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Wynn-Okada Lawsuit Halted Six Months for Criminal Probe

Oct. 31 (Bloomberg) -- Wynn Resorts Ltd.’s lawsuit against its former director Kazuo Okada was halted for six more months so the U.S. can continue to investigate possible bribery of Philippine officials by the Japanese billionaire.

Judge Elizabeth Gonzalez granted the Justice Department’s request for a second six-month stay of the civil case so the government can pursue the criminal probe unhindered.

“My concern is that there are particular safety concerns about witnesses,” the judge said at a state court hearing today in Las Vegas.

The Justice Department asked for a new stay yesterday, citing recently discovered evidence. The government submitted details on the evidence and arguments for further delaying the suit under seal. Both sides are barred from seeking depositions of witnesses who also may have been talking to the government.

“At the pace you are currently moving, my guess is that it will be two years before you are ready,” Gonzalez told Joey Lipton, a Justice Department attorney.

Lipton said his aim was to prevent evidence gathering in the civil case with respect to the findings of Louis Freeh, the former Federal Bureau of Investigation director, whose report was the basis for the Wynn Resorts board’s decision to oust Okada as “unsuitable” to be a controlling shareholder.

Wynn Resorts sued Okada last year for breach of fiduciary duty and forcibly redeemed his 20 percent stake in the casino operator, alleging he made payments to Philippine officials that might threaten the company’s gaming licenses. Okada, 71, filed counterclaims to undo the redemption of his shares.

Okada’s Lawyer

Okada’s lawyer, Charles McCrae, said at the hearing today that another six-month delay would hurt his client even more than the original one.

“We are emphatically opposed to any further stay,” he told the judge. “Every day the case goes by, we suffer more damage.”

Okada has called the Freeh report biased and part of a campaign by Steve Wynn, Wynn Resorts chairman and chief executive officer, to eliminate him as a rival within the company. Wynn Resorts redeemed Okada’s stake for $1.9 billion, which Okada said was about $800 million less than the shares’ market value.

Donald Campbell, a lawyer for Steve Wynn, said at the hearing that he supported the government’s request to stay the lawsuit to protect the safety of witnesses. Campbell told Gonzalez he been part of a case involving a Columbian drug cartel in 1985 where the judge had denied a similar request.

“That witness was murdered,” Campbell said.

New Casino

Okada, the chairman of Tokyo-based Universal Entertainment Corp., is building a casino resort in the Philippines. It will compete with casinos in Macau, where Wynn Resorts gets most of its revenue. Okada, who became a billionaire selling machines for Japanese pachinko parlors, won one of four provisional gaming licenses awarded for the Manila hub in 2008.

Universal Entertainment said Feb. 5 that a third-party committee was investigating payments made through its U.S. unit, Aruze USA Inc., in the Philippines. The committee was looking at $40 million in payments, according to the statement.

The case is Wynn Resorts v. Okada, A-12-656710-B, Clark County District Court, Nevada (Las Vegas).

To contact the reporters on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net; Valerie Miller in Nevada state court in Las Vegas at valeriemusicmagic@yahoo.com.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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