Report cites ‘significant, repetitive’ failures at Wynn Resorts
Maddox, other company officials say firm has changed
THE MASSACHUSETTS GAMING COMMISSION on Tuesday began a sprawling review of Wynn Resorts, delving into the alleged sex crimes of the company’s founder, the way it jettisoned an executive working on the Everett resort two years ago, the financial future of the publicly traded firm, and an introduction to an array of new officials running the business.
Wynn Resorts is building a $2.6 billion casino on the banks of the Mystic River that is scheduled to open in June. Its plans have been thrown into jeopardy by the emergence of rape and sexual harassment allegations against Steve Wynn, who helped sell the idea of a Wynn casino in the Boston area five years ago. The allegations, which date back more than a decade and first became public through a Wall Street Journal article early last year, had been hidden away by a company culture that allowed Wynn to play by a different set of rules, the investigation found.
It will be the job of Matt Maddox, a longtime Wynn employee who is the new CEO, and Phillip Satre, the new board chairman, to convince the commission that the days of sweeping sexual harassment under the rug with secret settlements are behind them.
Wynn Resorts leadership has changed dramatically since Steve Wynn resigned and sold his shares in the company in February 2018. Of the 11 people who needed to qualify as suitable during the Gaming Commission’s initial 2013 investigation into the company, only Maddox and Wynn’s ex-wife, Elaine Wynn, are still considered officials who must pass muster with the agency.
Maddox appears to have operated largely on the periphery of the allegations against Wynn. He was accused by one of Wynn’s alleged victims of offering her a bribe or hush money not to talk to a reporter, but investigators for the Gaming Commission said evidence they uncovered undermined that claim. The investigators recommended the commission “should independently evaluate Mr. Maddox’s disavowal of any knowledge of any allegations of sexual misconduct by Mr. Wynn through the years.”
Because of the significant change in leadership, many analysts expect the Massachusetts Gaming Commission to fine the company but leave its casino license intact. That was the approach taken by the Nevada Gaming Commission, which imposed a $20 million fine on the company after issuing a 22-page complaint that covered much of the same ground as the Massachusetts report but with far less detail. The Massachusetts Gaming Commission report did not sugarcoat the depth of the problems at Wynn Resorts.
“The significant changes in leadership, policies, structure, and internal controls at the company do not erase the fact that the corporate failures revealed in this investigation are significant, repetitive, and reflective of the company’s historical governance practices,” the report said.
Tuesday was the first day of the adjudicatory hearing to determine whether Wynn, and its new officials, will be considered suitable for the Boston area casino license.
Gaming Commission Chairwoman Cathy Judd-Stein clarified the limits of the panel’s task, which is to look at the suitability of Wynn Resorts and key figures in the company to hold the casino license. “This hearing is not intended to adjudicate the veracity of allegations involving Steve Wynn,” she said at the start of the proceedings.
The commission’s investigators made no attempt to recommend a course of action for the five-member appointed body that oversees gambling across the state, but they made it clear they believe the company should undergo a thorough vetting. After several days of hearings, the commission is expected to deliberate in private and issue its ultimate decision in writing.
Many of the redactions related to victim information, according to the commission. But there were numerous instances where other information appeared to be redacted, including entire sections of the report. At one point, the report said investigators “confirmed the existence of (redacted) women alleged to have been subject to some form of sexual misconduct by Mr. Wynn. In addition to the matters which have already been discussed earlier in this report, the Investigations and Enforcement Bureau also identified allegations from the following three areas.” The first two areas were redacted in their entirety and the third was redacted except to note the information came from interviews conducted by the Investigations and Enforcement Bureau.
The hearing itself was cloaked in unusual secrecy for the Gaming Commission, which generally streams all of its meetings and publishes reams of meeting documents on its website.
The hearing was not being streamed by the commission – though there were ample television cameras and seating for the public – and the documents were provided to reporters in a room next to the hearing rather than being posted online. The commission had previously been sued by Steve Wynn, who alleged that it made improper use of information protected by attorney-client privilege. A Nevada judge agreed with that argument before Wynn and the commission reached a legal settlement. The decision not to livestream the meeting was made at the advice of legal counsel.
On Tuesday, the hearing delved into how the company handled a local case of sexual harassment involving an unnamed executive working at the Encore Boston Harbor casino and hotel going up in Everett.
According to a report prepared by Denise Murphy, a partner at Rubin & Rudman who specializes in employment law, the executive acted inappropriately at work. “He often included himself in social gatherings, inserting himself into employees’ lunch plans and insisting that Las Vegas employees dine and participate in weekend activities with him,” read the report. “He made inquiries about employees’ private lives and inappropriately shared information about his own private life. His attempts at jokes were considered crude and were not well received. Mr. [redacted] appeared to have no concept of boundaries with his coworkers or subordinates.”
In one incident, the executive massaged the shoulders of a female employee as she made travel arrangements for him. After learning of that behavior, Wynn executives issued a written warning to the executive.
In a second incident that occurred in July 2017, the same executive went to Starbucks with a different woman and when it came time to pay he reached around and put his hand over her mouth as she attempted to pay, according to the report. Executives conducted an investigation and the executive not only copped to the behavior, but even replicated it.
“To their great surprise, not only did he admit the allegations, but he chose to demonstrate his actions by repeating the behavior on the lone female in the room during the investigation’s interview,” said the report.
After that, Maddox and other executives agreed that the offender should be terminated, according to the report. When a top Wynn lawyer called the executive to discuss the situation, he responded by saying he would meet with the company executives “once he put his pants on,” the report said. His departure was later announced as a resignation.
Wynn handled that executive appropriately, Murphy said. “I think that the company did everything right,” she said.
The commission also heard from Drew Chamberlain on the financial strength of Wynn Resorts in the wake of Steve Wynn’s departure. Chamberlain concluded that Wynn’s “financial stability has not been negatively impacted by the events surrounding the misconduct allegations,” and the company’s financial stability depends on retaining its casino licenses in Massachusetts and around the world.
The commission heard from new board members, many of whom were recruited by Maddox, who generally pledged to improve the company’s practices, and had varying backgrounds and perspectives.
Richard Byrne, a former Deutsche Bank executive, described Wynn Resorts as “one of the best companies” and said he was thrilled to join its board. Dee Dee Myers, another new board member who was President Bill Clinton’s press secretary early in his administration, said Maddox convinced her to join the board by pledging to address the company’s past problems.
Commissioner Gayle Cameron asked Maddox why there weren’t people of color among the new board membership.
“The journey is still ongoing. Diverse thought is really important in a board room,” Maddox said. Satre said the company plans to recruit more board members and expects to add two new directors.Maddox also outlined a new outlook to make Wynn Resorts a leader in the areas where it has stumbled badly, and said he hopes people can “begin to regain trust in us.”
“We are going to lead on the human resources front,” Maddox said. “The days of a company focused on its bottom line to measure success are yesterday. A company needs to be viewed as a net giver in the communities where it operates.”