Wynn’s USD7.5 million settlement said to involve paternity claim

Steve Wynn’s secret USD7.5 million payment to a former employee involved a paternity claim against the casino mogul, according to people familiar with the situation.

Wynn made the payment in 2005 because he didn’t want the allegations to be a distraction for his company, said the people, who asked not be identified discussing private information. Wynn Resorts Ltd. had just opened the Wynn hotel in Las Vegas and was building one in Macau at the time. There’s no evidence Wynn fathered a child in the encounter.

The settlement has become a key element of the controversy surrounding Steve Wynn, who was the subject of a Wall Street Journal expose on Jan. 26 that detailed various allegations of sexual harassment and coercion against the casino magnate. He has denied any wrongdoing.

The paternity claim may help explain why Wynn, now 76, paid the former employee such a large sum, a question his ex-wife’s lawyers and gaming regulators have had trouble answering because the terms of the settlement are private.

A Wynn Resorts spokesman said neither the company nor Wynn himself would comment.

Wynn paid the settlement out of his own pocket. The arrangement first came to light two years ago in a court filing by Wynn’s ex-wife Elaine. She is suing to regain control of her 9.4 percent stake in Wynn Resorts, which she previously granted to Steve Wynn.

The Wall Street Journal said that the woman who received the settlement, a manicurist who worked at the Wynn Las Vegas resort, had told people she was pressured into having intercourse with him.

The article included allegations from other women of sexual harassment by Steve Wynn stretching over decades. “The idea that I ever assaulted any woman is preposterous,” he said in a statement.

The founder and chief executive officer of Wynn Resorts accused his ex-wife of orchestrating a media campaign against him, something Elaine Wynn has denied. The manicurist didn’t respond to multiple attempts to reach her by phone, mail and third parties.

Since the allegations were published, Wynn Resorts shares have lost more than 17 percent of their value. The company’s board launched an independent investigation and regulators in Nevada, Macau and Massachusetts have said they’re also looking into the matter. The University of Pennsylvania and the University of Iowa have taken Steve Wynn’s name off a common area and an eye institute respectively.

The settlement and the reason it wasn’t previously disclosed will be part of the Massachusetts Gaming Commission’s investigation, officials there said at a hearing Wednesday. Regulators could suspend or revoke Wynn Resorts’ license to operate in the state, jeopardizing the company’s $2.4 billion casino under construction in the Boston area. Massachusetts officials said they were told by the company that its legal counsel did not believe the settlement required disclosure during the license vetting process.

“The people of Massachusetts have a right to know what the hell happened here,” Commission Chairman Stephen Crosby said at the hearing.

The settlement has become a focus of Elaine Wynn in her suit because her lawyers said it was connected to a report of sexual harassment and raises questions of “reckless” behavior at Wynn Resorts.

“We’re getting bits and pieces of how this matter was addressed,” Elaine Wynn’s attorney, Mark Ferrario, said at an October hearing in Las Vegas, adding later: “Why was it handled different than every other type of claim like this within the company?” Christopher Palmeri, Valerie Miller, Bloomberg