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Wynn Resorts May "Fire" Its Way Into Massachusetts

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This article is more than 4 years old.

Update: On August 5, 2019, Wynn Resorts’ General Counsel issued James Stern a letter confirming he had “voluntarily resigned” effective April 6th.   The original story was based on a brief that Wynn Resorts filed with the Massachusetts Gaming Commission saying that Stern had been informed on April 6th  “that Wynn Resorts would no longer require his services.”

Wynn Resorts initially applied for a gaming license in Massachusetts in early 2012 after securing an option to purchase land in Everett, MA.   After a thorough review and investigation, the Investigation and Enforcement Bureau (IEB) of the Massachusetts Gaming Commission (MGC) found Wynn and a group of qualifiers "suitable."  In 2014, Wynn was selected as the sole winner of the Category 1 (resort-casino) for Region A and today a $2.6 billion casino is scheduled to open in June 2019.

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Wynn's suitability to operate that casino changed in January 2018 when allegations of sexual misconduct by Wynn's co-founder and CEO Steve Wynn were profiled in a Wall Street Journal investigative report.  The article sent shock waves through Massachusetts and the MGC stated that it would initiate a subsequent investigation into Wynn's suitability.  The Nevada Gaming Control Board (Nevada) did the same thing.

Earlier this year, Nevada found Wynn "suitable" to hold its gaming license but levied a record $20 million fine against the company.  In the Nevada Complaint against Wynn, it gave insights into its own investigation of the company, finding a pattern of executive behavior (failure to act on harassment reports) that was worthy of disciplinary action .... but the company was still suitable.

IEB in Massachusetts issued its own report, parts redacted, about senior management, up to board of directors, knowing of allegations of sexual assault and taking little action. Subsequently, a hearing was held in early April where members of the Wynn executive team were questioned about the report.  The hearings did not go well for Wynn.  Its CEO, Matt Maddox, claimed that he was unaware of any of the allegations despite his near 20 year tutelage under Mr. Wynn.  After the hearing, Wynn fired its head of security, Jim Stern, after testimony where he admitted to clandestine operations of spying on fellow employees, former employees and its largest share holder, Elaine Wynn.  Since then, Wynn filed a brief supporting Maddox, confirming Stern's firing and stating that the company should be found suitable.

A Boston Globe editorial urged that Wynn should be found suitable but, perhaps, it should fire Maddox ... and maybe ban Steve Wynn from ever entering any of their casinos ... and pay a fine.  But can Wynn simply fire, ban or pay fines to get the Massachusetts gaming license now?  Many people think "yes."

Wynn's board of directors has been completely remade since the revelations of Mr. Wynn in the WSJ report.  Its general counsel, Kim Sinatra, was let go.  Heads of other Wynn subsidiaries and their general counsel were also fired for failures and their departures hailed as part of a new Wynn .... one that now focuses more on its over 20,000 employees rather than a single individual (Mr. Wynn).

To its credit, Wynn has made a Herculean effort to reshape the company.  Adding women to its board, taking initiatives on sexual harassment training and funding charitable operations that help women are all admirable and set a new standard in business.  However, is that what is before MGC to determine suitability?

The Boston Globe stated in its editorial that "yes" Wynn should be allowed to keep the license because, among other things MGC never specifically ".... asked Wynn about sexual misconduct allegations back then. The background investigation at the time was focused on issues such as organized crime and finances. We’ll never know what might have happened if sexual misconduct allegations had been one of the subjects of the commission’s investigations in 2013.

So let's look at the questions that were posed by MGC (IEB) to Wynn as part of its finding of suitability in 2013:

Has the applicant/qualifier submitted an application for a gaming license which contains false of misleading information?

Has the applicant/qualifier committed prior acts which have not been prosecuted or in which the applicant/qualifier was not convicted but form a pattern of misconduct that makes the applicant unsuitable for a license under this chapter?

Does the applicant/qualifier demonstrate integrity, honesty, good character and reputation?

Is the applicant/qualifier a defendant in litigation involving its business practices?

Are all the parties in interest, including, but not limited to, affiliates, close associates and financial sources suitable to hold or participate in the gaming license?

Has the applicant/qualifier failed to establish their integrity or the integrity of any affiliate, close associate, financial source or any person required to be qualified by the commission?

Has the applicant/qualifier failed to demonstrate responsible business practices in any jurisdiction?

The MGC has sufficient information to answer these questions about the Wynn of 2013 as well as the Wynn of 2019.

Wynn was allowed to discard employees that it found not suitable to be a part of its organization and now presents this new and improved company.  Will MGC see the benefits of this approach of "firing" until found suitable or will Wynn be held to account for the way they answered in December 2013?

We should find out any day now.

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