Legal battle between Adelson and Jacobs resumes in US courts

Las Vegas Sands Corp. CEO Sheldon Adelson is sworn in before taking the witness stand

Sands China Ltd.’s secret investigation of Macau government officials, allegedly ordered by its chairman Sheldon Adelson, won’t remain under wraps for much longer if a fired CEO gets his way.
Steven Jacobs, locked in a four-
year battle with Adelson, wants a Nevada judge to let him use a report on the probe to support his wrongful termination lawsuit. Jacobs contends he was ousted in 2010 as chief executive officer of the China unit of Las Vegas Sands Corp. because he clashed with Adelson over demands he collect information on Macau officials to exert “leverage” on them.
Jacobs claims the report by a Hong Kong risk consultant and two others that look at alleged ties between Sands China associates and Chinese organized crime will expose the company to “serious political and legal problems.” Sands has argued that Jacobs “stole” the documents when he was fired, and that they’re legally off-limits for use in the lawsuit.
“These reports contain extremely sensitive, highly confidential, non-public information, consisting of proprietary and highly confidential business and strategic information,” Sands China said in a Nov. 26 court filing.
A hearing on the matter was set for yesterday [U.S. time] in state court in Las Vegas, where the case has been bogged down over whether it belongs in Nevada or should be litigated in China.
Jacobs, who has repeatedly accused Sands of stalling, said in a Dec. 24 court filing that the company’s legal maneuvers “have tied this matter in knots for four years and brought this case to a standstill.”
The hearing comes at the same time that the Chinese government is trying to cut off the flow of illegal money through the gambling enclave.
Chinese President Xi Jinping’s bid to catch “tigers and flies” in an anti-corruption drive has contributed to the first decline in annual casino revenue in Macau.
Sands China has increased scrutiny of Macau junket operators in a move that may lead to a shakeout among the middlemen who account for two-thirds of the betting in the world’s largest casino hub, a person familiar with the matter said in April.
Any possible business ties with organized crime figures overseas may have detrimental consequences for Sands in the U.S. Casinos in Nevada and other U.S. states are closely monitored by gaming regulators to keep out organized crime, which through mob bosses such as Bugsy Siegel and Meyer Lansky had a big hand in running the gambling businesses in Las Vegas during the early boom years before large corporations entered the market and built family and convention-oriented resorts.
MGM Mirage in 2010 sold its stake in an Atlantic City, New Jersey-based casino rather than sever its ties with the daughter of Macau gambling magnate Stanley Ho, who state regulators alleged had ties with criminal groups. The Macau officials probed by the Hong Kong consultant, Steve Vickers of International Risk Ltd., aren’t identified in public court records.
Adelson has said the investigation of the officials was commissioned by Jacobs, not by the company, and that he didn’t learn about until after Jacobs had been fired, according to a March 2013 court filing in the wrongful termination case.
“I never asked or authorized Jacobs to conduct a private investigation of or ‘create a dossier’ on Macanese officials,” Adelson said in his court declaration. “We believe unequivocally that Jacobs initiated the investigation on his own for his own purposes.”
Jacobs contends Sands is engaged in “a game of doublespeak,” because the company first disavowed any involvement in the reports and now argues that they should remain confidential or be barred as evidence. Jacobs returned at least some of the original documents to Sands and kept copies for himself, according to court records.
A second report Sands wants to keep out of court is a background investigation of Cheung Chi Tai, an alleged member of a Hong Kong organized crime group known as a triad who has been involved in operating VIP rooms in Macau casinos.
According to Hong Kong court records, Cheung was one of the owners of Neptune Group Ltd., a listed company that has invested in junket operators. According to Neptune’s 2014 annual report, it operated VIP clubs at Sands China properties.
Cheung is also named in a 2011 Hong Kong appellate court ruling as a triad boss who allegedly issued an order that the arms and legs of a barber-turned-junket-agent be broken, and on second thought that the man should be killed, for taking a gambler to Macau who had won a lot of money. The plot wasn’t carried because one of the conspirators told the police, according to the ruling.
The Wall Street Journal reported last month that Hong Kong police ordered Cheung’s assets frozen as part of a money-laundering investigation. An unidentified executive with Neptune Guangdong Group, an associated company of Neptune Group, said Cheung isn’t among the company’s current investors, according to the newspaper.
Representatives of Neptune Group and Neptune Guangdong didn’t respond to e-mails seeking comment on their affiliation with Cheung. Efforts to reach Cheung were unsuccessful.
There’s also a reference to Cheung in a criminal case the U.S. brought against group of Asian high rollers who were accused last year of running an illegal World Cup betting operation out of Caesars Palace in Las Vegas. One of the men arrested had a scanned picture of Cheung’s passport on his laptop that identified him as “Boss.”
A U.S. Senate investigative committee has identified Cheung as one of the nine leaders of the Wo Hop To Triad, the Justice Department said in a court filing.
Jacobs, in a revised version of his lawsuit filed Dec. 22, claims one of the issues he and Adelson clashed over was whether the board of directors should be informed about findings related to media reports that the company was conducting business with Chinese organized crime syndicates.
The third document Sands seeks to keep sealed is a background check on Heung Wah Kong, also known as Charles Heung, a Hong Kong movie producer.
Vickers, former commander of the Royal Hong Kong Police’s Criminal Investigation Bureau, spoke at an April symposium at the University of California at Berkeley about the role of organized crime in moving money from mainland China, where gambling is illegal, to Macau, where visitors are restricted from bringing large amounts of cash with them.
“The scale of this money is beyond all belief,” Vickers said at a panel discussion. He said the actual amount of money being wagered in Macau was as much as six times the official figure he estimated as USD50 billion a year because of what he called side betting in the casinos’ VIP rooms.
With side betting, gamblers in a VIP room agree ahead of time that, for example, a $1,000 chip is a $10,000 chip or a $100,000 chip, Vickers said. The off-the-books amount that is bet doesn’t go to the casinos but into the pockets of organized crime, according to Vickers.
“The scale of it has shocked everybody,” Vickers said. “This is where politics, business and organized crime – the rubber meets the road in Macau.”
The case is Jacobs v. Las Vegas Sands Corp., 10-A-627691, Clark County, Nevada, District Court (Las Vegas). Edvard Pettersson, Bloomberg