Report: Wynn executives hid misconduct allegations for years

BOSTON — For years, executives at Wynn Resorts concealed allegations of sexual misconduct against company founder Steve Wynn, according to a long-awaited report by Massachusetts casino regulators released Tuesday.

The 200-page report by the state Gaming Commission doesn't make a recommendation about the fate of the company's Massachusetts casino license or its nearly $3 billion Boston-area resort slated to open in June.

But it concludes by saying recent reforms touted by the company — notably the resignation of Steve Wynn as CEO and the ousting of every official who knew about the allegations but failed to report them — 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."

"Inaction and failures," the report concluded, contributed to a culture "where employees were reluctant to report allegations against Mr. Wynn to management."

Steve Wynn wasn't in attendance Tuesday, but Brian Kelly, a Boston-based lawyer who represents him, said that the report does not address the truth of the allegations against his client.

"Mr. Wynn denies all allegations of nonconsensual sex and nothing in this report changes that," he said in an emailed statement. "In fact, the Commission and its investigators have acknowledged today that it's not their role to decide the truth or falsity of those allegations and that Mr. Wynn's conduct is not the focus of their hearing."

The report was released as the commission opened a series of hearings on whether Wynn Resorts can continue to hold a state casino license. The hearings have implications for Encore Boston Harbor, the company's Everett casino.

Wynn Resorts didn't dispute the facts of the report and said in a statement that it represents a "complete review of matters related to the company's founder."

Matthew Maddox, who took over as CEO after Steve Wynn resigned, told the commission Tuesday he's "deeply remorseful" for the harm inflicted on the accusers.

"I am sorry that our company did not live up to its values," he said in brief opening remarks.

Steve Wynn did not submit to interviews with investigators but acknowledged in a statement to them that he had "multiple consensual relationships" with employees while leading the company, said Karen Wells, head of the commission's investigations unit, as she reviewed the report with the five-member gaming commission Tuesday.

The state commission launched an investigation last year after The Wall Street Journal published a report chronicling allegations of sexual misconduct against Steve Wynn, many by former cocktail waitresses and spa and salon workers at the casino's flagship casino, Wynn Las Vegas.

Investigators homed in on what company officials were aware of and how they responded rather than the nature of the allegations.

Many of the incidents detailed in the Tuesday's report were reported by The Wall Street Journal and a subsequent investigation by Nevada casino regulators, who recently handed down a record $20 million fine to Wynn Resorts but allowed the company to keep its casino license.

Similar to Nevada's findings, Massachusetts regulators found company officials were aware of the allegations but failed to report them to internal investigators or take other steps mandated in the company's sexual assault and harassment policies.

Company officials also failed to disclose to regulators settlements reached with some of the accusers as part of the state's vetting of the company for a casino license in 2013, the report found.

"Their efforts at secrecy made it exceedingly difficult, if not impossible, for gaming regulators to detect potentially derogatory information through typical regulatory means," the report stated.

Among the incidents the company failed to disclose was a $7.5 million settlement in 2005 that Steve Wynn had paid to a former salon employee who alleged she'd become pregnant after Wynn raped her.

Steve Wynn also paid a cocktail server $975,000 in a private settlement after she alleged he'd pressured her into a non-consensual sexual relationship from 2005 to 2006.

And the company reached a $700,000 settlement with another former cocktail server over a sexual relationship she had with Steve Wynn in 2008. That settlement was paid through corporate funds, investigators found.

Wynn Resorts has said it's taken a range of reforms since the allegations came to light, including elevating more women to key leadership posts, such as positions on the company's board of directors and president of Wynn Las Vegas. The company also ousted every official who knew about the allegations but failed to report them and created an independent committee to review sexual harassment claims led by a former Boston police commissioner.

Regulators were expected to review those reforms and other issues in the coming days.

On Tuesday, they heard testimony from an outside expert on the state of the company's finances in the wake of the scandal. Drew Chamberlain, of HLT Advisory, said the allegations don't appear to have negatively impacted company's financial stability.

The company traded at more than $200 a share prior to The Wall Street Journal's story last January. It dipped to a low of $90 following the scandal but now sits at about $135 a share.

Related:

Sexual assault reports against Wynn filed with Vegas police

Associated Press