Sands China Chief Executive Steve Jacobs attends a media briefing in Hong Kong in this May 11, 2010 file photograph. Jacobs, also formerly in charge of Sands' Macau operations, is suing Sands after being fired in July 2010 over clashing with Adelson over several issues, one of which included the hiring of so-called junket operators who bring in high rollers, and his description of unsavory business dealings in the lawsuit has touched off a criminal investigation. - Photo by Reuters.

BERKELEY, Calif: When Steve Jacobs joined Las Vegas Sands in 2009, the company was sinking.

The Sands, which owns the Venetian resort, saw its stock price hit an alarming low, below $2 a share, around the time Jacobs, a 47-year-old Harvard graduate with a boyish face and close-cropped silver hair, took a job heading Sands China, which runs the company's Macau operations.

But over the course of the next year, Sands mounted a remarkable recovery, thanks in large part to Jacobs' leadership in Macau, a gambling boomtown bigger than Las Vegas and 16 time zones ahead of the Strip.

“There is no question as to Steve's performance,” Sands COO Michael Leven told the company's board of directors in early 2010, according to court records. “The Titanic hit the iceberg.

(Jacobs) arrived and not only saved the passengers, he saved the ship.” The feel-good story, however, was not to last.

Within months, Jacobs was clashing with the company's CEO Sheldon Adelson over several issues, according to a legal complaint, including whether to hire more so-called junket operators who bring in high rollers. Jacobs says he objected, citing their corrupt reputation -- and last July, the company unexpectedly fired him effective immediately. Two security guards escorted him out of the casino without allowing him to gather his belongings, and then unceremoniously escorted him out of town, Jacobs alleges.

Today, Jacobs is firing on the ship he once saved. The former chief of Macau operations is suing Sands, and his description of unsavory business dealings in the lawsuit has touched off a criminal investigation.

Earlier this month, the company acknowledged it had received a subpoena for documents pertaining to possible violations of the US Foreign Corrupt Practices Act, which bars US corporations from bribing foreign officials. Not only are the Securities and Exchange Commission and Justice Department looking at Sands' actions, but the FBI has joined in.

A Reuters investigation in collaboration with the Investigative Reporting Program at UC Berkeley has learned that casino executives, US diplomats and the Chinese government share the concerns raised by Jacobs about Macau's booming junkets industry, which they describe as rife with organized crime.

An extensive review of court records, interviews with high-level federal officials, and State Department cables obtained by WikiLeaks and released to Reuters through a third party, reveal widespread corruption in a region that resembles a Chinese version of the early years of Las Vegas.

Among the Reuters-IRP investigation's findings:

* The FBI has joined the federal investigation of Sands, prompted by the Jacobs allegations.

* Sands has an internal background report on an alleged criminal figure who had financial links to the company.

* Mainland China restricted visas to Macau based on its distress about the growing power of criminal groups, known as triads, in the region.

* US casino executives have discussed with US diplomats the pervasive influence of the triads in the junkets for years -- yet nothing has changed.

Sands says that it has denied all allegations in the Jacobs lawsuit from the outset and on January 21 a subsidiary filed documents seeking to initiate a criminal complaint against Jacobs. It declined to provide a copy of the complaint.

The SEC and Department of Justice inquiries appeared to be a result of Jacobs' allegations in his wrongful termination lawsuit, Sands said by email to Reuters.

“Neither the SEC nor the Department of Justice has accused the company of any wrongdoing.  The subpoena is described as a fact-finding inquiry and does not mean the SEC has concluded anyone has broken the law,” it said.

BIGGER THAN LAS VEGAS

Macau, a former Portuguese colony located less than 40 miles (64 km) west of Hong Kong, for centuries served as a center for trading and piracy in the South China Sea, a base for vice, gold smuggling and espionage.

But the brazen town on the tip of a Chinese peninsula has evolved into much more than a backwater den of iniquity.

Today Macau is a super-charged conduit for cash on the lip of the world's fast-growing major economy. The once worn casinos huddled near the ferry docks have gone upscale. And in the last ten years, it has become a major source of cash for America's largest casino operators.

Since 2001, when China opened its doors to US casinos, annual revenues have increased more than tenfold to reach $23.5 billion today -- more than two and half times the revenues of the Las Vegas Strip and Atlantic City combined. The enclave provides two-thirds of Sands' revenue worldwide, according to securities filings.