Las Vegas Sands Corp. lost two motions Tuesday to rid itself of a wrongful termination lawsuit filed by the former chief executive of its Macau subsidiary, but a company attorney vehemently denied some of the more incendiary issues raised in the court case.
Los Angeles attorney Patricia Glaser, representing the company’s Sands China subsidiary, said former company official Steven Jacobs "lied to the court" when he said in documents the company had "couriered" $68 million from its casinos in Macau to Las Vegas.
Glaser said the money transfer was "a good business practice" and used as a convenience for the company’s customers.
Attorney Don Campbell, who represents Jacobs, who was fired last summer by the casino operator, said Las Vegas Sands "acted as the bank for its customers to the tune of $68 million." Campbell said the money was credit and credit deposits by customers for gambling activity in Macau and Las Vegas.
Allegations raised in Jacobs’ lawsuit have caused the Securities and Exchange Commission and the Department of Justice to open investigations of Las Vegas Sands for possible violations of the U.S. Foreign Corrupt Practices Act.
The company was seeking to have the case dismissed. Attorney Steven Peek argued that Jacobs, who started out as consultant to the company in early 2009 and eventually became president of the Macau operations later that year, was an employee of the Chinese subsidiary and not Las Vegas Sands.
Peek said Jacobs was listed as an executive officer for Las Vegas Sands for purposes of reporting to the SEC.
"He was not an employee of Las Vegas Sands," Peek said. "He was paid by (Venetian Macau Ltd.). He was a resident of Hong Kong. He enrolled his child in school there."
But Campbell, using several large displays, produced documents showing Jacobs’ ties to Las Vegas Sands. Included was an Aug. 3, 2009, side letter he said was a term sheet negotiated by Jacobs and Las Vegas Sands President Michael Leven.
"That’s not window dressing. It’s exceedingly important," Campbell said. "It eviscerates any previous employment agreement."
Campbell said in the court that Jacobs’ most recent W-2 tax form from the company identifies him as an employee of Las Vegas Sands.
Peek told District Court Judge Elizabeth Gonzalez the case should be tried in Macau where Sands China is based.
Gonzalez ruled Clark County had jurisdiction in the matter based on the various dealings between the parties in Las Vegas, where Las Vegas Sands is headquartered.
Gonzalez also rejected objections raised by Glaser, who argued that Sands China should be removed as a defendant.
Peek and Glaser said they would appeal the judge’s decision to the Nevada Supreme Court.
Jacobs, who now lives in Florida, said after the hearing that Leven, a longtime hotel and lodging executive who became president of Las Vegas Sands in March 2009 hired his company, Vagus Group, as a consultant to the company’s Macau operations.
According to statements at the hearing, when Jacobs became CEO of Sands China, he was given a salary of $1.3 million and stock options in the subsidiary, which is traded publicly on the Hong Kong Stock Exchange.
Gonzalez also permitted cameras in the courtroom for the hearing over objections from Las Vegas Sands, which wanted to keep a camera from the Public Broadcasting Service television show "Frontline," from filming the proceedings. The Las Vegas Review-Journal had both a still photographer and video photographer in the courtroom.
The case is being monitored by Wall Street, which is worried that any overhang from the SEC and Department of Justice investigations could weigh on the company’s stock price.
In a note to investors Monday, Jefferies & Co. gaming analyst David Katz said the investigation could last well into the summer months or longer.
"We believe the range or probability of specific outcomes is incalculable and do not presume a negative bias on the outcomes," Katz said. "Thus, we believe this issue, which is presently limited to the U.S. shares, should overhang the stock in the near-term."
Shares of the Las Vegas Sands, which are publicly traded on the New York Stock Exchange, closed Tuesday at $37.94, down 68 cents, or 1.76 percent. Shares of the company had reached as high as $50.65 on Feb. 3, before news of the SEC and Justice Department investigations was revealed earlier this month. Reuters News Service reported the FBI is also investigating the company.
In his lawsuit, Jacobs claims Las Vegas Sands Chairman and CEO Sheldon Adelson instructed him to "threaten to withhold Sands China business from prominent Chinese banks unless they agreed to use influence with newly elected senior government officials of Macau in order to … obtain favorable treatment with regards to labor quotas and table limits."
Las Vegas Sands spokesman Ron Reese has said the company "adamantly denies the allegations in the Jacobs lawsuit."
Contact reporter Howard Stutz at email@example.com or 702-477-3871.