that's already part of the conspiracy, and they're put through the process. And then they get inside. I'm assuming there's another way to do it as to turn someone that's already a dealer. So someone's already a dealer. They're not part of a conspiracy. And then just like in the world of espionage, you get at them. You coerce them. You bribe them. You do this or else. It's a carrot or a stick. And then I'm assuming you also get people that -- like the people you -- the person you said that's just playing out the game on their own and trying to get away with it. But I'm quite interested in that middle person.

Keith Michaels: Interestingly enough, you have to remember that the dealers and casinos generally make just above the -- whatever the state minimum wage is.

Andrew Hammond: Wow.

Keith Michaels: They do not make, from a payroll perspective, they do not make great money. Now, they'll make, you know, $150,000, $180,000 a year, but it's in tips.

James Lockhart: A lot of times, they go after unwitting dealers. They don't really have to recruit them. So it's a dealer who may be weak on procedure. Like the way that they read their whole card when they're checking if they have an ace showing, right, to see if they have blackjack.

Keith Michaels: Yeah.

James Lockhart: And they're actually revealing that card, not on purpose, but just because they're weak as a dealer. And there are people out there who prey on that. They know how to find a weak dealer, and they know how to set it up and basically read the dealer's cards, and improve their bet, but that's through no fault of the dealer. That might be the fault of the floor for not properly supervising him or her. But it's not necessarily always someone who's being you know, blackmailed by Soviet-style kompromat, or what have you.

Andrew Hammond: Sure. I was just wondering if there was any analogies there? I mean, one thing that I found quite interesting is for the surveillance crew, they report directly to the president, the CEO of the hotel, right? It's almost like the CIA. They're really, in many respects, the president's agency, and it seems like this is similar with you guys. You don't really get involved with the other parts of the other organization that much, is that correct?

James Lockhart: It's different in every property.

Andrew Hammond: Okay.

Keith Michaels: But yeah, but this is, generally speaking, you are correct, there is always -- and it's generally a dotted line to the -- directly to the president of the property. In a larger organization, for example, there might be a corporate senior vice president of internal audit. And so often, surveillance will report to that person. And then and that goes too, and James mentioned this earlier, but, you know, you'll never see two casino properties across the strip from each other sharing marketing intelligence. Because, you know, we're all trying to get the same customers. But in the surveillance side and the security side, the Chiefs Association and the Surveillance Information Network, have been integral for years, because, for us, we're all chasing the same bad guys. So that sharing of data has truly been -- and just like anything, any other organization or unit or, you know, you got to leave your ego at the door because this isn't about, you know, who's going to get the accolades? This is about are we going to be able to be successful?

James Lockhart: What he's talking about is the James Olson advice from the CIA Counterintelligence about don't be parochial. Olson is worried about CIA cooperating with DIA cooperating with FBI and not being trapped in silos. And what Keith is talking about is casinos cooperating with each other and also cooperating with state and local law enforcement beyond the gaming control board, beyond gaming enforcement. And that happens a lot because it goes back to the fact that the casino surveillance operation transcends the individual corporate operation. And it's about a community of gaming activities, the reputation of that as a whole state interest. So it does have that factor.

Andrew Hammond: Wow, that's really fascinating.

Keith Michaels: Along those lines, there was a -- there was a film in -- I don't know -- 2010 or somewhere around there, 21 with Kevin Spacey. And he took these MIT students, you know, helped them understand that they could use their brains for this wonderful ability of counting cards, playing basic strategy, knowing when to hit and when to stand, and good money management. Interestingly enough, in -- the people that they portrayed in that movie, many of them were put into these photo books by teams that I was on and teams that I had led in the 90s and that James was on through facial recognition, through biometric facial imaging, through our cameras, and then I tend to find. So a lot of those people got put in -- we made them famous. Because this was the time that we were we were -- we were doing this, so I watched that movie with a -- with a unique perspective that we identified some of those people and put them into books wearing their multiple disguises: hair, wigs, hats, different glasses, platform shoes to alter height. They went -- really went to great lengths because they were making a ton of money.

Andrew Hammond: Wow.

James Lockhart: We have more than those photograph books. When I was at Casino Royale, though, the director was this legendary guy. You know him, Keith -- Sandy [assumed spelling], a retired robbery homicide detective from North Las Vegas PD who went all the way back to the 70s, and he came in one night and gave me, you know, we've got this. We have acquired this basically manual from one of these teams, and it showed how they recruited their people. They were polygraphed. They had strict rules about liquor consumption, drug consumption. They'd be fired from these teams. But they were polygraphed. It was almost like an intelligence operation. I think they were polygraphed every three months. They had codes about how to communicate with each other on the gaming floor.

Andrew Hammond: Wow.

James Lockhart: When the count was positive, they would mention a woman's name. It could be anything like, "Hey, did you see the latest Madonna video?" And that would tell everybody get your money. Pull that money out of your socks. And, you know, the count is not favorable. Or if it was unfavorable, you know, mention a male. Say, you know, I don't -- I don't like watching John McEnroe anymore. He's not a good tennis player these days. And that would tell everybody, you know, pull your bets back. But this was a manual about 60, 70 pages. And so we have -- there's a vast amount of information comparable to a larger national security intelligence operation. And really the only way, Sandy, the boss, who said, "Don't ask. Just read it." You know, it was -- I never really found out how did we get this? Someone must have infiltrated the group, got this manual, and got out, and distributed it to surveillance operations.

Andrew Hammond: Well, just as we get to the end of the interview, this has been so much fun, but just a few final questions. So one of the things that I was wondering about, you know, both of you guys work there. For a lot of our listeners that maybe haven't been there or even some of the ones that have is that -- are those mob days -- that's all completely dead and gone. That went with the 80s and the 90s. It's all very corporate. And now is that correct or --

James Lockhart: Dead and over by the late 1980s and definitely gone with the wave of -- but there was a -- there was a -- there was a detritus of people left over who were still working in the casinos, who had had experience back in those days. And I knew -- I knew a few of them. You get to know a few of these old timers.

Keith Michaels: I would often do tours of the surveillance room from my boss, who had ex-law enforcement contacts. You know, Joe flies in from, you know, Chicago PD. He's retired. He wants to see a surveillance room. So we show him. And that question would come up often about, you know, does the mob still run Las Vegas? And I would always answer this way. I would, you know, we're in this secure facility, secure room. But I would look around a little bit and say, "Well, they do but they changed their name." And they're like, "To what?" I'm like, "Well, now they call themselves corporate America."

Andrew Hammond: The real mob.

Keith Michaels: Because some of the same stuff, you know, when you can pay to get the interchange exit changed closer to your property than where it was originally going to go when you can change the zoning, and you can, you know?

James Lockhart: Yeah, but they're not breaking legs, you know?

Keith Michaels: Still looks like a duck and quacks like a duck.

James Lockhart: It's not like Robert De Niro and Joe Pesci. You know, when I go out into the desert, there's a 3-in-1 chance I won't come back. That's tough. But some of it started showing up again. If you notice, there was a drought in Las Vegas, and the lake there was going down. And he started finding all these bodies --

Andrew Hammond: Bodies, yeah, I remember, reading about that.

James Lockhart: -- that had been buried out there when people thought that the lake would be there forever.

Keith Michaels: Yeah. I knew some very nervous people over the last several years.

Andrew Hammond: Oh, really? So I think just to close, we don't really have time to go into these cases. But those like cyber attacks that are involved. We've got nation-state attacks. We've got Iran in 2014, a cyber attack against the Las Vegas Sands Corporation. In 2016, the North Korean covert hacking group Lazarus took casinos, the Madas and Solera [phonetic] involved, and then basically laundering money. So this is the nation-states are involved. This is stuff that's ongoing. And modern technology is now part of the game as well, right?

James Lockhart: I mean, what you're getting at is that the casino operations are venues for intelligence activity, not just for the low-level criminal, or the higher-level criminal, but also nation-states, and, yes, that's true. So as you said, is it a cyber attack by Iran or a North-Korean money laundering operation in the Philippines? And the list goes on. You know, we're only catching about 35% of what's going on. There's a lot of cash money moving around very fast, a lot of people coming in and out in a casino. So the possibilities are kind of endless.

Keith Michaels: Within the last month, there was a casino in Las Vegas that is owned by a private person, not a corporation. He is known to be somewhat unique in the things that he does, like many operators were back in the day. But someone called the casino got to the cage, told the cage supervisor that he was, in fact, the owner of the casino and that he would be stopping by the cage to pick up tens of thousands of dollars, and then he did, and he was a bad guy.

Andrew Hammond: Wow.

James Lockhart: I don't know if you remember, Keith, but our first -- one of our first observations, you and I, going back to 1994 at this major strip property was if you show up in a suit, and you walk around like you own it, nobody.

Keith Michaels: Yep.

James Lockhart: No one wants to stop you or question you.

Keith Michaels: And this guy is going to give you a bag full of money.

Andrew Hammond: Okay, I think I may be -- I think I may be going on Orbitz looking for flights to Las Vegas and grabbing my suit. Well, this has been so much fun. Thanks ever so much for sharing your expertise and your knowledge about this subject. Thank you both.

James Lockhart: It was fun for us.

Keith Michaels: Thank you, Andrew, we appreciate it.

Andrew Hammond: Thanks for listening to this episode of "SpyCast." Please follow us on Apple, Spotify, or wherever you get your podcasts. Coming up on next week's show.

Go in and look at how many apps have a microphone attached to it, and the microphone is on. And it's that kind of a, uh-oh, wait a minute. You mean there are people listening to me on my phone? And the answer is yes. It's a technology that's listening to you.

Andrew Hammond: If you have feedback, you can reach us by email at "SpyCast" -- that's spymuseum.org or on Twitter at #intlspycast. If you go to our page at the cyberwire.com/podcast/spycast, you can find links to further resources, detailed show notes, and full transcripts. I'm your host Andrew Hammond, and my podcast content partner is Erin Dietrich. The rest of the team involved in the shows is Mike Mincey, Memphis Vaughn III, Emily Coletta, Emily Renns [phonetic], Afua Anokwa, Elliott Peltzman, Tré Hester, and Jen Eiben.