Attorney breaks down shareholders' lawsuit against Wynn Resorts - FOX5 Vegas - KVVU

Attorney breaks down shareholders' lawsuit against Wynn Resorts leaders

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Steve Wynn, in this undated photo. (FOX5) Steve Wynn, in this undated photo. (FOX5)
LAS VEGAS (FOX5) -

A Wynn Resorts stockholder filed a lawsuit against Steve Wynn and several others stemming from sexual harassment claims.

The Norfolk County Retirement System, an employee retirement plan located in Massachusetts and stockholder of Wynn Resorts during the time of the allegations, filed the lawsuit Wednesday in Nevada.

A complaint filed in Nevada said the lawsuit addresses the injury and losses sustained by the company as a result of abuses of power, breaches of fiduciary duty, and violations of law involving Steve Wynn. The complaint further accuses Wynn of a pervasive pattern of misconduct of which the company’s general counsel and  the board of directors “turned a blind eye.”

 In addition to Wynn, the lawsuit lists the following defendants:

  • John J. Hagenbuch, director of the company, chairman of audit committee, and member of the compensation committee
  • Dr. Ray R. Irani, director of the company, and member of the corporate governance committee
  • Jay L. Johnson, director of the company and member of the compensation committee
  • Robert J. Miller, director of the company, chairman of corporate governance committee, member of the audit committee, chairman of the company’s compliance committee, and compliance director
  • Patricia Mulroy, director of the company and member of the corporate governance committee
  • Clark T. Randt, director of company
  • Alvin V. Shoemaker, director of the company, serves as a member of the compensation committee and member of the audit committee
  • J. Edward Virtue, director of the company, chairmen of the compensation committee, and member of the corporate governance committee
  • D. Boone Wayson, director of the company, member of the audit committee, and member of the corporate governance committee
  • Kimmarie Sinatra, senior vice president of the company, general counsel, and secretary

The lawsuit said five of the 10 board members sat on the board for more than 10 years. In a court filing in 2017, Elaine Wynn said the board “may be the most compliant board of any major public company. In only three instances in the history of the company has a director voted against Mr. Wynn’s position on any issue.”

“The board of directors are all close friends and allies of Steve Wynn,” attorney Robert Eglet said. “And the board answers to him, rather than him answering to the board.”

The lawsuit states “the defendants concealed Wynn’s actions from stock holders.”

“So if this hurts or destroys the brand, hurts the company, prevents future projects, prevents projects that are planned from going forward, if there's problems with the gaming licenses, then it hurts the owners of the company who are shareholders,” Eglet said.

Despite rumors swirling around the future of two Wynn projects on the Las Vegas Strip, the director of the Center for Gaming Research at UNLV believes everything is still on track.

“Probably he's gotten pretty far along with those and I would guess that the people taking over the company would pursue most of those plans,” David Schwartz said.

Schwartz added it may take a while to notice, but it’s worth watching how this may affect the Strip’s bottom line.

“Most visitors in Vegas don't really know who owns what, so I don't think that would have a big impact,” he said. “So the big question is if this changes their operations, is that going to change how people perceive Las Vegas and their properties.”

[RELATED: Special committee formed to investigate Steve Wynn sexual assault allegations]

The board has previously come under fire for its weak corporate governance and defense to Wynn, the complaint stated. The practice has even caused scrutiny from other investors.

The lawsuit addressed alleged sexual harassment claims against Wynn. Including a Wall Street Journal report which claimed a manicurist was paid a $7.5 million settlement following her accusations.

Former employees reported that they resorted to entering fake appointments to help other female co-workers get around requests from Wynn’s office, or arranged for others to pose as assistants so they wouldn’t be alone. Some employees even hid in bathrooms or back rooms when they knew he was coming.

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“The Wynn Board knowingly failed to investigate the credible allegations and continued to support Mr. Wynn’s positions of leadership, compensation, and suitability as a gaming operator,” the complaint stated.

The lawsuit claims Wynn’s actions were repetitive and well known.

Gaming regulators in Nevada, Massachusetts, and Macau are investigating Wynn, according to the lawsuit.

The lawsuit stated Wynn is liable to the company for the damages resulting directly and proximately from his "breaches of fiduciary duty."

The complaint calls for Wynn and the other defendants to pay damages in excess of $15,000 each.

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