Updated April 4, 2019 - 8:18 pm
BOSTON — Elaine Wynn never told gaming regulators what she knew of a sexual encounter Steve Wynn had with a manicurist and the subsequent $7.5 million settlement payment because, she said, people she trusted told her the matter was appropriately handled.
Her testimony Thursday came as the Massachusetts Gaming Commission wrapped up three days of adjudicatory hearings that will determine whether Las Vegas-based Wynn Resorts Ltd. will be allowed to keep its gaming license. An investigative arm of the commission found company executives failed to disclose the settlement payment in 2014, when it was applying for the license. Wynn Resorts needs its Massachusetts gaming license to open its $2.6 billion Encore Boston Harbor resort in Everett on June 23.
The five-member commission will meet behind closed doors to review testimony and a 199-page report before making a decision on what, if anything, will be done. The commission’s findings will be released in writing, and the work is expected to take several days to complete.
The commission could revoke the company’s license, approve licensing conditionally or fine the company.
Allegations of sexual misconduct against Steve Wynn were first reported in January 2018 by The Wall Street Journal. Just over a week after the allegations surfaced, Wynn resigned as the company’s chairman and CEO. Within two months he had divested all financial holdings and had been evicted from a villa where he lived at the resort. He has denied having nonconsensual relationships with company employees.
Email ‘out of the blue’
Elaine Wynn, co-founder and largest shareholder of Wynn Resorts and president of the Nevada State Board of Education, said she first learned of a sexual misconduct allegation against Steve Wynn in 2009.
She said she was alarmed when, in the midst of her divorce proceedings with Steve Wynn, she received an email “out of the blue” alleging he had raped a Wynn Resorts employee in 2005.
Elaine Wynn said she informed then-corporate counsel Kim Sinatra and consulted with outside counsel and longtime Wynn family friend Frank Schreck. Elaine Wynn was satisfied Sinatra and Schreck had resolved the matter — the settlement came from Steve Wynn’s own money — so the payoff didn’t concern the company.
“At the time, Ms. Wynn had no reason to doubt Ms. Sinatra and reasonably believed that Ms. Sinatra and Mr. Schreck and the company’s attorneys knew best how such allegations should be handled,” the commission’s Investigations and Enforcement Bureau report said.
The matter didn’t come up again until Elaine Wynn referenced it in a cross claim involving the company’s lawsuit with Japanese businessman and former Wynn partner Kazuo Okada that began in 2012.
By then, efforts were being made to oust Elaine Wynn from the board of directors. She had sensed a change in attitude from the board after the cross claim was filed, and she attempted to stay on the board even while her ex-husband continued to lead the company.
“I found I was being referred to as a bitter, cynical ex-wife,” she told the commission.
The issue surfaced again after The Wall Street Journal published its story about the settlement and other allegations against Steve Wynn.
Wynn Resorts CEO Matt Maddox also was in the spotlight Thursday morning as commissioners concluded their questions from testimony he delivered Wednesday night.
Maddox said Thursday that Sinatra did more to protect Steve Wynn than the company, and that she was weak on regulatory compliance.
These qualities led Maddox to replace her, he said. Longtime Las Vegas gaming attorney Ellen Whittemore was named general counsel the day after Sinatra left the company.
Las Vegas Review-Journal efforts to reach Sinatra were unsuccessful Thursday.
Under intense questioning from Commissioner Gayle Cameron and Chief Enforcement Counsel Loretta Lillios, Maddox said he directed the removal of Steve Wynn, the man who hired him, from the company without any severance payment.
After Cameron questioned Maddox’s leadership ability, with several subordinates failing to inform him of details about Steve Wynn’s encounters and settlement payments, he responded that at the time most were focused on keeping the company afloat while it was awaiting resolution of the Okada litigation that could have cost the company billions of dollars.
He told commissioners his ability to oust Wynn and help start a number of corporate policy changes, some directly addressing harassment issues, led to a corporate culture change that he wants to bring to Massachusetts.
“I think the tone at the top is different now. It’s not about one man,” Maddox said. “I’m the exact right person at this time to make Wynn Resorts a great company.”
Wynn Chairman Phil Satre, who testified earlier in the hearing, said the company has improved as a result of the scrutiny.
“As we lead this company into the future, we are committed to implementing and enforcing industry-leading policies for compliance and meeting the highest standards of excellence,” he said.
When the Nevada Gaming Commission considered discipline against Wynn Resorts for the same allegations against its former chairman and CEO and how executives handled them, the company was fined a record $20 million. The license was not revoked or modified.
An adverse decision
Near the end of the last day of hearings, Massachusetts Gaming Commissioner Enrique Zuniga had one last question for Wynn Resorts Board Chairman Phil Satre that resulted in an unusual exchange just as commissioners, executives and regulative staff were thanking each other for all their hard work bringing issues to light.
“If you were to receive an adverse finding from this commission relative to your license, what would you think you would be required to do as a result of that?” Zuniga asked.
“You’re saying what would we do if we got an adverse decision?” Satre replied.
“Why would you care about that?” Satre responded. “I mean, our financial condition at that point in time, is not something that is an issue for you. It’s an issue for our shareholders, it’s an issue for everywhere else, but why is it an issue for you if you’ve decided we don’t want you here?”