The legal battle between Steve Wynn and Kazuo Okada, Wynn Resorts Ltd.’s largest shareholder, escalated Monday as Okada countersued in federal court in Las Vegas, alleging the company’s board of directors violated racketeering laws by voting to redeem his shares at an $800 million discount.
Okada also “disputes that any redemption has occurred,” the Japanese billionaire said in his lawsuit. Okada said Wynn Resorts is “barred by contract from redeeming Aruze USA’s securities,” so his shares are still outstanding.
Okada also alleges that Wynn Resorts “undertook a secret investigation” to remove him from the board and “committed a series of predicate acts of racketeering, which include fraud.” His federal lawsuit seeks a permanent injunction against Wynn Resorts’ redemption of Okada’s shares and unspecified damages.
Paul Kranhold, a Wynn Resorts spokesman, was unavailable for comment on Okada’s filing.
Wynn Resorts forcibly redeemed Okada’s nearly 20 percent stake in the company on Feb. 18 after an investigation headed by former FBI Director Louis Freeh found that Okada had violated U.S. anti-corruption laws by allegedly making improper payments to gaming officials in the Philippines.
Okada, CEO of Universal Entertainment Corp., made his fortune from pachinko, a form of slot machine popular in Asia, and was an early big-dollar investor in Wynn Resorts through his U.S. company, Aruze USA.
“Apart from the lack of any legal basis for Wynn Resorts’ actions, Aruze USA sues because Wynn Resorts … is not a corporation in any ordinary sense,” according to the filing. “Rather, Wynn Resorts’ flamboyant Chairman Mr. (Steve) Wynn has run Wynn Resorts as a personal fiefdom.”
Okada claims Wynn, chief executive of the Las Vegas-based casino company, packed the board of directors with “friends who do his personal bidding, and (is) paying key executives exorbitant amounts for their unwavering fealty.”
The court filing is the latest move in the unraveling of a once successful business partnership between Wynn and Okada, who has invested $380 million in Wynn Resorts since 2000.
Okada and Aruze USA invested
$260 million in November 2000 for a 50 percent stake in Valvino Lamore LLC, the predecessor to Wynn Resorts. The Nevada Gaming Commission found Okada and Aruze USA, a wholly owned subsidiary of Universal Entertainment, suitable on June 17, 2004.
The lawsuit also alleges Okada’s
24.5 million shares in Wynn Resorts were worth $2.7 billion, and that the
$1.9 billion the company has said it will pay him through a 10-year note reflects a 30 percent discount.
Okada said Wynn Resorts’ board failed by not undertaking an “independent and objective examination” before finding him “unsuitable” as a shareholder.
Wynn Resorts said it plans a special board meeting to remove him from the board.
The time and date for the shareholders’ meeting have not yet been determined. Wynn Resorts said it would take a two-thirds vote to remove Okada and that only shareholders of record on March 30 will be allowed to vote.
Okada has already been removed from the boards of Wynn Macau Ltd. and Wynn Las Vegas Capital Corp., both subsidiaries of Wynn Resorts.
Wynn Resorts sued Okada in Nevada state court. Attorneys for Okada on Monday transferred the case to U.S. District Court in Las Vegas.
The lawsuit alleges that Wynn Resorts refused to give Okada’s lawyers a copy of the investigation, by “erroneously invoking attorney-client privilege and confidentiality, even after Wynn Resorts had leaked a report of the investigation to The Wall Street Journal.”
Wynn Resorts shares gained 28 cents, or 0.23 percent, Monday to close at $121.07.
On Oct. 25, 2002, Wynn Resorts conducted its initial public offering on the Nasdaq at $13 per share.
Contact reporter Chris Sieroty at
email@example.com or 702-477-3893.