Wynn's Civil War

Fifth shareholder suit filed against Wynn directors
By Steve Green
Wednesday 18 April 2012

Shareholder lawsuit No. 5 was filed Tuesday against Wynn Resorts Ltd. board members over allegations of potential violations of the federal Foreign Corrupt Practices Act.

The latest to sue the Las Vegas-based hotel-casino operator in U.S. District Court for Nevada was Excavators Union Local 731 Welfare Fund, which is based in New York.

It’s represented by law firms Cohen Milstein Sellers & Toll PLLC, in New York and Washington, D.C.; and Aldrich Law Firm Ltd., in Las Vegas.

Since litigation erupted this year between Wynn Resorts and board member Kazuoa Okada, five outside shareholders have now sued the board.

Their suits generally claim the company has been hurt by the dispute with Okada and revelations revealed in that dispute about potential violations of the FCPA.

The FCPA is a U.S. law aimed at deterring bribes by U.S. business officials and companies to greedy foreign officials.

Okada has suggested Wynn Resorts improperly agreed to donate $135 million to the University of Macau in China, where the company is a casino operator.

Wynn Resorts has countered that Okada provided improper gifts to Filipino casino regulators.

Of the five shareholder lawsuits, just two name Okada as a director, including Tuesday’s Excavators’ complaint.

In the other three lawsuits, by not suing Okada, the shareholders and their attorneys appear to have adopted his arguments against Wynn.

But Tuesday’s lawsuit naming Okada, along with the other 11 directors, contains claims that Wynn Resorts has admitted that Okada ''used accounts at Wynn Resorts to attempt to allegedly improperly influence gaming regulators in the Philippines for a casino project'' and that Okada couldn’t have used those accounts without the knowledge and approval of the Wynn board.

Attorneys for the Excavators Union's fund ask that board members be required to pay the company unspecified damages for their conduct; and that Wynn Resorts be blocked from making payments to the University of Macau to cover the $135 million pledge.

Wynn Resorts has not responded to the shareholder lawsuits, and it’s not commenting on them.

Separately, attorneys for Okada on Monday argued that the main Wynn/Okada lawsuit should remain in federal court in Nevada, where they moved it after Wynn filed suit in Nevada state court.

In a court filing, they said the ''pretext'' for Wynn redeeming Okada’s $2.7 billion in Wynn shares at a discount for a $1.9 billion note in February was that Okada and/or his companies committed multiple violations of the FCPA.

''Interpretation of the FCPA falls within the exclusive jurisdiction of the federal courts. Accordingly, Wynn Resorts’ complaint was properly removed to this court,'' the Okada filing said.

Wynn attorneys dispute that contention, saying the transfer of the suit to federal court amounted to Okada ''improperly manipulating the legal process.''

They say the Wynn Resorts board, in redeeming Okada’s shares and suing him over alleged breaches of duty as a director, didn’t make any federal claims.

U.S. District Judge Larry Hicks in Reno hasn’t indicated when he’ll rule on a request by Wynn Resorts that the suit be sent back to state court in Las Vegas, called Clark County District Court.