Wynn GC 'Turned a Blind Eye' to CEO's Misconduct, According to Lawsuit
Kim Sinatra allegedly had a hand in concealing a multimillion-dollar settlement with a woman who claimed former Wynn Resorts CEO Steve Wynn forced her to have sex with him.
February 09, 2018 at 12:08 PM
4 minute read
Photo: Tupungato/Shutterstock.com
The fallout continues after The Wall Street Journal revealed former Wynn Resorts Ltd. CEO Steve Wynn's alleged decades of sexual misconduct. A shareholder derivative suit filed this week takes aim at Wynn, the company's board of directors and general counsel Kim Sinatra.
The suit, filed Tuesday in the Clark County District Court in Nevada, alleges that while Wynn “engaged in a pervasive pattern of egregious misconduct,” the board at the Las Vegas-based company as well as Sinatra “turned a blind eye” and continued to stand behind the casino mogul.
The complaint outlines the ways in which Sinatra, who did not immediately return requests for comment, allegedly had a hand in concealing a multimillion-dollar settlement with a woman who claimed Wynn forced her to have sex.
The company declined to comment on the suit.
In 2005, the WSJ reports, a manicurist who worked at Wynn Las Vegas was forced by now 76-year-old Wynn to have sex. The manicurist was later paid a $7.5 million settlement from Wynn's personal funds and that the former CEO deliberately “kept it secret so it would not distract” from business opportunities, the suit claims.
The 42-page complaint then points to court filings in a separate case involving Wynn and ex-wife Elaine Wynn, which contain claims that the latter has known about the settlement since 2009 and that Sinatra also knew about it.
In a March 2016 court filing, Elaine Wynn said she learned her ex-husband had made a “multimillion-dollar payment after apparently being threatened with allegations of serious misconduct on company property against a Wynn Resorts employee.” When she made inquiries about this with Sinatra, the general counsel stated that “Mr. Wynn had decided that the matter should not be disclosed to the board or other company counsel,” according to the filing.
This settlement, the shareholder derivative suit notes, was also not disclosed “on advice of counsel” to Massachusetts gaming regulators when they were considering issuing a gaming license to Wynn Resorts in 2013. “This concession demonstrates that the company, including Ms. Sinatra, knew of the allegations of egregious misconduct involving the company and actively concealed it from the Massachusetts gaming regulators,” the complaint reads.
Sinatra “breached her fiduciary duties by concealing and failing to police, investigate and act as the company's chief legal officer to address the known credible allegations of intentional egregious misconduct and violations of the law,” by Wynn, the complaint alleges, all the while reaping substantial compensation and benefits from the company.
Sinatra, who is one of the highest-paid executives in Las Vegas, according to Vegas Inc., is known as a close confidant to Wynn, with a former employee telling the Las Vegas Review-Journal that she is one of the closet executives to him. Court filings call her Steve Wynn's “co-conspirator.”
The suit also calls into question Wynn Resorts' corporate governance practices, noting that the board has come under fire before for “weak corporate governance and deference to Mr. Wynn.” The complaint cited Wynn's pay package and said he has been permitted to use corporate jets for extensive personal travel. And the company apparently leased Wynn's personal art for $1 per year while picking up the tab for insurance, security and taxes.
Wynn, citing the “avalanche of negative publicity,” stepped down as CEO on Tuesday. Wynn Resorts, meanwhile, now faces scrutiny from gambling regulators who weren't made aware of the $7.5 million settlement.
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