Reopening the question of Wynn Resort's suitability to build a casino in Everett, Massachusetts gaming regulators honed in Wednesday on the failure of the company and its namesake Steve Wynn to disclose to investigators in 2013 that Wynn had privately paid out a $7.5 million settlement to resolve sexual harassment allegations.
The Massachusetts Gaming Commission also said it would be watching closely to see how the Wynn Resorts board of directors responds to the Wall Street Journal's blockbuster expose from Friday detailing what the paper described as "a decades-long pattern of sexual misconduct" by Wynn, including instances of pressuring employees to perform sex acts.
"The stakes are enormous and many lives are involved, from the lives of the women allegedly abused, to the lives of men and women in Everett now building the project, to the senior executives and board members of Wynn Resorts. We will get this right and we will get this right quickly," Gaming Commission Chairman Steve Crosby said.
The Massachusetts Gaming Commission has responded to the allegations of sexual harassment and assault against Wynn by opening a regulatory review to determine if Wynn and others involved in the company would still pass the strict suitability standards outlined in the state's gaming law.
While that unfolds, Crosby said those working in Everett to build the casino should "feel fine" carrying on with their jobs. "This is not the first time there have been allegations of misconduct against major players in the casino business. We will resolve this one way or another," he said.
The head of the commission's investigations unit told commissioners Wednesday that in the days since the story was published she had confirmed with Wynn Resorts that Wynn did pay out a private settlement to a manicurist to resolve a sexual harassment allegation that was not previously disclosed during the licensing process.
Investigations and Enforcement Bureau Director Karen Wells told commission members that she had spoken to Wynn Resorts lawyers and state investigators who led the suitability review into Wynn in 2013.
The lead investigators for the consultant law firm Michael & Carroll, as well as the state police detective assigned to the investigation, confirmed that they were not aware of the settlement at the time Wynn was deemed suitable and Wynn Resorts was awarded one of three casino licenses.
Wells said counsel for the casino company told her that the settlement was withheld from regulators on advice of counsel, and that the settlement was entered into privately "to keep it from the public domain."
"There were no court documents filed that could have been identified in the course of the investigations," Wells said.
The failure to disclose the settlement, which Wells described as "notable," is just one element of a complete review of Wynn's suitability to continue to hold a gaming license in Massachusetts that the commission plans to undertake.
"These allegations are deeply troubling and have triggered an aggressive and immediate response of the commission," chairman Crosby said in an opening statement. Expressing deep respect for the Wall Street Journal, Crosby said a final assessment "cannot be based on anonymous allegations in news article."
The Investigations and Enforcement Bureau plans to revisit the suitability of Wynn, as well as other "qualifiers" within the company who were subject to background checks during the first suitability determination process.
Wells said the bureau will also look into any corporate action taken, or the lack thereof, in connection with the alleged misconduct at the time of the incidents, and monitor Wynn Resorts 'response moving forward now that certain information is in the public domain.
Finally, the bureau will review how the current situation involving Wynn might impact the financial stability of the company, which owns casinos in Las Vegas and Macau.
Crosby said he has complete confidence in the investigatory team in place, despite the fact that they did not turn up any evidence of sexual misconduct during their initial screening. "Everything we know now so far is that the background investigation was done with the total appropriate thoroughness and comprehensiveness," he said.
Wynn has denied the allegations against him and called claims of assault "preposterous" and motivated by his ex-wife as part of an ongoing divorce lawsuit. Over, the weekend he did step down as finance chair of the Republican National Committee, and the Wynn Resorts board of directors, as well as the Nevada Gaming Control Board have launched their own investigations.
Massachusetts Gaming Commission general counsel Catherine Blue explained to the commission how under law they have broad discretion to take action if Wynn is deemed unsuitable to hold a license, including a fine or suspension or revocation of his license.
Before any final action is taken, Wynn would be entitled to have a hearing before the commission, Blue said.
Several commissioners quoted directly from the state statute that makes clear the Gaming Commission's duty to ensure "public confidence in the integrity of the gaming licensing process" with the burden of proof on the applicant or licensee to "establish by clear and convincing evidence" that they are suitable to operate a casino.
"What I, as a commissioner, at this point urge of the IEB, our bureau, is that as it goes about this task that it be simultaneously scrupulously fair to Wynn Reports and to Mr. Wynn himself but equally scrupulously diligent. I urge you not to rest until you have credible answers to each of the areas you described you would be focused on," Commissioner Lloyd Macdonald said.
Macdonald said that beyond the settlement disclosed by the Wall Street Journal the article provides a "reasonable road map" for investigators, including the names of Wynn executives and past associates of Steve Wynn who could be contacted.
The former judge specifically mentioned Jorgen Nielsen, a former artistic director at the Wynn Resorts salon, who told the Wall Street Journal that high-level executives had been warned that Wynn's sexual exploits were creating a problem, and Doreen
Whennen, a former executive who allegedly reprimanded a salon manager for filing a complaint against Wynn with human resources on behalf of the woman with whom Wynn ultimately settled.
Commissioner Bruce Stebbins questioned whether the level of cooperation the commission receives from Wynn Resorts in its investigation can be used as part of their ultimate reevaluation. He was told by counsel that they could take cooperation into consideration.
No timeline was given for the suitability review, and multiple commissioners stressed the importance of giving investigators the time and space they need to gather all the facts before discussing the future of the $2.4 billion Wynn Boston Harbor casino in Everett.
"It is tempting to think of multiple scenarios, and I think we should really resist that," Commissioner Enrique Zuniga said.
Crosby also implored investigators to err on the side of transparency as the review proceeds and to make public as many findings as possible, while recognizing that sexual assault allegations may require some discretion.
"Please take it from us that we're going to look on disfavoring to keeping things off the record. The people of Massachusetts have a right to know what the hell happened here," Crosby said.