Pledging that the company has undergone a "transformation" since Steve Wynn left the last year while embroiled in sexual misconduct allegations, Wynn Resorts on Tuesday set out to convince the Massachusetts Gaming Commission that it remains suitable to hold the lucrative Boston-area casino license despite its failures to act on allegations of rape and sexual misconduct by its namesake.
The Gaming Commission on Tuesday morning released the long-awaited findings of its Investigations and Enforcement Bureau's year-long investigation, which revealed that some former Wynn Resorts executives knew of allegations of rape and other sexual misconduct against company founder Steve Wynn, did not take steps to address them and, in some cases, actively worked to cover them up.
"The Company does not contest the facts contained in the IEB's report," Wynn Resorts said in a statement Tuesday morning. The company added, "Any employee who was aware of allegations of sexual assault against the Company’s founder and did not investigate or report is no longer with the Company."
The report largely mirrored the findings of a similar inquiry led by gaming regulators in Nevada -- which led to a record $20 million fine but an agreement that regulators will not take action against the company's casino license in that state -- though the Massachusetts report contains a greater level of detail.
"The IEB investigation shows that over a course of years, a limited group of executives and employees in positions of authority at the Company, including in the legal divisions, were aware of certain allegations of sexual misconduct against Mr. Wynn involving employees, but they disregarded Company policies when it came to handling those allegations," the report's executive summary says. "The investigation also shows that in some instances particular Company executives, with the assistance of outside counsel, were part of affirmative efforts to conceal allegations against Mr. Wynn that came to their attention."
The IEB report details the allegations made by a Wynn Las Vegas manicurist who reported to her supervisor in 2005 that Steve Wynn had raped her and that she was pregnant by him. That allegation was passed to Marc Schorr, then the Wynn Las Vegas president and CEO and COO of Wynn Resorts, who informed Steve Wynn. There was no internal investigation and a settlement of $7.5 million between Steve Wynn and the manicurist was "structured for utmost secrecy," the IEB wrote.
There was also a $975,000 settlement to resolve a 2006 allegation from a former Wynn Resorts cocktail server who told the company's human resources chief that she had "wrongfully engaged in a sexual relationship" with Steve Wynn. There was no internal investigation of that allegation, the IEB said. In 2008, another cocktail server who had been fired sent a demand letter to a Wynn Resorts attorney in which she alleged an "intimate relationship" with Steve Wynn. There was no internal investigation and the parties agreed to a $700,000 settlement, the IEB said.
Steve Wynn has denied allegations of non-consensual relationships but in a statement initially given to a Wynn Resorts special committee investigating the allegations, he said he "had multiple consensual relationships during my tenure at Wynn Resorts and made no attempt to document them." Steve Wynn did not agree to be interviewed by Gaming Commission investigators either under oath or on a more informal basis, the IEB said.
Matt Maddox, who replaced Steve Wynn as the gambling empire's CEO last year, told the commission Tuesday that Wynn Resorts is a new company and detailed changes to its executive structure and board of directors, and updates made to company policies.
"Fourteen months ago when the Wall Street Journal article came out, our company was shaken to its core. We were in crisis, and many of us were in denial. ... I knew when I took over on February 7, 2018, that we had to be strong, be fast and get to the truth. Only the truth was going to let this company survive and thrive. We had to be transparent, cooperative and progressive," Maddox said. "We were going transform ourselves from a founder-led company that was about a man into a progressive company that's about the 25,000 people. We weren’t just going to get to best practices – we were going to lead."
Soon after the IEB report was released Tuesday morning, Wynn Resorts went live with a new website offering details on changes at the company in the last year.
The company's board is entirely new and all the executives identified in a Nevada Gaming Board report as having had knowledge of Steve Wynn's alleged acts have left the company, per Wynn Resorts. Everyone who was responsible for disclosing a settlement involving Steve Wynn and one of his alleged victims to the Mass. Gaming Commission is also gone, and only Maddox, now the company's CEO, remains from the company's original list of qualifiers.
Whether the five commissioners think that the steps Wynn Resorts has taken in the wake of the Wall Street Journal article that ignited the commission's investigation are sufficient for the company to maintain its suitability is an open question.
"Remedial measures are certainly important, but they do not erase the past and as the Nevada Gaming Commission's recent historic regulatory fine demonstrates, this is a very serious issue of corporate governance which requires careful consideration," Wells told the commission Tuesday morning.
Wells also told the commissioners they will have to consider that in 2013 when the Gaming Commission deemed Wynn Resorts suitable, three of the people found individually suitable -- Steve Wynn, his ex-wife Elaine Wynn who owns significant shares in the company and sat on its board and Wynn Resorts' then-general counsel Kim Sinatra -- were aware of the 2005 settlement but did not disclose it to regulators. Steve and Elaine Wynn were both also aware of the rape allegation behind the settlement but did not disclose it.
"The Commission will have to consider whether the Massachusetts gaming law and regulations mandated disclosure of the 2005 settlement and related sexual assault allegation or any other allegation of sexual misconduct or sexual conduct involving Mr. Wynn and a subordinate employee," the IEB wrote in its report.
After opening statements from both sides Tuesday, the commission began considering the differences in how Wynn Resorts and its executives handled two complaints of inappropriate behavior at Encore Boston Harbor and the litany of allegations against Steve Wynn. The IEB called as its first witness Denise Murphy, a partner from the law firm Rubin and Rudman who specializes in employment law.
Murphy conducted for the IEB an independent review of the handling of two complaints of inappropriate behavior against an executive at Encore Boston Harbor, Wynn Resorts' roughly $2.5 billion casino project in Everett. The resort is set to open in June if the commission determines Wynn Resorts is still a suitable operator.
The first Encore Boston Harbor complaint, from January 2017, involved an employee who reported that the executive "massaged her shoulders while he was looking over her while she was making plane reservations for him," Murphy said. The second complaint, in July 2017, was based on an incident when "the executive and the individual went to Starbucks and got coffee. She tried to pay, the executive tried to override her and put his hand, from behind, over her mouth and put out his own credit card."
Murphy said Krum and another Encore Boston Harbor official immediately launched investigations upon becoming aware of the complaints and worked to ensure that the employees who made the complaints were fully heard and were kept apprised of the company’s response to the complaints. After the second complaint, which was filed against the same executive by a different employee, Wynn Resorts fired the executive.
"I think the company did everything right, in the context of their limited resources in Boston," she said when asked for her overall assessment of the handling of the complaints. Murphy added, "The company did, as far as I'm concerned, they did what they're supposed to do."
The IEB concluded that Murphy's review "demonstrates that the two Encore Boston Harbor complaints received drastically different treatment compared to the allegations against the company CEO and Chairman."
"There is a striking contrast between the manner in which the two Encore Boston Harbor complaints were treated on the one hand, compared to the manner in which the allegations against Mr. Wynn ... were treated on the other hand," the IEB wrote. "Clearly, the Company had policies in place and possessed the understanding and sophistication to appropriately deal with workplace sexual misconduct complaints."
After about six hours, including an hour-long lunch break, the Gaming Commission recessed its hearing at 3:50 p.m. Tuesday to resume the proceedings at 10 a.m. Wednesday.
Wednesday's session is expected to begin with a presentation from Wynn Resorts, the company's first chance to make a detailed and thorough response to the IEB's findings and the issues raised during the first day of the hearing.
The new members of the company's board of directors are expected to play a central role in that presentation, testifying as a panel on the changes to the board and management at Wynn Resorts. The company will also call upon an outside expert to "present her expert report and analysis of the Wynn Resorts Ltd. changes at the board level," according to Jed Nosal, an attorney at Brown Rudnick who is representing Wynn Resorts.
"We look forward to sharing more information tomorrow about the transformation of the company's governance, policies, training and culture," the company said in a statement issued at the conclusion of the proceedings Tuesday.
This article has been updated to reflect the correct name of the law firm at which Denise Murphy is a partner, Rubin and Rudman.