“Dozens of People Recount Pattern of Sexual Misconduct by Las Vegas Mogul Steve Wynn”
—Headline in the Wall Street Journal, January 26, 2018, Story By Alexandra Berzon, Chris Kirkham, Elizabeth Brownstein, and Kate O’Keefe.
The above-listed story should have been the start of a reassessment by the Nevada Gaming Control Board—a reassessment that addressed the reality that simply saying they were the Gold Standard did not make it so.
If there was ever clear and convincing evidence that a regulatory system was not working and needed to be remade, it was this story. A small group of reporters from an out-of-state publication should not be able to scoop an agency that is supposed to be aware as to what was going on within its regulatory domain. However, little has been done in Nevada since the publication of this story other than to start a revolving door of leadership for the agency, orchestrated by the governor of the state, which is now on its third head since this story was published.
The failure of the NGCB is material. It appears to have failed in protecting a critically important constituency—the employees of a casino operator—from sexual abuse. That is a material scar.
It is one thing to have some revenues miscoded, or some compliance test ignored – it is another thing when an employee is being subjected to sexual abuse and has nowhere to turn for protection.
It was a telling remark that was recorded in the Nevada Gaming Control Board Complaint, Dated October 14, 2019, lifted from the Massachusetts investigation, where Mathew Maddox, CEO of Wynn Company, was quoted “…there were many victims (of Mr. Wynn), and those victims felt powerless…”
There is nothing like having Mr. Wynn’s friend and colleague state the issue in the clearest of terms. File this under regulatory failure.
Let’s go beyond Nevada and view how Massachusetts reacted to the Wall Street Journal story.
The state of Massachusetts had granted a license to the Wynn organization and many of its officers, directors, and qualifiers to build Wynn Boston Harbor in 2014 (the name has been changed to Encore Boston Harbor). The project was to open in June 2019. Five days after the Wall Street Journal story broke, the Massachusetts Gaming Commission opened an additional investigation of the Wynn organization and its key officers, directors, and shareholders.
Mr. Wynn was licensed on two criteria in Massachusetts; one was as an officer and director, and the other was as a 12 percent shareholder in the parent entity. One was relevant for it gave him control, the other because he stood to receive a material benefit.
Mr. Wynn was not as lucky as Apollo and Leon Black recently in Nevada, where the test only seemed to be about control. It was as if Nevada chose not to look at those who stand to materially benefit, especially if they are currently denying a rape allegation, have a record of paying $100,000 a month to a woman who was not his wife for something, and who had a long-standing $158 million financial relationship with Jeffrey Epstein for something—after Epstein had been convicted for soliciting sex with a minor.
To investigate the accusations made in the Wall Street Journal against Mr. Wynn and his organization, the Massachusetts investigators would request he be sworn in. In addition, Mr. Wynn would have been requested to waive attorney-client privilege with the attorneys involved in certain investigative topics. He would also have been requested to identify non-disclosure agreements to which he was a party. The investigators would also request Mr. Wynn waive any rights he may have had contained in certain non-disclosure agreements he entered. If Mr. Wynn refused to do this, the Massachusetts authorities could cause him to understand his gaming license was a revocable privilege and could be taken away for not cooperating with the investigation.
From the very start of the allegations contained within the Wall Street Journal article, Mr. Wynn blamed a whole variety of people for all of these many stories. This included his ex-wife, the bad job done by the Wall Street Journal reporters, women who were making some extortive effort to profit from a claim that he was involved in inappropriate sexual conduct, and so forth. In short, he was a victim—a victim on a great many fronts.
Mr. Wynn also pledged to vigorously defend himself to clear his name. However, it appears he did not want to do this by allowing skilled investigators to dig into all of these things. In fact, after the Wall Street Journal story, he entered into six additional NDAs, where he placed confidentiality provisions on those agreements during the time of the Massachusetts investigation.
Mr. Wynn did not seem to believe his goal toward exoneration would be achieved by allowing his attorneys and people who he had entered into NDAs with to tell all they knew. Within a few days of the Massachusetts investigation starting, Mr. Wynn resigned as an officer and director, and in slightly more than two months, he was completely divested of his stock holdings in Wynn. In other words, he appears to have opted to run for the exits rather than expose himself to a real independent investigation. I am sure he did it for the good of the team or some such thing while he continues on his Diogenes-type search for exoneration.
However, the Massachusetts investigators were still able to present an understanding of how Mr. Wynn and his organization in Las Vegas behaved.
Quoting from the Massachusetts report: “The investigation also shows that in some instances particular company executives, with the assistance of outside counsel, were part of affirmative efforts to conceal allegations against Mr. Wynn, that came to their attention.” Of critical importance, the investigation adds that these executives, with the assistance of outside counsel, made it “…exceedingly difficult, if not impossible, for gaming regulators to detect potentially derogatory information through typical regulatory means…”
One does wonder if Brin Gibson, chairman of the Nevada Gaming Control Board, has ever visited with his regulatory brethren in Massachusetts to determine whom the outside counsel was who assisted the Wynn executives in making it nearly impossible to detect derogatory information about a licensee’s behavior to regulators? It would be rather ironic if it were to be the case that he used to be employed by a law firm that included this person’s name.
It is also rather ironic that while the actions of the Massachusetts investigators may have worked to assist Nevada to get rid of a man who potentially had a zipper problem, the recent actions of the Nevada Gaming Control Board may have welcomed another of these into being associated with a Nevada gaming operation. It is interesting to note both Mr. Wynn and Mr. Leon Black had approximate 12 percent positions in the stock of the parent companies. In Massachusetts this 12 percent position made it necessary for Mr. Wynn to be licensed, in Nevada, they thought it was unimportant to investigate or license Mr. Black.
I am also very much of the opinion the reason Nevada decided that Leon Black and his firm did not need to be licensed was they knew exactly how both Leon Black and Apollo would respond to releasing their lawyers from privilege, opening NDAs, being sworn in and being subjected to a deep-dive investigation. Rather than being confronted with a potentially ugly result, Nevada opted to suggest it did not matter or was unimportant. I do not believe the intent of much of the 15.C. Gaming Statutes and Provisions were designed to help Nevada hide things that might be unpleasant, but it certainly seems this is how it is being used.
The Nevada regulators now seem to be entering an era where they believe that what they don’t know, can’t hurt them. That road will not be paved with gold, but rather embarrassment for allowing themselves to be played.
