Updated April 3, 2019 - 9:34 pm
BOSTON — Wynn Resorts’ CEO said he and his colleagues were in denial about former Chairman and CEO Steve Wynn.
Matt Maddox said Wednesday he initially had a hard time believing his predecessor paid $7.5 million to settle a sexual harassment complaint with a company manicurist and accepted his explanation that it was part of a legal strategy to leverage a better divorce settlement from his ex-wife.
He told Massachusetts gaming commissioners it took about five days before he realized “there’s something else here.”
Maddox offered riveting and often graphic testimony for more than two hours Wednesday to commissioners, who at one point questioned his leadership, in the second of a three-day adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts. The testimony and a report released Tuesday will inform Massachusetts gaming commissioners in their decision on whether Wynn Resorts can keep its Massachusetts license and operate Encore Boston Harbor, the company’s $2.6 billion resort set to open in June. The company already has begun hiring employees and taking reservations.
Allegations 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 chairman and CEO, and within two months he had divested all financial holdings and was evicted from a villa he lived in at the resort.
Twice during Maddox’s testimony, Commissioner Gayle Cameron became exasperated with his comments and questioned how he could have believed what Wynn was telling him.
Maddox said he learned of Wynn’s sexual encounter with the manicurist employed at the Wynn Las Vegas spa just weeks before the Wall Street Journal story was published.
“I asked him (Steve Wynn) what this is all about because it seemed to be getting more traction,” Maddox said. “He told me that he was getting a manicure and that there was an overture made by the manicurist and that he went for it. He thought that was probably a mistake afterwards. She kept calling him, calling his cellphone and he stopped taking the calls because he didn’t think what he had done was right, having a consensual, one-time relationship. And she continued to call and call and then (her) attorney showed up.”
Maddox said the attorney either told Steve Wynn or Steve Wynn’s attorney — he said he was “not exactly sure how everything transpired” — that his client had been raped.
“At that point, (Steve Wynn’s) attorney, Frank Schreck, said if that’s the case, this meeting is over, please call police because this is a criminal matter. And the attorney said, ‘No, no, that’s not the case. Let’s see if we can settle this,’ to which they began the back-and-forth on the allegations and a settlement was reached.”
Cameron appeared to be skeptical.
“You know about the settlement. You have a woman emailing you who has alleged something happened to her. You read about dozens of women who have made allegations who have come forth and you firmly believe they all lied, and that’s what you stated to the IEB, that they all lied?” Cameron said. “I’m just having trouble understanding that, I really am.”
Executives in denial
Maddox responded he could see why it is hard to believe.
“I would be (having trouble understanding) if I were you, too,” he told Cameron. “I would be, too. But when crisis hits and almost everybody’s immediate reaction, unless you have the cold hard facts, is typically denial.
Maddox said Steve Wynn’s explanation that the Wall Street Journal article was an elaborate litigation strategy by ex-wife Elaine Wynn seemed plausible because some of the sources cited in a Wall Street Journal story about decades of sexual harassment complaints against Steve Wynn were close to her.
Asked how it was possible that dozens of women lied as part of a coordinated litigation strategy, Maddox said, “I understand how ridiculous that looks.”
Elaine Wynn has denied having had anything to do with the story.
Earlier in the day, Wynn board member Pat Mulroy left no doubt who she believed was responsible for the company’s failure to disclose to regulators a settlement payment in 2005.
She laid the blame on Steve Wynn, former company general counsel Kim Sinatra and Elaine Wynn, the company’s largest shareholder.
Mulroy said she first learned of the $7.5 million settlement with a manicurist, who became pregnant after the woman alleged Steve Wynn forced her to have sex with him, when Elaine Wynn filed a cross-claim in a court action related to her divorce settlement with Steve Wynn. That information was disclosed at her first meeting as a director in March 2016. Mulroy said she felt as if she had “just walked into a war zone.”
Elaine Wynn to testify
She said board members were angry with Elaine Wynn, particularly after Steve Wynn said the allegations were untrue and were part of her legal strategy to leverage a better divorce settlement.
Mulroy also testified that Sinatra never disclosed the settlement with the manicurist before Elaine Wynn’s cross-claim. She said Sinatra later indicated that the manicurist initiated the sexual encounter and that it was a one-time incident that occurred 11 years earlier and was “old and cold.”
Cameron asked Maddox if he ever felt betrayed by his staff because many of them knew something about the harassment payment Steve Wynn paid from his own funds and didn’t tell him about it.
“What does that say about your leadership that they think it’s OK that all these things could be happening, yet you’re not notified?” Cameron said.
Elaine Wynn is expected to testify Thursday, the last day of the scheduled hearing.
Once the hearing is completed, the five-member commission will adjourn to closed-door sessions to determine whether Wynn Resorts will continue to be licensed in Massachusetts and to dole out any other punishment, including possible fines against the company and intensified scrutiny by regulators.
The commission could take several days to reach a decision and will present it in a written response.