LAS VEGAS (AP) – A federal judge in Nevada has reanimated elements of a securities fraud lawsuit seeking class action lawsuit over allegations that executives at Wynn Resorts Ltd. knew about reports of sexual harassment and misconduct against company founder Steve Wynn but ignored them.
US District Judge Andrew Gordon ruled that the case may continue because Steve Wynn, board members and top executives of his Las Vegas-based company, “have materially misrepresented and omitted” violated the laws and regulations of the Securities and Exchange Commission.
Wynn has denied allegations published in January 2018 with a Wall Street Journal report of dozens of casino employees that, the judge found, “describe behavior that would accumulate a decade-long pattern of sexual misconduct.”
The former casino mogul, now 79, stepped down as the company’s CEO and Chairman of the Board shortly after the Journal article appeared, and has several ongoing lawsuits.
His attorneys on the current case, Colby Williams in Las Vegas and Michelle Johnson and Colleen Smith in California, declined to comment on Gordon’s order.
Another federal judge dismissed the lawsuit in May 2020, but allowed plaintiffs, led by John Ferris and Joann Ferris, to amend and re-file the case.
It is seeking unspecified damages for unnamed holders of Wynn shares, whose value has fallen by more than 17% after allegations of misconduct became known.
“The court’s decision underscores the fact that suspected sexual misconduct and harassment by corporate executives are a major issue for investors, especially when management turns a blind eye to reports of misconduct,” said Murielle Steven Walsh, plaintiff’s attorney. “This type of misconduct endangers the economic success of a company.”
Gordon, in his 42-page order dated July 28, said that the resuscitated case should focus on two statements from the company:
First, a press release responding to allegations made by Wynn’s ex-wife Elaine Wynn in a lawsuit “relating to serious misconduct and abuse of company resources by (Steve) Wynn.”
Second, statements by the company and Steve Wynn in response to the Journal article.
“At that point,” the judge said, the plaintiffs “sufficiently” claimed that Steve Wynn, the Company’s current President and CEO, Matt Maddox, and two other senior executives, Kimmarie Sinatra, former General Counsel and Secretary to the Executive Vice President, and Stephen Cootey, former chief financial officer, accountant and treasurer, “knew of information that contradicted what they said that denied allegations of wrongdoing.”
“The conclusion that these defendants knew about Wynn’s alleged wrongdoing at the time of their testimony is sound and compelling,” wrote Gordon.
Wynn Resorts spokesman Michael Weaver said in a statement that the company looks forward to the case “going beyond the allegation stage.”
Wynn Resorts owns and operates casinos in Las Vegas, Massachusetts and the Chinese gambling enclave of Macau.
The statement said that similar allegations were investigated by the Massachusetts and Nevada gambling regulators in 2018 and 2019, and both “confirmed the license and good standing of the company and its current executives.”
In February 2019, the Nevada Gaming Commission closed a year-long investigation and sentenced the company to a record $ 20 million fine for failing to investigate sexual misconduct against Wynn prior to his resignation.
Then-Commissioner Philip Pro, a former federal judge, said investigators had found “a failure of a corporate culture to govern itself as it should”.
In April 2019, the Massachusetts Gaming Commission fined Wynn Resorts $ 35 million for failing to disclose years of sexual misconduct allegations against Steve Wynn. In addition, Maddox was fined $ 500,000 for “clear negligence” in investigating at least one complaint of misconduct.
Massachusetts regulators said they were “concerned about the systemic failure and pervasive culture of secrecy” at Wynn Resorts.
The company agreed in November 2019 to accept $ 20 million in damages from Steve Wynn and an additional $ 21 million from insurance carriers on behalf of current and former Wynn Resorts employees to resolve shareholder claims alleging the company’s directors Failing to disclose allegations of misconduct.
The agreements did not admit any wrongdoing.
In another ongoing lawsuit, the Nevada Supreme Court is considering Steve Wynn’s appeal against a Nevada Gaming Commission’s decision last December to consider a fine of up to $ 500,000 and to declare him unfit to grant his gambling ties to the state renew.
Steve Wynn also has a libel suit pending against The Associated Press and an AP reporter based on a story about accounts with the Las Vegas Police Department of two women alleging sexual misconduct at Wynn.
Wynn owned, built, and operated notable Las Vegas properties, including the Golden Nugget, The Mirage, Treasure Island, and Bellagio, before building the Wynn and Encore resorts on the Las Vegas Strip.