The State Ethics Commission is investigating gambling commissioner Stephen Crosby for a possible conflict of interest in his review of a proposed resort casino on land owned by a longtime friend.
The commission decided to launch a preliminary inquiry after receiving a sworn statement alleging that Crosby, the chairman, “actively participated” in the gambling commission’s work on the Eastern Massachusetts casino license after he officially recused himself from the proceedings. The land, which belonged to Crosby’s friend Paul Lohnes, is the site of Steve Wynn’s planned $1.75 billion resort casino.
Crosby confirmed the ethics investigation, which is secret, but denied any wrongdoing on his part.
“I have rigorously adhered to all regulations and guidance provided to me by the State Ethics Commission over the last three years,” said Crosby in a statement. “I am fully cooperating with what I understand to be a preliminary inquiry and I look forward to an expedient resolution of that inquiry.” He declined further comment, citing the confidentiality of the Ethics Commission’s proceedings.
The statement that sparked the investigation, which was signed under penalties of perjury, was read to the Globe by a person familiar with the probe. It asserts Crosby’s involvement continued until the commission chose Wynn Resorts over the rival Suffolk Downs project in Revere in September 2014.
“Crosby actively participated in the commission’s activities related to the award (of Wynn’s casino license) after claiming to have recused himself,” read the statement. “I believe his actions violated” several sections of the state conflict-of-interest law.
The statement’s author, who offered to meet with the commission to provide details, wrote that he believed Crosby’s actions could be grounds for rescinding Wynn’s casino license. The Globe does not know the identity of the person who filed the complaint.
‘I have rigorously adhered to all regulations and guidance provided to me by the State Ethics Commission over the last three years.’
Stephen Crosby, Mass. Gaming Commission chairman
Ethics Commission spokesman David Giannotti would not confirm the agency is investigating Crosby.
Crosby, a former top official in the Cellucci administration, has been dogged by controversy almost since December 2011, when he was named gambling commissioner, a post in which he oversaw the awarding of Massachusetts’ first casino licenses. At various points in the hotly contested fight for the Eastern Massachusetts license, Crosby has been accused of favoring both Wynn and Suffolk Downs.
A “preliminary inquiry” means that the five-member commission has approved a thorough inquiry. During the investigation, the commission’s enforcement division has authority to summons witnesses to testify or turn over documents.
The Ethics Commission probe parallels Boston Mayor Martin Walsh’s recently filed expanded suit against the Gaming Commission, alleging it repeatedly violated the state’s casino law and its own rules to make sure Wynn was granted a casino license.
The complaint alleged that the commission and Crosby took several actions that benefited Wynn — despite Crosby’s clear conflict of interest because of his friendship with Lohnes, whom he met during their service together in the National Guard in the 1970s.
The city alleged that Crosby should have recused himself as soon as he learned in 2012 that Lohnes owned the land where Wynn wanted to build a casino. But Crosby didn’t reveal his relationship with Lohnes until being questioned in August 2013 by State Police investigating the possibility that Lohnes had secret partners with criminal records.
Crosby initially withdrew only from the commission debate over the land in December 2013. He left the meeting room while colleagues debated whether Wynn should be allowed to continue his quest for a license in Everett even though at least two felons had owned some part of the land.
Crosby publicly disclosed his ties to Lohnes in the fall of 2013, after the Globe questioned their relationship. After he filed a written disclosure with the Ethics Commission, the commission told Crosby he could continue to vote on matters related to Everett.
In May 2014, after the Globe reported that Crosby attended a Kentucky Derby party at Suffolk Downs, he withdrew from deliberations over all aspects of the Eastern Massachusetts license.
Boston’s lawyers alleged that Crosby and Lohnes were much closer than Crosby, who has downplayed the relationship, has admitted.
According to Boston’s complaint, Lohnes said the men had socialized at least 20 times since he bailed out Crosby’s failing publishing company in the 1980s. In May 2012, the suit said, with Wynn in the market for a casino site, Lohnes arranged a dinner with Crosby and his wife.
Crosby told the Globe in 2013 that he hadn’t seen Lohnes in years. However, at a recent meeting with Globe editors, Crosby acknowledged that he, Lohnes, and another business partner from their defunct publishing company dined with their wives in May 2012.
Crosby said he never discussed the casino with Lohnes and didn’t realize his friend owned the Everett land until an intermediary called him in November 2012 to let him know.
“A mutual friend called me and said obscurely, ‘If somebody you knew had an ownership in land that might be involved in a casino proposal, would I want to know or not know?’ ” Crosby said in 2013. “I said it doesn’t really matter. This mutual friend said that Lohnes thought it would be better that we not have any contact. I said, ‘That’s fine.’ ”
In any event, Crosby said, “there had been not one iota of discussion either about the Wynn proposal or the land situation prior to my recusal.”
Wynn originally offered Lohnes and two partners $75 million for the contaminated land along the Mystic River, land they bought for $8 million in 2009.
Later, Wynn lowered his offer to $35 million under pressure after revelations that at least one felon may have been a secret owner of the land.
If the Ethics Commission finds Crosby violated any section of the conflict-of-interest law, except the bribery section, it can impose civil penalties up to $10,000. For violations of the law’s bribery section, the civil penalties can increase to $25,000.
The commission could also refer matters to the attorney general or district attorney to decide whether a violator should be prosecuted.