Mayor Walsh, Boston expand scope of gambling suit
By Andrea Estes GLOBE STAFF MAY 21, 2015
Mayor Martin J. Walsh Wednesday filed a greatly expanded version of Boston’s lawsuit against the Massachusetts Gaming Commission, alleging the agency repeatedly violated the state’s casino law and its own rules to make sure Steve Wynn was granted a permit to build a $1.75 billion casino in Everett.
And after the license was awarded last September, the suit alleges, the commission bent the rules several more times to make sure Wynn kept it even though his company had not met key conditions and deadlines.
“The commission’s award of the license was the product of a corrupt process to favor Wynn” and the commissioners’ action “has irreparably tainted the gaming licensing process,” the suit says. The city wants a judge to revoke the casino license and bar the commissioners from taking further actions involving the sole eastern Massachusetts casino license.
Commission spokeswoman Elaine Driscoll said the panel has not seen Boston’s new complaint, but adamantly defended the process that led to Wynn beating out a Mohegan Sun proposal in Revere for the lucrative license.
“The commission made each license award based solely on a meticulous, objective, and highly transparent evaluation of each gaming proposal,” Driscoll said. “We are confident that this complex licensing process was administered in a comprehensive and fair manner, although disappointing to interested parties seeking an alternative result.”
Had Mohegan Sun won the license, Boston would have received $18 million a year from the developer. The city was unable to reach a similar deal with Wynn.
The 158-page complaint, which includes more than 80 exhibits, is similar to the suit originally filed in January. But it provides new details about a series of 16 actions the gambling commission took, allegedly in violation of the law, to help Wynn.
It also contains several new allegations, including a charge that Wynn’s “representatives” knew that two criminals had owned the Everett land, but did virtually nothing to make sure they were no longer involved when they signed an option agreement with FBT Everett Realty, the owners of record, in December 2012.
Charles Lightbody, a convicted felon, and two of the principals of FBT Realty, are under state and federal indictment for allegedly covering up Lightbody’s continuing ownership interest until at least 2013.
The commission should have disqualified Wynn because of the involvement of criminals, the lawsuit says. The gambling commission has concluded that the state’s prohibition against felon involvement in a casino project would not apply to parties in a land deal.
Wynn Resorts spokesman Michael Weaver said the company investigated those people identified as landowners by FBT Everett Realty.
Later, after the gambling commission raised concerns that there could be secret owners, Wynn worked with the panel to amend its agreement with FBT to “clearly confirm ownership” and to reduce the purchase price from $75 to $35 million, Weaver said, to eliminate the possibilities that any secret owners could benefit from the casino project.
“All of these allegations are retread stories and are without merit,” said Weaver. “We are happy to be moving forward with our construction and site remediation planning. We had more than 800 people attend our construction job fair two weeks ago, so clearly there are many people interested in the revenue and job creation our project will bring to Everett.”
The suit also alleges that commission chairman Stephen Crosby was much closer to one of the Everett landowners than he has disclosed. Crosby acknowledged in the summer of 2013 that he had been in business with Lohnes in the 1980s, but said he rarely saw him.
But the two men had actually socialized at least 20 times since Lohnes bailed out Crosby’s failing company in the 1980s, the city alleges. In May 2012, soon after a Wynn abandoned plans for a casino in Foxborough, Lohnes hosted a dinner party for Crosby and his wife, the suit says.
The suit states that Crosby should have recused himself as soon as he learned in 2012 that Lohnes owned the land where Wynn wanted to build the casino. But he did not reveal the relationship until being questioned by State Police investigating the possibility of secret landowners, in August 2013.
Crosby did not withdraw from the debate over the land until December 2013; several months later he withdrew entirely from deliberations over the eastern Massachusetts license.
According to the suit, the commission has taken 16 actions that violated the state’s gambling rules since Wynn first filed its license application in January 2013.
The commission, led by Crosby, had vigorously endorsed a proposal requiring an applicant to be deemed suitable by the commission before it could sign an agreement with its host community and hold a local election. Wynn and the city of Everett, the suit alleges, wanted to reverse the sequence to increase pressure on the gambling commission by demonstrating that Everett voters embraced the plan.
After Wynn called Crosby, which city lawyers allege was a prohibited ex-parte communication, the chairman “in a complete about-face” asked the panel to reassess its position. His fellow commissioners objected at first but eventually yielded, the suit says.
“Chairman Crosby did Wynn’s bidding and swayed the commission,” the city’s lawyers wrote.
The day after the commission voted to change the rule, Wynn signed a host community agreement with Everett. Two months later, Everett voters overwhelmingly approved the casino plan. The election occurred six months before Wynn was deemed suitable by the gambling commission.
The city alleges the commission took several other actions to benefit Wynn, including choosing a different company to conduct a suitability investigation of his company after Wynn complained to Crosby about Spectrum Gaming.
Spectrum Gaming had been sharply critical of gambling activities in Macau, where Wynn has a casino. At the time, the complaint says, there were pending shareholder suits against Wynn and a US Securities and Exchange Commission investigation of a donation Wynn Macau made to the University of Macau Development Foundation.
In addition, the city lawyers allege, the commission let Wynn buy land from the T for its entrance more than 60 days after the license was issued, an alleged violation of state regulations. The sale also violated public bidding laws and a requirement for an environmental review, the suit states.
The gambling commission has said the 60 day rule applies only to the property where the casino will actually be built.
The Baker administration has held up the sale pending the environmental review and state Inspector General Glenn Cunha is looking into whether the $6 million MBTA land sale violated public bidding laws.
Wynn also was required by the gambling commission to file an application with the city of Boston for permits necessary to mitigate traffic problems in Charlestown, but has not done so, according to the suit.
The cities of Revere and Somerville have also filed suit to block construction of the Everett casino.
Andrea Estes can be reached at
andrea.estes@globe.com.
