Okada, Casino Investor In PHL Issued Summons

by Joseph G. Lariosa

CHICAGO (jGLi) – The Aruze USA, Inc. and Universal Entertainment Corp., both companies owned by Japanese casino investor Kazuo Okada, were issued summons by the Eight Judicial District of Las Vegas, Nevada to answer within 20 days the civil complaint filed by the Las Vegas-based Wynn Resorts, Limited in connection with the $110,000 entertainment expenses extended to Filipino gaming officials by Okada who is putting up multi-billion dollar casino resorts in Manila, Philippines.

A deputy clerk has sent out summons on behalf of Judge Elizabeth Gonzalez of Department ll (eleven) of the district court of Clark County last Feb. 26 for Aruze USA, Inc., a Nevada subsidiary of Tokyo, Japan-based Universal Entertainment Corporation, which has a 19.66% ownership stake of Wynn Resorts.

A separate summons was also sent out to Universal Entertainment Corp. last Feb. 22.

Under the County Court District rules, if a civil defendant fails to file an answer to the summons, a “judgment default will be taken against you for the relief demanded in the Complaint.”

In a 47-page complaint for request for business court assignment and “exempt from arbitration – declaratory relief,” the Wynn Resorts, Ltd., which retained Pisanelli Bice PLLC led by James J. Pisanelli of Las Vegas, Wachtell, Lipton, Rosen & Katz’s Paul K. Rowe of New York, New York and Glaser Weil Fink Jacobs Howard’s Robert L. Shapiro of Los Angeles, California, asked the court to declare Mr. Okada, a director and up until October 2011 a vice chairman of Wynn Resorts, in violation of fiduciary duty and related offenses committed against Wynn Resorts.


The complaint said Mr. Okada “surreptitiously undertook these acts despite admonishments that all Directors closely adhere to Company policy, scrupulous business practices/ethics, and the law, both foreign and domestic. The public’s confidence in gaming’s integrity depends upon strict observance of these principles. Okada’s conducts pose a direct assault upon, and a present threat to Wynn Resorts’ reputation for probity, which is central to maintaining its stature in the gaming industry as well as its current and future licensing.”

Wynn Resorts, a corporation organized under Nevada laws and is based in Nevada and publicly traded on NASDAQ, says it is a world-class developer of destination resort casinos and owns Wynn Macau, Ltd. and Wynn Las Vegas, LLC, which owns Encore resort casinos in Las Vegas. Wynn Macau is a Cayman Islands company, publicly traded on the Hong Kong Stock Exchange.

The complaint said that when Mr. Okada made “payments for the benefit of foreign gaming officials, who could advance his personal business interests” and when he “elected to compete against Wynn Resorts, undertaking a campaign to convert Wynn Resorts’ assets for his own benefit, and that of his affiliates,” Wynn was compelled to “defend against Okada’s acts of aggression by among other things, the initiation of remedial and defensive Board actions and the prosecution of this action.”

The complaint said the problem started when Okada abandoned his “duty of loyalty to Wynn Resorts with his plan to develop gaming operations in the Philippines. When Okada approached Mr. Wynn with an idea of creating a casino resort in Manila Bay, [n]either Mr. Wynn nor the Board of Directors was willing to pursue such opportunities in the Philippines.”


Undeterred, Okada pressed on his personal agenda “without full disclosure to Mr. Wynn or the Board. He asked that a city ledger account, Universal City Ledger, at Wynn Resorts be opened in the name of his company.”

Mr. Okada used the University City Ledger “to facilitate his pursuit of his personal business interest in the Philippines and to promote the false appearance of an affiliation with Wynn Resorts to his Philippine business contacts.”

In 2008, Okada was able to obtain “four provisional gaming licenses without public bidding” from Philippine Amusement and Gaming Corporation (PAGCOR), which regulates, authorizes and licenses games of chance, cards, numbers, particularly casino gaming in the Philippines.

An independent investigation and risk assessment of investing in the gaming industry in the Philippines commissioned by Wynn Resorts and disclosed in January 2011 showed that that official corruption in the Philippine gaming industry is “deeply ingrained,” doubts were raised that newly-elected President Aquino’s stated plan for reform would eliminate corruption from the gaming industry; country’s legal/regulatory frameworks were not closely aligned with American compliance and transparency standards; and despite general refusal by witnesses to discuss Okada’s role in the Philippines (many refused to comment), other information created reasonable suspicion that persons acting on Okada’s behalf had engaged in improprieties.

Later on Feb. 24, 2011, after the Wynn board discussed the findings of the independent investigation and the Foreign Corrupt Practices Act (FCPA), Mr. Steve Wynn, the chairman of Wynn Resorts, informed the board that Mr. Okada invited him to meet with President Aquino, an invitation the board urged Mr. Wynn to decline and to cancel. It also sent a message that the Wynn Resorts would not invest in Universal’s Manila Bay project.


Embarrassed and angry, Okada proceeded to announce he and Universal planned to lure high-limit, VIP gamblers from China to its Manila Bay resort-casino, the same customer base as Wynn Macau, and a direct competition with Wynn Macau.

Universal purportedly intends to construct two casinos and three hotels in Manila by December 2013, opens them in early 2014, intends to spend $2.3-billion on the project, and hopes to turn $2-billion in sales in its first year of operation. Okada plans to open more casinos in Asia in 2015.

The complaint said to promote his own interest, Okada launched a campaign to misappropriate Wynn Resorts’ assets and secrets for his and his affiliates’ use, among them arranging several people as interns at Wynn Macau to learn and siphon Wynn Resorts’ Wynn Macau’s “know-how.”

When Mr. Okada promoted the “local business practices that involved having third parties make payments to government officials rather than someone doing so directly (acts prohibited not only under the Foreign Corrupt Practices Act and by Wynn Resorts’ Code of Conduct and other policies),” Wynn Resorts held training among the board members to be familiar with the Foreign Corrupt Practices Act and Code of Business Ethics. Mr. Okada never attended this training.

This prompted the Wynn board to retain the legal services of former Federal Bureau of Investigation Director Louis J. Freeh, who went to Tokyo, Japan on Feb. 15, 2012 to interview Mr. Okada in the presence of his U.S. counsel.


On Feb. 18, 2012, Mr. Freeh among others reported to the board the following:

a.     The Universal City Ledger account established by Okada revealed 36 separate instances, from May 2008 thru June 2011, where Okada or his associates/affiliates made payments exceeding US$110,000 that directly benefitted senior PAGCOR officials.

Payments included luxury lodging, extravagant dinners, shopping, and cash (US$5,000 each) to spend for, among others, former PAGCOR Chairman Efraim C. Genuino and his family and friends and current PAGCOR Chairman Cristino L. Naguiat.

Naguiat, his wife, their three children, their nanny, other PAGCOR officials, one of whom brought his family, stayed at Wynn Macau and were provided with the most expensive accommodation (US$6,000 a day a room), food and star treatment.

Freeh said this Okada’s conduct constituted prima facie evidence of violations of the Foreign Corrupt Practices Act.

b.     There is also substantial evidence that Okada, his associates and companies have arranged and manipulated ownership and management of legal entities in the Philippines under his control that may have enabled the evasion of Philippine constitutional and statutory requirements that may subject Mr. Okada to “civil and criminal penalties under Philippine law.”

Wynn asked the court for compensatory and special damages, including attorneys’ fees, against Mr. Okada; declaration that Wynn Resorts acted lawfully and in full compliance with its Articles of Incorporation and other governing documents; disgorgement of profits, punitive damages, award of reasonable costs and attorneys’ fees and prejudgment and post-judgment interest on the foregoing sums at the highest permitted by law; and additional relief this Court deems just and proper.   (lariosa_jos@sbcglobal.net)

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.