Long-anticipated Investigators Found a Culture of Secrecy, Failure to Follow Policies for Steve Wynn Complaints

The Massachusetts Gaming Commission (MGC) unveiled its long-anticipated investigation of Wynn Resorts and Encore Boston Harbor and reported they found a company culture that did not follow policies when allegations were made against former CEO Steve Wynn, and also used extreme secrecy to hide allegations and settlements involving him in several cases.

That, however, was tempered also by a laundry list of changes that the company has made in the last 14 months, including ousting Steve Wynn and implementing a robust corporate governance structure.

Wynn Resorts CEO Matt Maddox (center) listens to the investigation report on Tuesday morning. General Counsel Elaine Whittemore sits beside him to the right, and Encore Boston Harbor President Bob DeSalvio is seen behind. Wynn Resorts officials touted the many changes they have made since the sexual misconduct claims were publicized, and said no one who had knowledge of them during the licensing process was still with the company.

“However,” said Karen Wells, MGC Investigations and Enforcement Bureau (IEB) director, “the past cannot be erased by these changes.”

That set the tone for the unveiling of what had been found over the last year by the IEB using thousands of pages of information, conducting hundreds of witness interviews, and traveling to six states to produce the report. That report had been held up with a lawsuit from Steve Wynn last November asserting attorney-client privilege, but that suit was recently settled and that allowed the unveiling to go forward Tuesday morning.

“In evaluating the IEB investigation, it showed a pattern of certain employees, including the Legal Division, disregarding policies when it came to allegations against Mr. Wynn,” she said. “It showed they made great efforts at secrecy so that it made it difficult if not impossible for gaming regulators to uncover these incidents.”

Earlier, she also said, “The investigation actually revealed a culture in the company where employees hesitated to report sexual misconduct allegations against Mr. Wynn. We found the company failed to safeguard the well-being and safety of its employees.”

At the outset of the investigation unveiling, Loretta Lillios, of the IEB, said what happened at the company mattered. She bookended the impending report with the idea that a gaming license is a privilege and not a right – noting that companies have to always keep proper policies and conduct in place or risk losing the license.

It was a warning that all things were on the table, including the loss of Encore’s license.

“The IEB’s investigation revealed the company’s adherence to these criteria has been called into question,” she said. “What happened at the company matters. It matters to the women who have been directly affected by the allegations of sexual misconduct. It matters to the workforce and employees here. It matters to the Commission. It matters to the people of Massachusetts… After all the evidence and testimony is presented, you will have ample information to apply the law and make a sound determination.”

Wells detailed for most of her presentation the allegations against Steve Wynn, using a timeline to go through the allegations and the response to them. She started in 2005 with the settlement paid to a manicurist at Wynn Las Vegas who claimed she had been raped by Steve Wynn and was now pregnant as a result of two such encounters. That allegation was detailed in the original Wall Street Journal article in January 2018 that opened the entire sexual misconduct situation.

A main issue, Wells said, was to not decide whether the allegations were true, but whether the company responded correctly and whether it should have divulged information to the MGC in 2013.

“The Commission is not evaluating whether the allegations are true or false, but it is evaluating the company’s response to the allegations,” she said. “A key question for the Commission to consider is whether the company’s failure to divulge derogatory information may have a role in suitability or the suitability of a qualifier…We now know in 2013 at least three Massachusetts qualifiers had knowledge of these allegations. They were Steve Wynn, Elaine Wynn and Kim Sinatra…A key question for the Commission is whether this relevant information should have been divulged on the front end rather than us having to investigate this now.”

The IEB also indicated that they tried to interview Steve Wynn several times, and he declined. However, he did release a statement that was read by Wells to the Commission.

“I had multiple sexual relationships during my tenure at Wynn Resorts and made no attempt to document them,” the statement read. “I do not believe any of the specific details of these relationships are material to the issues I understand are being reviewed by the special committee. I recognize some of the names obtained in the witness questions, but have no memory of ever meeting or having relationships with the women whose names are in your questions. I deny having any relationship that was not consensual. During the time I was employed by Wynn I was aware of a code of conduct and other policies. I was not however familiar with the details of those policies.”

Many of the key questions in the investigation included information garnered during discovery in the case of Elaine Wynn vs. Steve Wynn, as well as in a case known as the Okada case. Much of what was brought out in regard to the allegations and the response to them came from that case.

For Sinatra, who left the company in July 2018 with a multi-million dollar severance package, it became clear she knew of the allegations against Wynn during the 2013 suitability hearings. Yet, she did not divulge them, and the investigation seemed to suggest she wasn’t clear as to what she remembered knowing.

One such exchange involved an e-mail chain where a letter detailing a hostile working environment was described. That letter in that e-mail was up for dispute as to whether Sinatra read it, read all of it, or if she even really knew about it.

Much of her responses, according to the report, were that she didn’t recall a lot of information.

“I don’t recall if I knew in `14,” she had responded when asked if she knew the original 2005 case included a rape allegation of the manicurist.

Also in question was how the company responded after the Wall Street Journal article, including putting out an immediate statement of support letter for Steve Wynn to employees. That statement also included a reference to the article as being the latest strategy in Elaine Wynn’s legal case against the company.

Wells said that was put out before any investigation into the matter and without consideration to employees that may have been affected by Steve Wynn’s alleged behavior.

Wynn Communications Director Michael Weaver said he would not do that again if he were to do it over.

“Mr. Weaver stated to investigators that if he was to do it over again, he would do it differently,” Wells testified.

Maddox also told investigators that he simply believed Steve Wynn.

“As ridiculous as it looks now, we believed it,” Wells summarized. “We believed it. I know it’s tone deaf.”

The letter to employees went out with the input of Steve Wynn and others in the organization, but was under the signature of Wynn Las Vegas President Maurice Wooden – who indicated he was uncomfortable with the letter in his name but felt he had no choice in the matter.

That letter was followed up by what turned out to be an ill-advised Town Hall style employee meeting tour by Steve Wynn and other company officials. It had been reported in media accounts that employees at the Town Halls were asked to raise their hands if Steve Wynn had assaulted or abused them. That had not been confirmed before, but the IEB investigation revealed that Wynn Attorney Stacy Michaels told investigators that she was present and that did happen.

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The remainder of the first day of hearings focused on the new Board members and the new members of the corporate hierarchy.

The MGC listened to detailed presentations about each new Board member and each new employee. Each told the story of how they had been recruited – some by Matt Maddox – to serve on the Board in the aftermath of the crisis at the company.

All of them were being reviewed by the MGC for suitability, and if they were qualified to serve on the Board or work in their positions.

The testimony by Wynn attorneys was to begin on Wednesday, where they would present their case and ask questions regarding the IEB report.

                                 •                       •                       •                       •

The MGC did remind everyone that there would be no vote at the end of the proceedings, nor would there be any sort of discussion of the report or testimony.

Instead, when all of the information had been gathered, the MGC would deliberate in private  – with the option of asking for more or additional information.

At some point in the near future, they would issue their findings and their remedies – including the possibility of stripping the license – in a written report.

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