Massachusetts Governor Charlie Baker has named Cathy Judd-Stein as the new chairman of the Massachusetts Gaming Commission, filling the vacancy created when Stephen Crosby, the first chairman, resigned in September under accusations that he was biased in the commission’s investigation of Wynn Resorts. She will begin her work February 2.
Judd-Stein comes to the job from her current post as deputy chief legal counsel in the governor’s office, a position she has held since 2015. She has been the legal advisor to five of the Bay State’s governors, including Paul Cellucci, Jane Swift, Mitt Romney and Deval Patrick. She was also executive director of former Governor Deval Patrick’s Nominating Commission and general counsel for the state treasury.
At the press conference announcing her appointment, Baker praised Judd-Stein’s “legal expertise, precision and impeccable work ethic.” He called her a “thoughtful, diligent and fair thinker.”
Judd-Stein told reporters, “I accept the challenge of working hard every day to try to get the job done right, and as my role switches from adviser to chair, I’m honored to continue serving the public and the interests of this great commonwealth.”
Judd-Stein joins the commission at a critical juncture when it is at the culmination of its investigation of the conduct of Las Vegas-based Wynn Resorts That probe has focused on whether executives in 2014 knew of several allegations of sexual misconduct against founder and former CEO Steve Wynn when the company was in the midst of suitability hearings with the MGC over its application to operate a casino in the Boston area.
A year ago, the Wall Street Journal published an expose of allegations against Wynn. Allegations Wynn still disputes. Within a month, this resulted in his resignation as CEO, his divestiture of all company stock and severing of all connections to the company that bears his name. But in the minds of the MGC that doesn’t clear up the thorny problem of whether the company that remains has some vestige or residue of Wynn tainting it. Is the company still worthy of operating a casino in the Bay State? is the problem the panel must resolve—they hope before the $2.6 billion Encore Boston Harbor (formerly Wynn Boston) is due to open in June.
Gayle Cameron has been interim chairman since Crosby resigned—largely because Crosby made this statement: “I have said repeatedly that for now we must proceed with the Everett project as planned and be thoughtfully mindful of the thousands of people whose jobs may be affected by this issue and of the long-term economic benefits envisioned by this project …” This led many to assume that he could not fairly decide the fate of the project.
A major roadblock to the commission making its finding about Wynn Resorts is the lawsuit the former CEO launched in Nevada court, challenging the commission’s right to publish or even read a report that includes materials derived from what Wynn claims were attorney/client privilege involving him. From court filings this apparently has to do with a sexual harassment case that occurred several years before accusations against Wynn became public. One of the questions the MGC investigators have probed is whether the company tried to hide from the commission the fact that Wynn paid a $7.5 million settlement to a former employee who claimed sexual harassment.
So far Nevada Clark County District Court Judge Elizabeth Gonzalez has kept Wynn’s private affairs under seal through a temporary restraining order and preliminary injunction, which means the MGC’s report is also not allowed to be published—at least until the court resolves Wynn’s lawsuit.
The governor declined to offer an opinion whether the Wynn license should be pulled or reaffirmed but expressed confidence that his new appointment would “let the facts take her wherever they go.” Asked whether the casino would open on time, Baker commented on the changing nature of the timetable. “Nobody seems to know what the calendar looks like,” he said.
The commission’s investigative arm had originally hoped to be done with the investigation by last summer. It included many interviews with employees of Wynn Resorts and the company provided many documents for investigators to pore over.
In the year since Wynn stepped down, the corporation has replaced most of its board of directors and many executives. Under CEO Matthew Maddox, who was the president of Wynn Resorts at the time of the scandal, the company maintains it has completely changed the corporate culture. As the company’s largest shareholder, Wynn’s ex-wife, Elaine Wynn, has played a significant role in restructuring the company, including pushing the appointment of the new chairman, Phil Satre, the former chairman and CEO of Harrah’s/Caesars Entertainment.
At stake is the $2.6 billion Encore Boston Harbor and its tower in the city of Everett that overlooks the Mystic River with the Boston skyline in the background—and thousands of employees. The project is the largest private single-phase construction project in the history of the Commonwealth of Massachusetts. The 671-room tower looks complete from the outside, and most of what remains is landscaping, public road improvements and interior work. For example, only 10 percent of the carpeting has been installed.
If the Wynn lawsuit looks like it won’t be resolved soon, the commission does have the option of removing those matters—which are a tiny fraction of the total—from the report, which could then be published. Wynn and his lawyers will be given an advance copy of the report to determine whether all the objectionable material has been removed.
Wynn’s attorneys have attacked the commission’s director of investigations Karen Wells of the Investigation and Enforcement Bureau. David Mackey, an outside counsel working for the commission, told them last week he is awaiting a written version of Judge Gonzalez’s ruling. Then he can assess what should be excised from the final version. Mackey told the board he didn’t believe Wells violated attorney-client privilege.
He told the MGC, “We absolutely do not believe that Mr. Wynn’s allegation that Director Wells somehow flagrantly invaded the common interest privileges are supported by the facts here.”
He added, “Counsel for Wynn Resorts also attended those interviews. These witnesses were advised by Director Wells that Wynn Resorts, the company, had waived its privilege and was cooperating, but that Mr. Wynn had not waived his privilege and if the witness had any concerns at all about these boundaries of an attorney-client privilege, they should feel free to consult with their counsel, leave the room, have a discussion and that they should only answer the question if they felt like they could. In fact, the witnesses did on occasion raise privilege issues and Director Wells fully respected that and moved on to other questions.”
Other jurisdictions are also investigating Wynn Resorts, including gaming regulators in Nevada and Macau. All the while the former CEO maintains his innocence.
Commissioner Cameron asked Mackey why Wynn didn’t sue the Nevada Gaming Control Board, which is also probing his sexual allegations history. Mackey replied, “I could conjecture, but I’m not confident enough about it to say publicly what that rationale might be.”
Some observers warn that as careful as the MGC is, it is likely to leave itself open to lawsuit, no matter what its final decision.
There are already three lawsuits underway: Sterling Suffolk Racecourse LLC v Wynn Resorts, which alleges that Wynn fraudulently won its license, a case that could take years to resolve; the city of Revere and Mohegan Gaming & Entertainment, which sued MGC over the same decision to aware the license to Everett/Wynn instead of them; and finally FBT v MGC v Wynn. The former owners at FBT Everett Realty have sued in Suffolk County Superior Court, seeking to recover $40 million that it claims it lost when the MGC pressured Steve Wynn to lower the amount he would pay for the Everett land because it incorrectly believe one of the owners was a felon.
Although former Chairman Crosby is gone and now replaced, some critics worry that his statement about the importance in preserving the jobs of the casino employs reflects the attitude of the other commissioners. And that it inaccurately portrays the situation.
Columnist Walter Pavlo of Forbes wrote last week, “Why Crosby chose to blow this jobs-are-in-jeopardy dog whistle as a result of suitability is beyond reason. Not only is that not true, Massachusetts law provides a plan for what to do when an operator is found not suitable. It is beyond MGC’s responsibilities to base its decision on suitability with such a heavy consideration on the economy. Would a gaming license be given to someone, no matter their character, if he or she could prove that they could generate more jobs? If that is the case, Steve Wynn should apply for the license himself.”
Such statements have put the commission in a straitjacket of its own making. Pavlo writes, “MGC has painted itself into a corner by not openly discussing what might happen if Wynn is found not suitable. Having a ‘Plan B’ should have been something MGC presented as part of its awarding the license, instead their silence has led to speculation that their only alternative is to move forward with Wynn but levy some fine on it for its transgressions of lying to obtain the license.”
The 2011 law that authorized casinos in Massachusetts included a provision for finding an existing license holder “not suitable,” and transitioning to another license holder. That too is an arrow that the MGC has in its quiver.
