Attorneys for the Massachusetts Gaming Commission, Steve Wynn and the company he founded but was forced to resign from, Wynn Resorts, are working to resolve an impasse over a lawsuit brought in a Nevada court to keep the MGC from publishing a report that contains material Wynn argues is confidential and subject to attorney-client privilege.
Until this is resolved, the commission may not be able to rule on whether to allow Wynn to keep its license and open the $2.4 billion Encore Boston Harbor that is scheduled to be ready to open in June.
According to court documents filed in Clark County, Nevada, “Mr. Wynn’s counsel, Company Counsel, as well as the Massachusetts Defendants have worked on a process to resolve this matter or at least narrow the disputes. The Company is providing them with categories of documents and Massachusetts has given them interviews, which they are reviewing.”
Steve Wynn has filed a motion with Judge Elizabeth Gonzalez asking for a preliminary injunction and Wynn Resorts has made a motion to dismiss. The gaming commission’s attorney is expected to join that motion.
About 20 pages of documents are the problem. Steve Wynn sued, claiming that company attorneys improperly gave the documents to MGC investigators who are probing the continued “suitability” of Wynn Resorts to operate a casino in the state.
Wynn’s lawsuit, filed last month, has so far prevented the panel from reviewing the evidence its investigators have collect. Last month Judge Gonzalez granted Wynn a temporary restraining order that has prevented the panel from seeing the evidence.
Commissioners had hoped to be able to render a judgment on Wynn Resorts’ suitability this month. The longer the lawsuit stretches out, the farther away that goal recedes. The next hearing is December 20.
Court documents show that the documents Wynn wants to keep sealed involve a 2014 mediation between the company and a former employee who alleged sexual improprieties against Steve Wynn. In the documents is a statement from Wynn that he told a board member of his company about the accusation.
That is of interest to the investigators because it would be evidence that some Wynn Resorts board members were trying to prevent the commission from learning of these accusations at a time that the company was under consideration for its casino license, which was also 2014.
Two weeks ago, MGC interim Chairman Gayle Cameron indicated her board’s frustration with the delays: “My fellow commissioners and I are ready to adjudicate this matter and eager to assess the findings. Identifying a viable way to bring this investigation to a close must be an urgent priority.”
In a filing with the Nevada judge, Commission Executive Director Edward Bedrosian said this: “Any postponement of the IEB’s issuance of its investigative report will inevitably delay the commission’s adjudicatory hearing and decision.”
Bedrosian added, “If the commission ultimately determines the company is still suitable to hold the license, such delay risks the opening of the project, postponement of the employment of thousands of workers and enormous irreparable financial loss to the commonwealth, the city of Everett and surrounding communities.”
He noted that if the MGC rules that Wynn is not suitable, “such delay would postpone additional proceedings to transfer the license and project to a suitable licensee and delay the considerable economic benefit of expanded legal gaming in the commonwealth.”
Wynn is also dismayed by the delays because, besides wanting to keep its license, it also wants to open on time. Any delays in opening translates into money lost.
When the commission finally does hold hearings on the investigators’ findings, the entire board of Wynn could make a dramatic appearance before the panel to testify, make the company’s case for keeping its license and answer questions.
Board of Directors Chairman Phil Satre said last week he hopes to have the board and the relatively new CEO Matt Maddox appear before the board. He told the Las Vegas Review-Journal that changes in cultural and personnel that have been made since Steve Wynn left have created a “long-lasting foundation upon which we will build our future success.”
He added, “I’m delighted with the changes and the evolution that we’re experiencing at the company. We know we have to get past the regulatory environment that we’re dealing with right now and we’ll do our best to convince our regulators of our qualification, the changes that we’ve made and I would be remiss if I didn’t say I’m optimistic because I believe in the steps that have been taken.”
Wynn’s downfall as chairman and CEO of the company he founded came rapidly after multiple allegations of sexual misconduct were published by the Wall Street Journal in January. They included the revelation that Wynn paid a $7.5 million settlement to a female employee who claimed harassment. By February the casino mogul had resigned and divested himself of all interests in the company, although he continues to deny them.
Also, by February the MGC began its review of the company’s suitability to keep its license. Maddox was appointed to succeed Wynn that same month. Notably, when the original suitability hearings were conducted, the $7.5 million settlement was never revealed to regulators.
Such considerations are part of the law that created the gaming commission. Section 23K which established the Massachusetts Gaming Commission addresses, “an applicant or licensee’s antecedents, habits, character, associates, criminal record, business activities and financial affairs, past or present.”
Before he resigned as chairman of the MGC because of accusations of bias, Stephen Crosby had expressed concerns about the settlement between Wynn and his accuser and whether any of his board or executives knew anything about it. In a comment attributed to him by the Boston Herald, Crosby said, “Not remembering is not satisfactory. Even the littlest stuff gives us the heebee jeebees when we don’t remember stuff. How do we know that somebody doesn’t remember something that’s material? How do we know that? It puts the commission and it puts the company in a very bad position to have these little things occur.”
A Bloomberg article in 2016 recounts how Wynn’s ex-wife Elaine Wynn, who is now the largest stockholder in the company, petitioned the Nevada Supreme Court for status as a whistleblower, claiming that she feared retaliation from the man and the company. Details of her complaint are not available.
However, in an SEC filing earlier this year that included a presentation entitle “Restore Wynn” Elaine Wynn pleaded with shareholders to make changes at the top: “The boards failure to protect employees has damaged the company’s reputation as a model employer for progressive leadership, diversity, gender-equality and employee development.” It was, in fact, at her behest that Satre was brought on as board chairman.
Satre praised Maddox in the Review-Journal interview: “I think when the crisis began in January this year, the company, in retrospect, was very fortunate to have somebody who was as decisive and well-grounded and knew the steps that needed to be taken as Matt was,” Satre said. “If you compare the way we have reacted to that crisis as a company—and when I say ‘we,’ I didn’t join this company until the first of August—it is vastly different than what you’re seeing at CBS or Fox or other places that have had similar crises. Nobody moved as swiftly as this company did to take charge of the situation and react appropriately on behalf of the shareholders and on behalf of the employees and customers, and that begins with Matt Maddox.”
That included changing the name of the casino from the Wynn Boston Harbor to Encore Boston Harbor.
It also included moving to conduct an internal review of the allegations against the former CEO, all of which has been shared with the MGC’s investigators.
Several shareholders have filed lawsuits alleging that past and current company executives and board members knew about the allegations against Wynn and did nothing. Some lawsuits claim they have lost significant amounts of money due to stock devaluations.
Wynn Resorts stocks were valued at more than $200 at the beginning of 2018 and had fallen to $165 when Wynn resigned. Currently it is valued at about $110.
Nevada gaming regulators are also conducting a review similar to that underway in Massachusetts.
