Wynn Resorts to forfeit $130M in deal with feds over illegal transactions

Wynn Resorts Ltd. has agreed to forfeit $130.1 million — the largest ever for a casino — in an agreement with federal authorities to avoid prosecution for its Las Vegas casino-resort using unlicensed money transmitting businesses in a scheme to recruit high-rollers.

Federal authorities said Wynn Las Vegas admitted that it illegally used unregistered money transmitting businesses to circumvent the conventional financial system.

Wynn regularly contracted with third-party independent agents acting as unlicensed money transmitting businesses to recruit foreign gamblers to the resort, according to the Justice Department. For the gamblers to repay debts to Wynn Las Vegas or have funds available to gamble there, the independent agents transferred the gamblers’ funds through companies, bank accounts and other third parties in Latin America and elsewhere, and ultimately into a Wynn-controlled bank account in the Southern District of California.

Funds deposited into the Wynn-controlled account were transferred into the Wynn cage account. According to federal attorneys, employees, with the knowledge of their supervisors, and working with the independent agents, eventually credited the Wynn account of each individual patron. The convoluted transactions enabled foreign gamblers at Wynn to evade foreign and U.S. laws governing monetary transfer and reporting.

In one example cited by prosecutors, Juan Carlos Palermo, while acting as an independent agent for Wynn, operated and controlled multiple unlicensed money transmitting businesses in the United States and abroad that conducted more than 200 transfers with bank accounts controlled by Wynn or associated entities. Those transactions, on behalf of more than 50 foreign casino patrons, exceeded $17.7 million.

The U.S. Attorney’s Office and the Department of Justice have not disclosed other names of unregistered individuals and companies that forwarded payments to Wynn.

Wynn Las Vegas, a subsidiary of Wynn Resorts, on Friday signed a non-prosecution agreement with the U.S. Attorney’s Office for the Southern District of California and the U.S. Department of Justice to end an investigation. Wynn agreed to forfeit $130.1 million in funds involved in the transactions in exchange for not being prosecuted, the company said.

The settlement is believed to be the largest forfeiture by a casino based on admissions of criminal wrongdoing.

“Casinos, like all businesses, will be held to account when they allow customers to evade U.S. laws for the sake of profit,” U.S. Attorney Tara McGrath said in a release issued late Friday. “Federal oversight seeks to prevent illegal funds from tainting legitimate businesses, ensuring that casinos offer a clean, thriving and safe entertainment option.”

End of class-action lawsuit involving Steve Wynn

Wynn Resorts also announced Friday that a class-action lawsuit filed by hundreds of shareholders in February 2018 was settled Aug. 22. The lawsuit involved the company’s response to allegations made against former Wynn Chairman and CEO Steve Wynn, who resigned in 2018 in the wake of sexual harassment accusations. Steve Wynn has denied ever harassing anyone.

Both long-standing legal matters involved incidents that occurred more than six years ago involving executives, employees and partners who are no longer affiliated with the company.

“Wynn Resorts is committed to acting with the highest integrity and in full compliance with all laws and regulations governing our industry,” the company said Friday in an emailed statement. “The improper actions that are the subject of the settlement were undertaken by individuals with whom we severed ties years ago. The actions of these individuals, for which Wynn has accepted responsibility, date back many years and violated Wynn’s compliance policies and procedures. We are pleased that the company has now resolved this long-standing legal matter.”

After Steve Wynn resigned from the company in 2018, the company reconstructed its board of directors and emphasized new policies to prevent what happened from ever happening again.

“Beginning in 2018, we took decisive action to transform our workplace environment and governance and begin a new chapter for Wynn,” the company statement said. “These settlements are the final milestone in that process, as we put legacy issues fully behind us and focus on our future.”

Class-action settlement

The settlement amount for the class-action lawsuit was not immediately disclosed and involves shareholders who owned Wynn stock in 2018 when Steve Wynn resigned after several publications published stories about sexual harassment allegations.

Wynn officials indicated the settlement amount would be disclosed within weeks when the matter is completely resolved.

The company said as a result of the settlement, all claims against the company and its current and former directors and executives have been resolved. The matter was the last piece of litigation specifically related to allegations against Steve Wynn.

Federal settlement

Some details of the settlement with the U.S. Attorney’s Office and the Justice Department were disclosed by the company in a Friday Securities and Exchange Commission filing and the matter had previously been disclosed by the company to federal authorities.

According to the SEC filing, the Department of Justice took into account the historical nature of the transactions at issue; Wynn Las Vegas’s cooperation with the DOJ’s multi-year investigation; that Wynn Las Vegas no longer employs or is affiliated with any of the individuals implicated in the transactions at issue; and Wynn Las Vegas’s extensive remedial measures, many of which were undertaken prior to the parties entering into the non-prosecution agreement.

Investigators began reviewing the illegal transactions in 2014. While the transactions involved in the Wynn case fall under the same statute — the Bank Secrecy Act — as money-laundering violations recently disclosed by MGM Resorts International, the Wynn case doesn’t involve money-laundering.

The non-prosecution agreement resolves all prior U.S. federal regulatory inquiries commenced in or about 2014 regarding compliance by Wynn Las Vegas with federal statutes, the SEC filing said.

Defamation lawsuit

In a separate but related legal action, the Nevada Supreme Court on Thursday ended a defamation lawsuit brought by Steve Wynn against The Associated Press in 2018, rejecting his bid for a jury to hear his claim that he was defamed by an AP story about two women who alleged Wynn committed sexual misconduct.

The seven-member court upheld a February ruling by a three-judge panel that cited the state’s anti-SLAPP law, or “strategic lawsuits against public participation,” that blocks lawsuits filed to intimidate or silence critics.

That ruling said anti-SLAPP statutes “were designed to limit precisely the type of claim at issue here, which involves a news organization publishing an article in a good faith effort to inform their readers regarding an issue of clear public interest.”

In what the unanimous full court said was an effort to clarify the law, Justice Ron Parraguirre wrote that Wynn, as a public figure, needed to show “clear and convincing evidence to reasonably infer that the publication was made with actual malice.”

“The public had an interest in understanding the history of misconduct alleged to have been committed by one of the most recognized figures in Nevada,” the opinion said, “and the article directly relates to that interest.”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on X. The Associated Press contributed to this report.