Lawsuit against Wynn Resorts reads like screenplay

Kazuo Okada's most recent lawsuit against Wynn Resorts Ltd., filed less than a month after he was unceremoniously dumped as the company's largest shareholder, reads more like a screenplay than a legal document.

The 107-page filing, submitted to the U.S. District Court in Las Vegas on Monday, charges Wynn Resorts with racketeering, securities violations, fraud, acquiring property and signatures under false pretenses, and other "wrongful" acts.

The heart of the matter, according to Okada's attorneys, is that Chairman Steve Wynn, with general counsel Kim Sinatra acting as consigliere, set out to separate Okada from his 24.5 million shares of Wynn Resorts and have him removed from the company.

The alleged plot included "secretly and unilaterally" manipulating language in the company's Stockholders Agreement to further the ultimate plan of "Illegally placing and maintaining control" of the company "in a single man -- Mr. Wynn."

In short, Okada was whacked. He'll stay that way unless a federal judge decides to change the script.

Okada wants the stock returned and his 20 percent ownership stake restored to its full value, which he believes is worth roughly $1 billion more than the $1.9 billion Wynn plans to pay him through a 10-year note.

The federal court lawsuit lists four general allegations against Wynn Resorts, 20 counts as claims for relief and 33 affirmative defenses. It's so big it has a table of contents.

Some of the racketeering charges and securities violations alleged by Okada could raise concerns of state gaming regulators and federal authorities.

He accuses Wynn and Sinatra of having "executed on a scheme and pattern of racketeering activity, the aim of which was to defraud and defame and steal" Okada's stake in the company.

There are also the claims that would interest gossip columnists.

At a meeting in Macau on May 16, 2011, Wynn told Okada that his ex-wife, Elaine Wynn, was angry about his recent marriage to Andrea Hissom. Elaine wanted to transfer her stake in the company -- some 11 million shares she received in her divorce settlement -- "to a new owner," Wynn said.

The sale never took place.

For her part, Elaine Wynn has remained silent on the Okada matter. When asked about it recently, her response was, "I'm not going there, boys."

In another subtle dig, Okada's lawyers allude to Wynn's claim that he out-negotiated MGM Grand Corp. and Kirk Kerkorian when Mirage Resorts was bought out for $6.4 billion in 2000.

That same year, Wynn approached Okada after he was "ousted" as CEO of Mirage Resorts following "a bruising boardroom battle, which centered on allegations that Wynn misappropriated company funds."

Wynn was "humiliated by his public ouster" and Okada's $260 million investment in the new company became Wynn's means to re-enter the casino business.

The document's time line has something for all audiences. It delves into intricate detail to spell out the rise and the downfall of the 12-year Wynn-Okada relationship, which ended when Wynn's board, in a hurriedly arranged meeting, voted to take back Okada's stock. Okada was listening in from Tokyo, but his phone link was cut off before the stock redemption vote took place.

The board decided Okada was "unsuitable" and a potential danger to the company's gaming licenses. An investigation by former FBI Director Louis Freeh uncovered allegedly improper payments and favors granted to Philippine gaming regulators related to Okada's other business interests.

In a statement, Wynn Resorts said the counterclaim was "enormous in length" and carries "scurrilous allegations" without disputing Freeh's report.

Wall Street has clammed up on the Okada countersuit. There was more talking in "The Artist" than from gaming analysts, who have written off Okada's ouster as a done deal. Wynn's shares are soaring in value and the company is awaiting confirmation from the Macau government that it can build a new resort on the Coati Strip.

The last thing the investment community wants is an overhang from the Okada matter weighing down price per share.

Okada isn't going away quietly.

The lawsuit paints the Wynn board members as nothing more than capos, describing them -- including former Nevada Gov. Bob Miller, Wynn executives Mark Schorr and Linda Chen, and City National Bank Chairman Russell Goldsmith -- as friends of Wynn "who do his personal bidding."

Wynn Resorts key executives are paid "exorbitant amounts for their unwavering fealty."

The company itself was said to be Wynn's "personal fiefdom."

Even if the courts were to restore Okada's stock ownership, his relationships with Wynn and Wynn Resorts have been rubbed out.

Some speculate that Wynn and the company might reach a settlement with Okada that returns much of the 30 percent discount built into the redemption costs with more of the money up front. That would allow Okada to move forward on his planned $2 billion Philippines casino development.

If this were a Hollywood screenplay, the ending would be more definite. Somebody would just get an offer he cannot refuse.

Howard Stutz's Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871.
He blogs at lvrj.com/blogs/stutz.
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