Kim Sinatra, general counsel of Wynn Resorts.

Kim Sinatra, ex-general counsel of Wynn Resorts, has been named in a lawsuit alleging she OK'd a "secret undercover operation" targeting a former employee who publicly accused casino boss Steve Wynn of sexual misconduct. 

The suit also alleges that Sinatra tried to cover up Wynn's wrongdoing by failing to tell the company's board and gaming regulators about "settlements, possibly involving millions of dollars." She stepped down from her position at Wynn Resorts last summer, several months after Steve Wynn resigned as chairman and CEO.  

Jorgen Nielsen, former artistic director of The Wynn Salon, named Sinatra in an invasion of privacy suit he filed Oct. 17 in Nevada's Clark County District Court. The complaint also names Wynn Resorts CEO Matthew Maddox and James Stern, who served as the casino's executive vice president of corporate security.

Nielsen alleges that Maddox, Sinatra and Stern orchestrated a plan to send spies posing as clients to a hair salon at the Palms Casino Resort, where he worked after resigning from The Wynn Salon. 

Stern masterminded the plan while Maddox and Sinatra approved of the scheme, which was part of an effort to gather "derogatory information" for Wynn to use against Nielsen, according to the suit. Nielsen alleges that Wynn filed a defamation suit against him shortly after the spy operation ended. That suit is pending. 

Wynn Resorts has denied wrongdoing and issued a statement asserting that "the company didn't authorize any inappropriate surveillance activity." Attempts to speak with Sinatra were unsuccessful. 

Nielsen's attorney, Kathleen England of Las Vegas, said in an interview Monday that the timing of the alleged spy operation is "especially troublesome." 

"This is maybe two months after Mr. Nielsen is the named source in a Wall Street Journal article, which has brought about this cascading series of investigations. It's after Steve Wynn has divested himself of all his corporate positions and money interests," she said. "And they're authorizing an undercover sting operation against a former employee. What could possibly be the legitimate purpose of that?"

Nielsen's suit is built largely on an investigative report and order issued earlier this year from the Massachusetts Gaming Commission, which levied fines of $25 million and $500,000 against Wynn Resorts and Maddox, respectively. 

The agency found "numerous violations of controlling statutes and regulations pertaining largely to a pervasive failure to properly investigate in accordance with existing policies and procedures and to notify the commission about certain allegations of wrongdoing." 

"The commission is deeply troubled by the circumstances of these filings," the order stated. 

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