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Resorts CEO sues hedge fund founder over comments made at UC Berkeley

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SEPTEMBER 29, 2014

Wynn Resorts Limited CEO Stephen Wynn filed a slander lawsuit in the U.S. District Court, Northern District of California on Thursday against hedge fund founder James S. Chanos regarding comments Chanos made at a forum conducted at UC Berkeley in April.

Chanos was a panelist at a forum hosted by the Reva and David Logan Investigative Reporting Symposium, which presented and discussed clips from PBS Frontline’s upcoming feature, “Bigger Than Vegas.” The documentary “investigates the explosive growth of Macau as the gambling capital of the world, and how major American casinos conduct business there,” according to a description on Frontline’s website.

Macau is a special administrative region of China and the world’s largest gambling center — its $45 billion in official gambling revenue last year dwarfs Las Vegas’ $6 billion market. The documentary was the subject of nearly four years of work, according to Lowell Bergman, the director of the Investigative Reporting Program at UC Berkeley and the chair of the panel.

The film was slated to come out Tuesday but has been delayed. A new air date for the documentary has not yet been determined.

Chanos is the founder of the New York-based hedge fund Kynikos Associates LP. He is best known for short-selling, in which an investor’s profit hinges on a stock decreasing in value; his most famous deal was his short of energy company Enron’s stock shortly before the company’s financial collapse. Chanos spoke at the panel and appears in the documentary due to his history of investment in China.

Wynn is the chief executive officer of Wynn Resorts, which currently has two resorts in Macau.

The suit states that the action for slander arises from “Chanos’ false and defamatory statement concerning purported violation of the Foreign Corrupt Practices Act by Wynn and Wynn Resorts.”

The Foreign Corrupt Practices Act makes it unlawful for a U.S. person to make a payment to a foreign official for the purposes of obtaining business.

The suit states that the alleged statement caused direct injury to Wynn’s and Wynn Resorts’ reputations, along with emotional distress to Wynn.

“As a direct and proximate result of the publication of the Statement, Wynn has suffered emotional distress to his general damage in a substantial amount,” the suit stated.

The suit states that “Wynn and Wynn Resorts have been thoroughly investigated in a public manner on numerous occasions by entities such as the Nevada Gaming Control Board, the Massachusetts Gaming Commission, the Securities and Exchange Commission, and other government agencies.” The suit also states that at no time has “any official agency suggested that there is any reliable evidence that plaintiffs, or either of them, have violated the Foreign Corrupt Practices Act.”

The Logan Symposium is an invitation-only event that takes place every year and is hosted by the UC Berkeley Graduate School of Journalism’s Investigative Reporting Program.

China places a roughly $3,000 limit on how much money its citizens can bring into Macau per trip, so one way for the gambling industry to get around this and other regulatory issues is to use companies known as “junkets.”

Junkets recruit customers from China, provide lines of credit in Macau, set up transportation and accommodations for visitors and are sometimes involved in collecting debt. Visitors relying on junkets can cash out their winnings from Macau in foreign currency, avoiding Chinese government regulations.

Macau is listed as a jurisdiction of primary concern for money laundering in the 2014 U.S. Department of State’s International Narcotics Control Strategy Report. The Chinese government is also in the midst of an anti-corruption campaign.

Chanos said in a CNBC interview May 15 that his company was “increasingly concerned that a crackdown’s looming in Macau” but did not expand his comments, noting that the interview was being conducted in a casino hotel.

Neither Wynn Resorts nor Chanos could be reached for comment on the suit. Stephen Wynn’s net worth is an estimated $3.5 billion, and Chanos has a net worth of $1.5 billion.

Contact Philip Cerles at [email protected] and follow him on Twitter @PhilipCerles_DC.
LAST UPDATED

SEPTEMBER 30, 2014


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