Criminal inquiry heats up with Wynn’s lawsuit against Okada

The water just got deeper for embattled Japanese gaming titan Kazuo Okada.

In a 34-page motion filed Monday afternoon in Clark County District Court, U.S. Attorney Dan Bogden and lawyers with the U.S. Department of Justice Criminal Division Fraud Section are trying to intervene and halt discovery in the civil litigation filed by Wynn Resorts Ltd. against billionaire Okada, his Japanese gaming company Universal Entertainment Corp. and its American subsidiary Aruze USA Inc.

The reason? A criminal investigation is heating up.

“The basis for this motion is that the government is conducting a criminal investigation into the same matters that form the basis of this civil action,” the motion said. “Due to the substantial overlap between the facts at issue in the civil litigation and the ongoing criminal investigation, permitting civil discovery to proceed, without limitation, risks interfering with and potentially compromising the criminal investigation.”

The safety of potential witnesses may be at stake, the motion asserts. According to the government, “the scope of federal criminal discovery is quite narrow, and those narrow strictures are based on concerns that broad disclosure of the details of the prosecution’s case will … (a) lead to perjury and manufactured evidence, (b) create opportunities for intimidation of prospective government witnesses, and (c) permit criminal defendants to unfairly surprise the prosecution at trial with information gained through discovery.”

A related motion filed by Department of Justice trial attorney Joey Lipton on behalf of fraud section chief Jeffrey Knox and the local U.S. attorney’s office asserts stopping discovery and sealing the contents of its declaration to the court are essential to protecting an investigation. “If the information in the Declaration were publicly disclosed, it could interfere with an ongoing federal criminal investigation being conducted by the government into the same matters that form the basis of this civil action,” the government argues.

The call for secrecy is more than a little ironic considering the very public nature of the pitched battle between Wynn Resorts Chairman Steve Wynn and his former best friend, Japanese pachinko king Okada.

It’s not a stretch to speculate that there might be no criminal investigation of Okada without the lawsuit and the devastating investigation on Wynn’s behalf by former FBI Director Louis J. Freeh. After being retained in October 2011, Freeh found evidence that Okada and associates made gifts and payments to regulators with the Philippines Amusement and Gaming Corporation in excess of $100,000. The largesse to the casino regulators appeared to be evidence Okada had violated the U.S. Foreign Corrupt Practices Act, which forbids payments to foreign officials. Okada had been trying to develop a $2 billion casino in the Philippines.

If that sounds like glorified tip money to a billionaire, maybe it was just the tip of an iceberg.

In October 2012, Reuters first reported Nevada gaming regulators were investigating up to $40 million that appears to have been transferred from Okada associates at Universal Entertainment to a company controlled by Rodolfo Soriano, a confidante of former PAGCOR chief Efraim Genuino. In an interview, a lawyer who formerly represented Universal admitted Soriano represented Okada’s development interests in the Philippines. “This guy Soriano — that is Okada himself. He is acting for Okada,” Manuel Camacho said.

But this case isn’t about visitors receiving complimentary rooms, meals and parting gifts. It’s about possible violations of the federal corporate bribery statute by a billionaire .

Authorities who might have shrugged off those free suites can’t help but dig into reports of $40 million in cash transfers.

Okada was forced to relinquish his 20 percent stake in Wynn at a 30 percent discount. Last year, he lashed out at Wynn for the casino chairman’s oddly generous $135 million donation to the University of Macau. But I’m betting Okada will be playing a lot more defense than offense in the coming months, and even his finger-pointing at Universal functionaries on allegations of making millions in “unauthorized” transfers isn’t going to slow the wheels of the federal investigation.

A jury trial in the civil case in District Judge Elizabeth Gonzalez’s courtroom has been reset for April 21, 2014. But that nasty litigation and even his loss of equity in Wynn Resorts are nothing compared with the depths of intrigue Okada now must navigate.

John L. Smith’s column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at jsmith@reviewjournal.com or call (702) 383-0295.