Investigation:MGC says Wynn Organization Did Not Inform them of Settlement

February 9, 2018
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The Massachusetts Gaming Commission (MGC) held a special hearing on Wednesday, Jan. 31, into the allegations against Wynn Resorts CEO Steve Wynn – a Massachusetts gaming licensee – and said they were not told of the 2005 private settlement, while at the same time urging fairness and speed in the investigation.

The one-hour hearing was unique in that it was one of about three government-level hearings now going on internationally, with others now underway in Nevada and Macau (China). Another is going on privately within the Wynn organizations by a Special Committee of the Board of Directors. The hearing addressed new information that the Wynn organization didn’t disclose a $7.5 million settlement that happened in 2005 – well before the MGC’s background check – and also detailed comments from the MGC attorney saying they have the right to pull a gaming license even without a conviction – words that made the matter go from serious to catastrophic rather quickly.

“There doesn’t have to be a conviction,” she said, when speaking about a pattern or practice of misconduct by a company or individual. “This can merely be behavior.”

Chair Steve Crosby led off the meeting by saying that the MGC’s Investigations and Enforcement Bureau (IEB) would not rush to judgment or impugn anyone.

“Before we begin, I’d like to reiterate that we have a shared sense of urgency about this serious matter, but careful diligence must be a top priority,” he said. “The stakes are enormous and many lives are involved— from the lives of the women allegedly abused, to the lives of men and women in Everett now building the project, to the senior executives and board members of Wynn Resorts. We will get this right and we will get it right as quickly as we can.”

He finished the meeting by saying he wants a very open investigation so the people know what happened.

“The people of Massachusetts have the right to know what the hell happened here with no punches pulled,” he said. “Having to hold back things is something this Commissioner will not look favorably on.”

MGC Attorney Catherine Blue explained that the MGC has broad authority to address matters and the state law allows them authority to limit, condition, restrict, revoke or suspend a license for any cause that the Commissioners deem reasonable.

Some of those causes include reputation, good character and integrity – among others.

She said that any actions by the MGC, do require due process to the licensee, in this case Wynn Resorts. That would mean if any actions are taken against the license, a noticed hearing would have to take place first.

The MGC announced on Friday, Jan. 26, after the allegations surfaced that they would initiate an investigation in their IEB division.

On Wednesday, Jan. 31, the first volley of that investigation was launched.

Somewhat of a revelation was when IEB Director Karen Wells said Wynn Resorts or Steve Wynn never told anyone in 2013 about the $7.5 million settlement associated with the recent allegation of sexual harassment by a Wynn hotel manicurist in Las Vegas.

“I corroborated that information with counsel for Wynn Resorts who confirmed that there was in fact a settlement, and that it was not disclosed to investigators upon advice of counsel,” said Wells. “She also confirmed that the settlement itself was not part of any court action or litigation and that no lawsuit was filed at any time.  There were no court documents filed that could have been identified in the course of the investigation.  This was a private agreement and steps were taken to keep it from the public domain. The circumstances around this $7.5M settlement and the decision not to disclose it to investigators remain a critical element of this review.”

For the commissioners, there was a sense of seriousness, but also one of attentiveness. No one wanted to engage in something unfair to Wynn or anyone else.

“The single most important thing at this stage is to get control of the facts by figuring them out as quickly as possible,” said Commissioner Lloyd MacDonald. “I urge you to be scrupulously diligent and work with speed, thoroughness and objectivity. That will be key.”

Wells said she had no idea how long the investigation would take as they have just embarked on it.

“It’s hard to give a timeline because once you start conducting interviews, it could lead you in many different directions,” she said.

However, she did indicate that they would focus on four key areas in the investigation. They include:

  • A review of the suitability of individual qualifiers, including Steve Wynn and other qualifiers potentially involved in this matter.
  • A review of any corporate action, or lack thereof, contemporaneous with the alleged misconduct. (The questions – who knew what, when, and what if anything did he or she do about it?)
  • Monitoring and reporting back to the Commission on the corporate response to the information that is clearly now in the public domain. (We will be looking at how the company, from the board on down, handles the allegations)
  • A review of how the current situation potentially impacts the financial stability of the company.

Of particular note, and something worth watching, were the allusions to former Wynn executive Doreen Whennen – who has become a central figure in the divorce settlement case between Steve and Elaine Wynn. That divorce settlement case is the genesis of the sexual harassment complaints that were made public on Jan. 26 by a Wall Street Journal story.

In relation to the $7.5 million settlement that is at the heart of the MGC investigation, Whennen is believed to have kept notes about that incident, notes that she took with her after resigning from Wynn in 2014.

That trial between the Steve and Elaine Wynn will start in April, and will be something they pay close attention to because the notes by Whennen have been ordered disclosed during that trial.

Those notes might have key information that will be helpful to investigators who are trying to get a sense of what that settlement was all about.

The situation regarding Whennen was brought to light at the MGC by Commissioner MacDonald.

Late last week, in regards to the $7.5 million settlement, Bloomberg News reported that a stipulation of the settlement called for the manicurist not to seek a paternity test.

“Whether or not that was appropriate (not to disclose the settlement) is what we’ll find out in this investigation,” reiterated Wells on Jan. 31.