Okada disputes Wynn right to redeem shares: lawsuit

Posted at 03/13/12 4:37 PM

The legal fisticuffs between Steve Wynn and Kazuo Okada, Wynn Resorts' largest shareholder, escalated further as Okada counter sued in US federal court, alleging that the casino company's board breached its fiduciary duties and violated racketeering laws by voting to redeem Okada's shares.

Okada "disputes that any redemption has occurred," the Japanese businessman said in his suit, which also alleges that Wynn Resorts "under took a secret investigation" to force him off the board and "committed a series of predicate acts of racketeering, which include fraud."

Wynn Resorts had forcibly redeemed Okada's nearly 20% stake in the company after an internal investigation by former FBI director Louis Freeh revealed that Okada -- who made his fortune from pachinko and is CEO of Universal Entertainment -- had violated US anti-corruption laws.

Outside spokesmen for Wynn Resorts had no immediate comment on Okada's countersuit.

Okada's countersuit alleges that CEO Steve Wynn "has run Wynn Resorts as a personal fiefdom, packing the board with friends who will do his personal bidding." The suit alleges that Okada's shares were worth $2.7 billion, and that the $1.9 billion the company paid him in a 10-year note was a 30% discount to the market.

Wynn's board failed by "not undertaking a thorough, independent, and objective examination" before finding Okada's Aruze USA holding company "unsuitable" to be a shareholder. The suit alleges that Wynn Resorts refused to give Okada's lawyer a copy of the investigation.

The legal fracas began in January when Okada accused Wynn of blocking access to records related to a $135 million donation by Wynn Resorts to the University of Macau that Okada called "inappropriate."

On Jan. 18, Okada's Aruze unit nominated three candidates to Wynn Resorts' board, according to regulatory filings filed on that day.

Okada's federal suit seeks a permanent injunction against Wynn's redemption of Okada's shares and unspecified damages.