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Wynn Resorts’ Ex-Lawyers Helped Conceal Sexual Assault Claims, Report Says

Steve Wynn
Steve Wynn

Billionaire Steve Wynn, chairman and chief executive officer of Wynn Resorts Ltd., speaks during the Milken Institute Global Conference in Beverly Hills, California, on May 3, 2017. Photo by Patrick T. Fallon/Bloomberg

A group of former lawyers connected to Wynn Resorts were involved in long-running efforts to conceal allegations of sexual assault and misconduct against the casino giant’s founder, Steve Wynn, according to a report released Tuesday by the Massachusetts Gaming Commission.

The 200-page report was released in conjunction with a three-day hearing the regulatory body kicked off on Tuesday to determine the suitability of the company for a Massachusetts gaming license, and whether it will be able to run a casino and resort scheduled to open this summer in Boston.

The report says a group of executives, including two former general counsels, and outside lawyers disregarded company policies by failing to report allegations of sexual misconduct against Wynn to the company’s board. The report also notes that most of the individuals involved are no longer at the company, including Steve Wynn, who resigned in February last year.

“Their efforts at secrecy made it exceedingly difficult, if not impossible, for gaming regulators to detect this potentially derogatory information through typical regulatory means, which rely heavily on robust self-disclosures,” the investigators wrote.

Wynn Resorts said it does not dispute the findings in the regulatory body’s report. The company said that any employee aware of allegations of sexual assault against Wynn who did not investigate or report those claims is no longer with the company.

Brian Kelly, a Nixon Peabody partner who represents Wynn, said, “Mr. Wynn denies all allegations of nonconsensual sex and nothing in this report changes that. In fact, the Commission and its investigators have acknowledged today that it’s not their role to decide the truth or falsity of those allegations and that Mr. Wynn’s conduct is not the focus of their hearing.”

The Massachusetts investigation was spurred by a Wall Street Journal article in January last year that included multiple allegations of sexual misconduct against Steve Wynn.

The earliest of those allegations came to light in 2005, according to the WSJ report and the Massachusetts regulatory investigation, when a manicurist said she was raped by Wynn in his office.

Frank Schreck, chairman of the gaming practice at Brownstein Hyatt Farber Schreck, was involved in the settlement negotiations with the woman in 2005, the report says. Schreck helped structure a new business entity to make $7.5 million worth of payments over a 10-year period to the alleged victim, the regulatory report says. It notes the settlement was “structured for utmost secrecy.”

Schreck, whom the gaming commission's report says had a relationship with Wynn spanning decades, represented the company in the settlement negotiations, according to a deposition of another outside lawyer involved in the case. But the investigators found that Schreck failed to alert the company’s then-general counsel to the issue and didn’t seek a waiver or consent from either Wynn or the company before taking on the matter, saying that was “the way it’s been for 40 years.”

“This is but one example of the company’s failure to identify the existence of a potential conflict between the company’s interests and those of Mr. Wynn, and to assess outside counsel’s obligations with respect to representation accordingly,” the report says.

A spokesperson for Brownstein Hyatt Farber Schreck said, “As part of a thorough review by Brownstein’s leadership, a leading independent legal ethics expert reviewed the conflict of interest question and concluded that, based on the information Frank Schreck had at the time, he acted appropriately.” The spokeswoman did not immediately respond to a request to name the ethics expert.

Marc Rubinstein, Wynn's general counsel at the time of the allegations, later learned of the settlement agreement with the manicurist after receiving bills from outside lawyers that he didn’t recognize, the report says.

Rubinstein inquired about the legal bills and was eventually allowed to see the settlement agreement in Schreck’s office under the condition that he not take any notes, photos or copies, the report says. After that encounter, Rubinstein asked Jerome Coben, then a partner at Skadden, Arps, Slate, Meagher & Flom, if he needed to advise the company’s board of directors about the matter, the report says. It also notes that Rubinstein was not aware that the original claim leading to the settlement included allegations of sexual assault. Ultimately, he did not report the matter, the report says.

A few months after learning of the settlement, Rubinstein told investigators that Wynn approached him, saying he needed “loyalty to him first and to the company second.” The report says Rubinstein told investigators he was offered the chance to resign with severance or work at the company on an at-will basis. Rubinstein resigned in 2006.

“It is concerning that the general counsel and outside counsel for the company did not recommend notification to the board (via disclosure to the audit committee) or any action at the corporate level, or that the general counsel did not take the further step to address with the board the dysfunction that general counsel for the company was not apprised of the matter in the first place,” the gaming commission's report says.

Rubinstein did not immediately return phone messages seeking a comment on the report. Coben, who retired from Skadden in 2008, declined to comment.

Rubinstein’s replacement as general counsel, Kimmarie Sinatra, played a much larger role in the Massachusetts report. She left the company in February last year, shortly after the WSJ article ran. Wynn Resorts media contacts did not provide contact information for Sinatra, whose bar registrations still list her Wynn phone number and email address.

The report says Sinatra was informed of the 2005 settlement as early as 2009, when Wynn’s then-wife, Elaine, learned of the payment. Elaine Wynn has claimed she told Sinatra that the basis of the payment was an allegation of rape against Steve Wynn, but Sinatra, in conversations with investigators cited in the report, “vehemently disagrees” with that assessment. The report says Sinatra said she was only informed of the settlement.

Either way, neither Sinatra nor Elaine Wynn reported the allegations to the board of directors at the time, according to the report. They also failed to disclose the settlement in a 2013 licensing process with the Massachusetts Gaming Commission, the report says.

“The Commission will have to consider whether the Massachusetts gaming law and regulations mandated disclosure of the 2005 settlement and related sexual assault allegation or any other allegation of sexual misconduct or sexual conduct involving Mr. Wynn and a subordinate employee,” the report says.

The report also says that members of the company’s legal department became aware in 2017 that the 2005 settlement included an allegation that Wynn had raped and impregnated a manicurist. That information came out during discovery in a legal proceeding, the report says. Still, nobody at Wynn Resorts told the board of directors of the allegation despite the company having adopted a policy months earlier that required the board to be notified of any matter likely to jeopardize its reputation. The company also did not tell regulators about the allegations, the report says.

The company first alerted regulators to the allegations after the WSJ article was published on Jan. 26, which the report says set off a cascade of activity.

On Feb. 2, Sinatra told the Massachusetts Gaming Commission that the board’s special committee investigating the sexual misconduct claims had hired O’Melveny & Myers for an independent investigation. On Feb. 6, Wynn resigned as CEO. Six days later, the company announced that Gibson, Dunn & Crutcher, where Sinatra was formerly a partner, would conduct the investigation.

That change was partly explained by the company’s newly installed CEO, Matthew Maddox, telling investigators that he was displeased with O’Melveny for issuing a press release before being officially engaged, according to the report. Maddox "also expressed deep concern about what he understood to be a large fee charged by O'Melveny for work it performed in another matter for an unrelated company," the report says.