Wynn Resorts

On June 3, 2019, Bottini & Bottini filed a shareholder derivative lawsuit on behalf of its client against some of the lawyers and law firms who were alleged to have helped cover up sexual harassment by Steve A. Wynn, the former CEO of Wynn Resorts. The complaint was based in part of particularized findings from a March 15, 2019 Report by the Massachusetts Gaming Commission. According to those findings:

Defendant Frank Schreck, chairman of the gaming practice at Brownstein Hyatt Farber Schreck, was involved in settlement negotiations with a woman raped by Steve Wynn in 2005, according to the 200-page report dated March 15, 2019 from the Massachusetts Gaming Commission (“MGC”). Schreck helped structure a new business entity to make $7.5 million worth of payments over a 10-year period to the alleged victim, according to the report from the MGC. It notes the settlement was “structured for utmost secrecy.”

Schreck, whom the gaming commission’s report says had a relationship with Wynn spanning decades, represented the Company in the settlement negotiations, according to a deposition of another outside lawyer involved in the case. But the investigators found that Schreck failed to alert the Company’s then-general counsel to the issue and didn’t seek a waiver or consent from either Wynn or the Company before taking on the matter, saying that was “the way it’s been for 40 years.”

Moreover, Defendant Marc Rubinstein, Wynn’s general counsel at the time of the allegations, later learned of the settlement agreement with the manicurist after receiving bills from outside lawyers that he didn’t recognize, the report says. Rubinstein inquired about the legal bills and was eventually allowed to see the settlement agreement in Schreck’s office under the condition that he not take any notes, photos or copies, the report says. After that encounter, Rubinstein asked Jerome Coben, then a partner at Skadden, Arps, Slate, Meagher & Flom, if he needed to advise the Company’s board of directors about the matter, the report says.

A few months after learning of the settlement, Rubinstein told investigators that Steve Wynn approached him, saying he needed “loyalty to him first and to the company second.” The report says Rubinstein told investigators he was offered the chance to resign with severance or work at the Company on an at-will basis. Rubinstein resigned in 2006.

“It is concerning that the general counsel and outside counsel for the company did not recommend notification to the board (via disclosure to the audit committee) or any action at the corporate level, or that the general counsel did not take the further step to address with the board the dysfunction that general counsel for the company was not apprised of the matter in the first place,” the MGC’s report says.

Attorney Jonathan Layne of Gibson Dunn & Crutcher LLP was also implicated in wrongdoing. Layne is alleged to have breached his fiduciary duties as an attorney to the Board by not ensuring that an independent investigation was performed into Steve Wynn's wrongdoing, especially given the allegation in a cross-complaint filed by Elaine Wynn that Kimmiemarie Sinatra had engaged in wrongdoing by not previously disclosing Steven Wynn’s misconduct.