One of the losing Boston casino bidders seeks $3 billion from Wynn Resorts, claims licensing process was compromised
Amended complaints in an ongoing lawsuit filed by Sterling Suffolk Racecourse against Las Vegas casino giant Wynn Resorts claim that the license application process for a full-scale casino resort in the Greater Boston area was marred by a “number of improprieties.”
The lawsuit was originally filed in the US District Court for the District of Massachusetts in September 2018. Forbes reported on Friday that recently amended complaints stated that former Massachusetts Gaming Commission Chairman Stephen Crosby was compromised due to his decades-long friendship with one of the owners of the land which Wynn Resorts purchased to build its Las Vegas-style integrated resort on.
The gaming and hospitality company was selected as the preferred bidder for the development of a full-scale commercial casino (as part of a larger resort) in the Greater Boston area. Wynn received its gaming license from the Massachusetts gambling regulator in December 2014.
Sterling also bid for the license in partnership with Mohegan Sun, the casino gaming business of Mohegan Tribe, one of the two federally recognized tribes in neighboring Connecticut. The company now seeks $3 billion in damages from Wynn Resorts.
Wynn secured the land where it planned to build its resort in 2012. It purchased 36 acres of land in the city of Everett (near Boston) that had been polluted by chemical manufacturer Monsanto. Wynn promised to pay for the site’s cleanup as part of the terms of its gaming license.
Licensing Process Marred by Fraud and Political Cronyism
Wynn bought the 36-acre site from FBT Everett Realty, a joint venture that listed Boston land developer Paul Lohnes as its majority owner. Mr. Lohnes was a long-time friend of Mr. Crosby, who chaired MassGaming at the time.
According to Sterling’s amended lawsuit, Mr. Lohnes and Mr. Crosby had numerous contacts in 2012, precisely around the time Wynn was looking for land for its property. The legal complaint further stated that after a May 2012 meeting between the businessman and the gaming regulator, Mr. Crosby began to “show an interest in bringing casino operators to Everett, even though the Everett Site had not yet been marketed before that time, even by its owners, for use as a casino.”
Sterling went on to say that Mr. Lohnes had told at least some of his partners in FBT that Mr. Crosby had owed him big and that he would help them sell the 36-acre site to a company interested to use it for a casino.
Wynn purchased the portion of land in late 2012 for $75 million. Local media quickly began searching for information about the site’s previous owners and uncovered that Charlie Lightbody, who authorities believed had organized crime ties, was one of the partners in FBT.
The Massachusetts Gaming Commission launched a probe into the matter. Over the course of the investigation, Mr. Crosby opted to disclose information, although limited amount of it, about his relationship with Mr. Lohnes. It became clear that the latter had invested in the former’s startup publishing business. Following those revealings, Mr. Crosby recused himself from any decision on the gaming license for the Greater Boston area.
The Sterling complaint also alleged that Everett Mayor Carlo DeMaria was involved in the land sale and that he used a “convicted criminal” as an FBT consultant for an “expected cut of the proceeds” from the deal. The top official also allegedly received kickbacks for his support of the land sale.
Sterling’s amended complaint read that “by fraud, kickbacks, political cronyism crossing the line of legality and other unlawful methods, the Defendants conspired to fix the application process.”
How Can Sterling’s Lawsuit Impact Wynn?
Following last year’s publication of a Wall Street Journal report detailing multiple sexual harassment allegations against Wynn Resorts founder and CEO, Steve Wynn, the Massachusetts Gaming Commission opened a probe into those as well as into the company’s suitability to operate the $2.6 billion Encore Boston Harbor (previously Wynn Boston Harbor) integrated resort.
The investigative team of the gambling regulator spent months collecting evidence about the allegations leveled against Wynn’s boss and trying to discover whether the company had previous knowledge of those and how it responded to them.
MassGaming planned to publish a report based on its findings late in 2018, but Mr. Wynn filed a lawsuit in Nevada, seeking to block the publication of those findings and arguing that some of the information the team of investigators obtained from Wynn Resorts violated attorney-client privilege. A Nevada judge blocked the release of MassGaming’s report and is to preside a hearing on the matter on March 4.
Wynn announced previously plans to open its Everett resort in late June. The company’s CEO Matt Maddox, who stepped in as Wynn’s top executive after Mr. Wynn left the post in February 2018, said earlier this year that they were on track to launch the resort as planned.
If the new batch of allegations by Sterling prove true, they could put Wynn’s license to operate the property in serious jeopardy, even though it has entered the final stages of construction and is months away from its opening.
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