Wynn Resorts vs Okada

8/2/2019 Wynn Resorts vs Okada

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Plaintiff(s) (name/address/phone):WYNN RESORTS, LIMITED

CIVIL COVER SHEETClark County, Nevada

Case No. -------(Assigned by Clerk's Office)

A-12-656710-BXI

Defendant(s) (name/address/phone):KAZUO OKADA, ARUZE USA, INC., and UNIVERSALENTERTAINMENT CORP.Attorney (name/address/phone):

James J. Pisanelli, Esq., Bar No. 4027Pisanelli Bice, PLLC, 3883 Howard Hughes Parkway, Suite800, Las Vegas, Nevada 89169; (702) 214-2100

Attorney (name/address/phone):

II. Nature of Controversy (Please check applicable bold category andapplicable subcategory, if appropriate) DArbitration RequestedCivil Cases

Real Property TortsDLandlord/TenantDUnlawful DetainerDTitle to PropertyD ForeclosureD LiensDQuiet TitleD Specific PerformanceDCondemnation/Eminent DomainDOther Real PropertyD PartitionD Planning/Zoning

NegligenceDNegligence - AutoDNegligence - Medical/DentalDNegligence - Premises Liability

(Slip/Pall)DNegligence - Other

DProduct LiabilityD Product Liability/Motor VehicleD Other Torts/Product LiabilityD Intentional MisconductDTorts/Defamation (Libel/Slander)D Interfere with Contract Rights

DEmployment Torts (Wrongful termination)DOther TortsDAnti-trustD Fraud/MisrepresentationD InsuranceDLegal TortDUnfair CompetitionProbate Other Civil Filing Types

Estimated Estate Value: __DSummary AdministrationDGeneral AdministrationDSpecial AdministrationDSet Aside EstatesDTrust/ConservatorshipsD Individual TrusteeDCorporate TrusteeDOther Probate

DConstruction DefectD Chapter40D GeneralDBreach of ContractD Building &ConstructionD Insurance CarrierD Commercial InstrumentD Other Contracts/Acct/JudgmentD Collection of ActionsD Employment ContractD GuaranteeD Sale ContractD Uniform Commercial CodeDCivil Petition for Judicial ReviewD Foreclosure MediationDOther Administrative LawD Department of Motor VehiclesDWorker's Compensation Appeal

DAppeal from Lower Court (also checkapplicable civil case box)DTransfer from Justice CourtD Justice Court Civil AppealDCivil WritDOther Special ProceedingDOther Civil FilingDCompromise of Minor's ClaimDConversion of PropertyDDamage to PropertyDEmployment SecurityDEnforcement of JudgmentD Foreign Judgment - CivilDOther Personal PropertyD Recovery of PropertyD Stockholder SuitDOther Civil Matters

III. Business Court Requested (Please check applicable category;for Clark or Washoe Counties only.)~ NRS Chapters 78-88 D Investments (NRS 104Art. 8) DEnhanced Case Mgmt/BusinessDCommodities (NRS 90) DDeceptive Trade Practices (NRS 598) DOther Business Court MattersD Securities (NRS 90) D Trademarks (NRS 600A)

February 18, 2012 lsi James J. Pisanelli, Esq.Date

Nevada AOe - Research and Statistics Unit

Signature of initiating party or representative

FOlmPA 201Rev.2.SE


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DISTRICT COURTCLARK COUNTY, NEVADA

WYNN RESORTS, LIM ITED , , a N evada Case No.: A - 1 2 - 6 5 6 7 1 0 - BCorporation,

COMPJam es J. Pisanelli, E sq., B ar N o. 4027JJP@pisanell ibice.comTodd L . B ice, Esq., Bar No. 4534TLB@pisanell ibice.comD ebra L . Spinelli, Esq., Bar N o. 9695D LS@pisanell ibice.comJarrod L . R ickard, Esq., Bar No. 10203JLR@pisanell ibice.comPISANELLI BICE PLLC3883 H ow ard H ughes Parkw ay, Suite 800Las Vegas, Nevada 89169Tele ph on e: 7 02 .2 14 .2 10 0F ac sim ile : 7 02 .2 14 .2 10 0Paul K. R ow e, E sq. (pro hac viceforthcoming}pkrowe@wlrk .comS tephen R . D iPrim a, E sq. (pro hac viceforthcoming)[email protected], LIPTON, ROSEN &KATZ, LLP51 W est 52nd S treetNew York, NY 10019Te lephone: 2 12 .4 03 .1 000Fac sim ile : 2 12 .4 03 .2 00 0R obert L . S hapiro, E sq. (pro hac vicefor thcomtngjRS@glaserweil .comGLASER WElL FINK JACOBS HOWARDAVCHEN & SHAPIRO, LLP1 02 59 C on stellatio n B ou le vard , 1 9th F lo orL os A ngeles, C A 90067Te lephone: 3 10 .5 53 .3 000Fac sim ile : 3 10 .5 56 .2 92 0A ttorneys for Wynn R esorts, L im ited

Plaintiff,vs.K AZUO O KADA, an individual, A RU ZEUSA , IN C., a N evada c orporation,U NIVER SA L EN TER TA INM EN T CO RP.,a J ap an es e co rpor at io n,

Defendants.

Electronically Filed02/19/2012 02:14:35 AM

CLERK OF THE COURT

Dep t. N o.: X ICOMPLAINT(Request for Business Court AssignmentPursuant to EDCR 1.61(a(Exempt from Arbitration - DeclaratoryRelief Requested)

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Plaintiff WYNN RESORTS , L IM IT ED (tiW ynn R esorts"), by and through its undersignedc ou ns el, h ere by file s th e a bo ve -c ap tio ne d Comp la in t:

NATURE OF THE ACTIONThis is an ac tion for breach of fiduc iary duty and related offenses comm itted against

W ynn Resorts at the hands of one of its direc tors, K azuo Okada ("Okada") and his affiliates.W ynn R esorts' C om plianc e C ommittee c ommissioned form er D irec tor of the Federal B ureau ofIn ve stig atio n, Louis J. Freeh, to exam ine O kada's dom estic and foreign ac tiv ities im pac tingW ynn Resorts. Based upon a multi-month investigation - w hic h culm inated w ith a personalinterview that O kada long evaded - Freeh unc overed substantia l evidenc e of gross im proprietiesby O kada and his agents, as explained in Freeh's report, attac hed as Exhibit 1. In partic ular, Freehpresented W ynn R esorts' B oard w ith evidenc e that O kada had m ade unlaw ful paym ents to foreigngam in g reg ulators w h o c ou ld ad van ce O kad a's b usiness intere sts. O kad a surreptitio usly u nd erto okth ese ac ts de sp ite admo nishmen ts th at all D ire cto rs c lo sely ad here to C om pany p olic y, sc ru pu lou sbusiness prac tic es/ethic s, and the law , both foreign and dom estic . The public 's confidence ingam ing 's integrity depends upon stric t observanc e of these princ iples. O kada's c onduc t poses adirec t assault upon, and a present threat to , W ynn R esorts' reputation for probity, w h ic h is c entralto m aintaining its stature in the gam ing industry as w e ll as its c urrent and future lic ensing.

PARTIES AND RELATED PERSONSIENTITIES1. Plaintiff W YNN RESORTS is and w as at all tim es relevant hereto a corporation

organized and existing under the law s of the State of N evada, w ith its princ ipal plac e of businessin the S tate of N evada. W ynn R esorts is public ly traded on N ASDAQ .

2. W ynn Resorts is a w orld c lass developer of destination resort c asinos.W ynn Resorts ow ns resort c asinos through its w holly ow ned subsidiary,WYNN LAS VEGAS, LLC (nW ynn Las Vegas") and through WYNN MACAU, LIM ITED(,'Wynn Mac au "),

3 . W ynn Las Vegas operates the Wynn Las Vegas and Encore resort c asinos inL as V eg as , N ev ad a.

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4. W ynn Macau is a Cayman Islands company, public ly traded on the Hong KongStock Exchange (of w hich W ynn Resorts ow ns a majority interest). Through its w holly ow nedsubsidiary, W YNN RESORTS (M ACAU), S .A ., a company organized and existing under thelaw s of M acau Spec ial Administrative Region of the Peoples Republic of China, W ynn M acauoperates the W ynn M acau and Enc ore at W ynn M acau resort-c asinos in M acau.

5. D efendant OKADA is and w as at all tim es relevant hereto a c itizen of Japan, and adirec tor of W ynn Resorts. Okada serves multiple roles w ith W ynn Resorts and its affiliatedcompanies (the "W ynn Companies"). He is a member of the Board of D irec tors for bothW ynn Resorts and W ynn Macau and, until February 18, 2012, through UNIVERSALENTER TA INMENT COR PORATION (ItU niversal") and A RU ZE U SA , c ontrolled a shareholderthat had ow ned approximately 19.66% of W ynn Resorts. From Oc tober 2 0 0 2 up to and untilO ctober 2011, O kada also served as V ice C hairm an of W ynn R esorts. In these capac ities, O kadaow ed, and continues to ow e, fiduc iary duties of c are, loyalty, and good faith to theWynn Compa nie s.

6 . D efendant ARUZE USA, INC . (nARUZE USA tt) is and w as at all tim es relevanthereto a corporation organized and existing under the law s of the State of N evada, and a w hollyow n ed subsidiary of U niversal ("U niversaltl). Until February 18, 2012, ARUZE USA w as a19.660/0 shareholder in W ynn Resorts. Okada serves as direc tor, President, Sec retary, andTreasurer of A RU ZE U SA .

7. D efendant UNIVERSAL is a public c orporation organized under the law s ofJapan, and formerly know n as ARUZE Corporation until a November 2009 name change.Universal m anufac tures and sells pachislot and pachinko m achines, and other sim ilar gam ingequipment. Universal does business in the State of N evada, has been issued a m anufac turer'slic ense by the Nevada Gam ing Comm ission, and w as deemed suitable by the Nevada Gam ingCom mission as a 1000/0shareholder in ARUZE USA . Okada is D irec tor, Chairm an of the Boardan d, to geth er w ith h is fam ily m em bers, a 6 7.9 0/0 sh areh old er in U niv ersal.

8 . The Wynn Resorts' Board of D irec tors consists of 12 members, c omprised ofStephen A . Wynn (ItM r. W ynn") as Chairman, Okada, Russell Goldsm ith, L inda Chen,

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wh ic h sp ec ializes in d om estic an d fo reig n c orp orate inv estig atio ns and c om plianc e.

D r. R ay R . Irani, form er N evada G overnor R obert J. Mille r, J oh n A. Moran, A lv in V . S ho em ak er,D . Boone W ayson, Elaine P. W ynn, A llan Zem an, and Marc D . Schorr (c ollec tively "W ynnD ire cto rs " a nd /o r "Wyn n Boa rd ").

9 . W ynn Resorts' Gam ing Compliance Committee ("Compliance Committee") is aninternal c omm ittee c haired by D irec tor M iller and c om prised of tw o additional m em bers, Sc horr(direc tor and COO) and John Strzemp (W ynn Resorts' Executive V ic e President and ChiefA dm inistrative Offic er). The Com pliance C om mittee is c harged w ith assuring W ynn R esorts'c om plia nc e w ith a ll law s an d reg ulatio ns, p artic ularly on g am in g law s , reg ulatio ns, an d p olic ies.

10 . The Honorable Louis J. Freeh, Esq., is a form er direc tor of the Federal Bureau ofInvestigation (tlFB I"), having led that agenc y w ith distinc tion from 1993 to 2001. Prior to servingas FBI D irec tor, Freeh w as a United States D istric t Court Judge. Today, F reeh is a partner inF re eh Spo rk in & Sullivan, LLP - a law finn he founded w ith tw o other former federal judges-

JURISDICTION11. Defendants Universal, ARUZE USA, and Okada have each individually and in

conc ert w ith one another, c aused the ac ts and events alleged herein w ithin the State of N evadaand all are subjec t to the jurisdic tion of this C ourt. V enue is also proper in this C ourt.

12 . This matter is properly designated as a business court matter and assigned to theB usiness D oc ket under EDCR 1.6 1(a) as the c laim s alleged herein arise from business torts.

GENERAL ALLEGATIONS13. A Nevada gam ing lic ense is a privilege. Nevada law imposes comprehensive

regulatory requirem ents upon gam ing lic ensees, inc luding obligations that those assoc iated w iththe lic ensee possess the nec essary c harac ter, qualific ations, and integrity to be suitable to holdthat privilege so as to not pose a threat to the public interest or the integrity of the regulation andcontrol of gam ing. A s a D irec tor of Wynn Resorts, Okada is subjec t to these demandingstandards.

14. Additionally , all of W ynn Resorts' D irec tors agreed to be, w ere, and are subjec t toW ynn Resorts' Code of Business Conduc t and E thic s (the "Code of Conduc t"). The Code of

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convinc e others that W ynn Resorts w as and/or is som ehow affiliated w ith U niversal's desiredpresenc e in M anila . A ll suc h representations w ere and are false.

20. In 2008, the Philippine Amusement and Gam ing Corporation ("PAGCOR"), a100% governm ent-ow ned and c ontrolled c orporation that operates under the direc t supervision ofthe O ffic e of the President of the Philippines and is c harged w ith "[rjegulatjing], authoriz[ing] andlic ens[ing] gam es of chance, gam es of c ards and gam es of num bers, particularly casino gam ing,in the Philippines," aw arded four provisional gam ing lic enses w ithout public bidding. P AGCORissued one such lic ense to a new ly-formed entity that is ow ned 99% by ARUZE USA, know n asTiger Resort, Leisure and Entertainm ent Inc . Okada's pursuit and developm ent of that lic enseexpressly c ontradic ts W ynn R esorts' requests to O kada not to pursue business in the Philippines.M oreover, Okada's ac tions to obtain and exploit that lic ense involved violations of his duties toWynn Res or ts .

Initial Examination o/Okada's Activities21. In or around the fall of 2010, W ynn Resorts heard that Okada w as continuing to

represent to m ultiple people that he (and/or U niversal) and W ynn Resorts w ere involved in a jointventure together in the Philippines and w ere pursuing, also as joint venturers, potentialopportunities in Japan. S uc h representations w e re again false.

22. Q uestioning O kada's ac tions, in or around January 2011, Wy nn R esorts, throughits Com plianc e C ommittee, commissioned an independent investigation and risk assessm ent ofinvesting in the gam ing industry in the Philippines, w hic h found:

a. O ffic ial corruption in the Philippine gam ing industry is "deeply ingrained";b. D oubts that new ly-elec ted President Aquino's stated plans for reform w ould

elim inate c orruption from the gam ing industry;c . The country 's legal/regulatory framew orks w ere not c losely aligned w ith

Am eric an c om plianc e and transparenc y standards; andd. Despite a general refusal by w itnesses to discuss Okada's role in th e

Philippines (m any refused to comment), other information c reated

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reasonable suspic ion that persons ac ting on O kada's behalf had engaged inimproprieties.

23. N otw ithstanding the issues identified by the investigation/assessm ent, O kada w asunrelenting in his appeal to W ynn R esorts. In February 2011, he repeated his oft-uttered requestthat M r. W ynn travel to the P hilippines to explore investing in U niversal's M anila B ay projec t.

24. During the February 24, 2011 meeting of the Board of D irec tors, follow ingdiscussion of the Foreign Corrupt Prac tic es Ac t ("FCPA"), the findings from the independentinvestigation w ere relayed to the Board. M r. W ynn advised the B oard that he had been invited byO kada to m eet Philippine President A quino. O kada w as present for the B oard 's discussions. Theindependent direc tors (Goldsm ith, Irani, M iller, M oran, Shoemaker, W ayson, and Zeman)unanimously advised W ynn Resorts management that involvement in the Philippines w asinadvisable and that the m eeting should be cancelled. In plain term s, the B oard inform ed O kadathat W ynn R esorts w o uld not invest in U niversal's M anila B ay projec t.

25. Okada, w ho had scheduled on his ow n initiative a meeting betw een M r. W ynn andPhilippine President A quino, w as em barrassed and angry in having to c anc el the arrangem ents.A g ain , h ow e ve r, O kad a rem ain ed u nd eterred .

26 . Finally recognizing that W ynn Resorts w as not going to provide Okada andU niversal w ith funds or know -how for his Philippine projec t, O kada nonetheless m oved forw ardw ith his sec ret plans to compete against W ynn Resorts by false c laims of affiliation anden do rsem en t, am ong o th er th in gs.

27. Despite know ing the Board 's opposition to his plans in the Philippines, Okadaproc eeded to announc e that he and U niversal planned to lure high-lim it, V IP gam blers from C hinato its M anila Bay resort-c asino, the same customer base as W ynn M acau. In short, Okada w asc reating a new casino in direc t c om petition w ith W ynn M acau.

28. Universal purportedly intends to construc t tw o casinos and three hotels in M anilaby D ecem ber 2013, intends to open those fac ilities in early 2014, intends to spend $2.3 billion onthe projec t, and hopes to turn $2 billion in sales in its first year of operation. O kada has public ly

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stated his intent to open more casinos in Asia in 2015. On or about January 2 6, 2 01 2, Universalbroke ground on construction of the Manila Bay casino resort.

29. To promote his own interests, Okada launched a campaign to misappropriateWynn Resorts' assets and secrets for his and his affiliates' use. Among other things, Okadaarranged to have several people serve as interns at the Wynn Macau property so that Wynn Macau"know how" could be learned and siphoned from Wynn Resorts.

Wynn R esor ts E xp ec ts C omp lia nce30. During a July 28, 2011 executive session, the independent directors again

discussed Okada's ongoing involvement in the Philippines and expressed concern about probityissues attendant to Okada's involvement and the effect that Okada's actions in the Philippinescould have on Wynn Resorts. Of notable concern were Okada's comments at prior Boardmeetings. Specifically, Okada had relayed his familiarity with local business practices thatinvolved having third parties make payments to government officials rather than someone doingso directly (acts prohibited not only under the Foreign Corrupt Practices Act, but also by WynnResorts' Code of Conduct and other policies).

31. Following Okada's comments, Wynn Resorts took several steps to reiterate and toensure awareness of the boundaries of corporate policies and legal restrictions on payments togovernment officials (among other things). These include the following:

a. To ensure that all directors, especially Okada, were kept informed about theForeign Corrupt Practices Act, on August 4, 2011, a notice to the Boardwas issued for a training on the Foreign Corrupt Practices Act to be held onOctober 31, 2011, followed by a Board meeting on November 1, 2011.

b. To further protect Wynn Resorts, on August 5, 2 0 1 1, all members of theBoard of Directors were asked to review: (1) the Code of Business Ethics;and (2) the Policy Regarding Payments to Government Officials, andexecute an acknowledgement that they read, understood, andacknowledged the policies. All members of the Board have signed the

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acknowledgement but for one. Despite multiple attempts to follow-up,Okada has still failed to sign.

c. Attached to the Directors' & Officers' Questionnaire sent to all members ofthe Board on January 12, 2012 was an acknowledgement form that requiredthe Directors to sign in two places: (1) Page 26 of the questionnaire; and(2) Page 50 on the separate Code of Business Conduct and EthicsAcknowledgement Form that was part of the questionnaire packet. Okadasigned and returned the former on the January 27, 2012 deadline but failedto return a signed Code of Business Conduct and Ethics AcknowledgementFonn. Okada has still not returned the acknowledgement despite afollow-up request to do so.

32. On September 15, 2011, Okada, through his assistant, sent an RSVP that he wouldattend both the Foreign Corrupt Practices Act training on October 31 and the Board meetingnoticed for November 1, 2011. But Okada never attended the training.

33. To follow up on issues raised during the July 28, 2011 Board meeting, in earlyAugust, Wynn Resorts' Board of Directors also commissioned a second independent investigationinto the regulatory and compliance climate in the Philippines. This investigation identifiedanomalies and improprieties related to Universal's/Okada's dealings in the Philippines.

34. On September 27, 2011, the Compliance Committee held a special meeting todiscuss the findings of the second independent investigation. Those findings identified a numberof concerns regarding Okada's activities, including that he may be: (a) engaging in acts thatwould render him unsuitable under Nevada gaming regulations, and (b) breaching the fiduciaryduties he owed to Wynn Resorts.

35. At the direction of the Compliance Committee, Wynn Resorts approached Okada'scounsel to discuss the Committee's concerns relative to Okada's conduct and business in thePhilippines, and its effect on Wynn Resorts and Okada's duties and responsibilities as a memberof Wynn Resorts' Board of Directors. Wynn Resorts' concerns were ill-received.

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46. Okada's deplorable actions demonstrate that he had abandoned and forsaken allduties owed to Wynn Resorts. Worse, Okada undertook a pattern of conduct that jeopardizesWynn Resorts' good reputation, its long-standing business relationships, and its gaming andbusiness licenses. Accordingly, the Board of Directors has unanimously (except for Okada)authorized the pursuit of this action.

FIRST CAUSE OF ACTION(Breach of Fiduciary Duty)

(Wynn Resorts against Okada)47. Wynn Resorts repeats and realleges the allegations set forth in Paragraphs I

through 46 above as though fully set forth herein.48. Wynn Resorts' Code of Conduct, which applies to all employees, officers, and

directors, provides guidelines for ethical behavior consistent with the reputation and integrity ofWynn Resorts. The Code of Conduct supplements the duties, fiduciary and otherwise, imposedupon Okada under Wynn Resorts' governing documents and the law.

49. The Code of Conduct addresses conflicts of interest. Specifically, the Code ofConduct provides that "directors are expected to dedicate their best efforts to advancing[Wynn Resorts'] interests and to make decisions that affect [Wynn Resorts] based on[Wynn Resorts'] best interest, independent of outside influences."

50. The Code of Conduct defines a "conflict of interest" as "when your own interests(including the interests of a family member or an organization with which you have a significantrelationship) interfere, or even appear to interfere with the interests of [Wynn Resorts]. A conflictsituation can arise when you take actions, have interests or are offered benefits that make itdifficult for you to perform your [Wynn Resorts] work objectively and effectively."

51. The Code of Conduct provides a non-exclusive list of potential conflict scenarios.Included in this list is an express prohibition on financial interests in other businesses: "You maynot own a significant interest in any company that competes with [Wynn Resorts]." The Code ofConduct provides that "it is not typically" a conflict if the competing entity "is a publicly tradedcompany and you and your family members' only relationship with any such entity is to have an

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in terest o f less th an 2% of the outstanding shares of the [competing] c ompany." (Emphasisadded).

52. Further, the Code of Conduc t prec ludes outside employment or ac tivities w ith acompetitor. Spec ific ally, "[sjimultaneous employment w ith or serving as a direc tor of acompetitor of [W ynn Resorts] is prohibited, as is any ac tivity that is intended to or that youshould reasonably expec t to advance a com petitor's in terests. You m ay not market produc ts orservic es in c om petition w ith [W yn n R esorts'] c urrent or potential business ac tivities .. .. . "

53. In addition, the Code of Conduc t expressly states that "{yjou m ay no t usecorporate property o r in fo rm ation o r yo ur positio n at {W yn n Resortsj for im pro per perso nalg ain , an d yo u m ay n ot c om pete w ith {W yn ll R eso rts], " (Empha sis a dd ed .)

54. The Code of Conduc t also provides as follow s:a. W ith respec t to offering gifts and entertainm ent,

i. "Spec ial rules apply in the context of dealing w ith governmentoffic ials and employees. See 'In terac ting w ith Government -Prohibition on Gifts to Government O ffic ials and Employees'be low."

ii. "G iving or receiving any payment or gift in the nature of a bribe ora k ic kb ac k is a bso lu te ly p ro hib ited . It

iii. "You are prohibited from providing gifts, m eals or anything ofvalue to government offic ials or employees or members of theirfam ilies in c on nec tio n w i th C om pan y b usin ess w ith ou t p rio r w r ittenap pro val from th e C om plian ce O ffic er. II

iv . "The Company's Policy Regarding Payments to Foreign O ffic ials,the U .S . Foreign C orrupt Prac tic es A ct (the ItFCPAn), and the law sof many other c ountries prohibit the Company and its offic ers,em ployees and agents or other third parties from giving or offeringto give money or anything of value, direc tly or through aninterm ediary, to a foreign offic ials, em ployees of a state ...owned

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c om pany, a foreign politic al party , a party offic ial or a c andidate forpolitic al offic e in order to attem pt to influence offic ials ac ts ordec isions of that person or entity , to obtain or reta in business, or tos ec ure a ny im p ro pe r a dv an ta ge ."

b . W ith respec t to com pany inform ation and intellec tual property :i. "C om pany assets, inc luding C om pany tim e, equipm ent, m ateria ls,

resourc es and proprietary inform ation, m ust be used for businessp urp os es o nly . It

ii. "The Intellec tual P roperty must not be used or reproduced w ithoutthe consent of the Com pany and for authorized use in c onnec tionw ith the C om pany 's business. Every effort m ust be undertaken top ro te ct th e In telle ctua l P ro perty from illeg al c opy in g or m isuse."

55. A s a W ynn Resorts direc tor, Okada w as bound by the Code of Conduc t56 . Further, as a D irec tor, O kada stands as a fiduc iary to W ynn Resorts and, therefore,

ow es a high duty to the Com pany, inc luding the duty of c are , the duty of loyalty, and that he at alltim es disc harged those duties in good faith and w ith a view to the interests of W ynn R esorts.

57 . The fiduc iary duty of loyalty that Okada ow ed as a D irec tor required him tom aintain , in good faith , the c orporation's and its shareholders' best in terests over the interests ofanyone else, inc luding his ow n .

58. Okada breac hed his fiduc iary duties by engaging in unlaw ful ac tivities, m any ofw hic h oc curred on W ynn Resorts' properties, and all of w hic h underm ine W ynn Resorts'reputation as w e ll as its business and gam ing lic enses.

59 . Okada further breached his fiduc iary duty of loyalty by, among other things,self-dealing, plac ing his ow n interests above those of W ynn Resorts, and using W ynn Resorts'c onfidentia l inform ation, trade sec rets, and related tradem arks for his ow n benefit and toW ynn Resorts' detrim ent. Spec ific ally , and am ong other things, the w ebsite of Universal (ofw hich Okada holds a signific ant interest and serves as Chairman of the Board) sta tes thatU niversal obtained its purported experienc e and "know how " in operating top quality fac ilities

IS


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and providing servic es to the high end m arket through O kada's experienc e w ith W ynn Resorts.U niversal's w ebsite also states that it in tends to use its know ..how acquired by O kada from hisrelationship w ith W ynn R esorts in U niversal's M anila B ay c asino-resort operation. U niversal andOkada expressly adm it (and those in the industry indisputably recognize) that a M anila Baycasino-resort w ill c ompete w ith W ynn M acau (in w hic h W ynn Resorts has a signific antow n ersh ip in tere st) for g am in g c ustomers an d re so rt c lie ntele.

60 . Okada 's ac ts and/or failures to ac t constitu ted breac hes of his fiduc iary duties.O kada 's breac hes of duty involved intentional m isc onduc t and know ing violations of the law .

61. As a direc t and proximate result of Okada's ac ts and om issions, W ynn Resorts hassuffered and w ill c ontinue to suffer direc t, inc idental and c onsequential dam ages in an am ount tobe proven at tria l, but in any event, in exc ess of $1 0 ,000, plus prejudgm ent interest.

62 . In com mitting the ac ts herein above alleged, Okada is guilty of oppression, fraud,and m alic e tow ard W ynn R esorts. A s suc h, W ynn R esorts is entitled to rec over punitive dam agesfrom O kada for the purpose of deterring him and others sim ilarly situated from engaging in likeconduct .

63 . A s a result of the ac ts and om issions of Okada, W ynn Resorts has been compelledto hire the servic es of an attorney for the protec tion of its in terests.

SECOND CAUSE OF ACTION(Aiding &Abetting Breach of Fiduciary Duty)

(Wynn Resorts against ARUZE USA& Universal)64. W ynn Resorts repeats and realleges the allegations set forth in Paragraphs 1

through 6 3 above as though fully set forth herein .65 . As a direc tor, Okada ow ed W ynn Resorts a fiduc iary duty of loyalty w hich, as

a lle ge d h ere in , h e b re ac he d.66 . ARUZE USA and Universal know ingly partic ipated in Okada's breach by

fa cilita tin g th e s elf . .d ea lin g a nd m is ap pro pria tio n o f Wynn R es orts' c on fid en tia l in fo rm atio n, tra desec rets, and trademarks, and c om mitting unlaw ful ac ts that underm ine W ynn Resorts' goodreputation as w e ll as its business and gam ing lic enses.

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74. In rec ognition of the c entral importanc e of its gam ing license, W ynn Resorts'A rtic les of Inc orporation afford the B oard of D irec tors the "sole disc retion" to take c ertain ac tionto protec t the gam ing licenses and approvals of W ynn Resorts and its affiliates. Under theA rtic les of Incorporation, an "Unsuitable Person' shall mean a Person w ho . . . in the soledisc retion of the board of direc tors of the Corporation, is deemed likely to jeopardize theC orporation's or any A ffiliated C om pany's applic ation for, rec eipt of approval for, right to the useof, or entitlem ent to, any Gam ing Lic ense." In addition, the Am ended and Restated Gam ing andComplianc e Program defines an "Unsuitable Person" as, among other things, one "that theC om pany determ ines is unqualified as a business assoc iate of the C om pany or its A ffiliates basedon, w ithout lim itation, that person's antec edents, financ ial prac tic es, financ ial c ondition orbus in es s p robi ty . It

75. Follow ing a determ ination of unsuitability, the A rtic les of Incorporation providethat "[t[he Securities Ow ned or Controlled by an Unsuitable Person or an Affiliate of anUnsuitable Person shall be subjec t to redemption by the Corporation, out of funds legallyavailable therefor, by ac tion of the board of direc tors, to the extent ... deemed nec essary oradvisable by the board of direc tors. If .. . the board of direc tors deem s it n ec es sa ry o r a dv is ab le ,to redeem any suc h Sec urities, the Corporation shall give a redem ption N otic e to the U nsuitablePerson or its A ffiliate and shall purc hase on the Redemption Date the number of shares of theSecurities spec ified in the Redemption Notic e for the price set forth in the RedemptionN "nce ....

76. On February 18, 2012, follow ing Freeh's presentation, the Board of D irec torsdeliberated at length and thereafter adopted resolutions that: (1) determ ined that A RU ZE U SA,and Universal w ere likely to jeopardize W ynn Resorts' and its affiliated companies' gam inglicenses; (2) deemed Okada, ARUZE USA , and Universal to be unsuitable persons underWynn Resorts' A rtic les of Incorporation; and (3) redeemed ARUZE USA 's shares inW ynn Resorts for approximately US $1.936 billion via a prom issory note, in acc ordanc e w ithA rtic le V II o f th e A rtic le s o f In co rp oratio n.

18


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7. Any additional relief this Court deems just andproper on the evidence presented at

D.ATEI) this lSth dav ofFebruarv. 2012." ' " . . . ~.

By:

a n dPaul K .. RO\Vl\Esq. m r o }m~'":vice forthcoming)Stephen R. Dil 'r ima.Esq, (I.Wi h u ? ' vi"i.Yji;nh;,:mmi'g)\V:\CHTE1..L~L,lPTON"!IltOSEN (.~KATZ, LLP~'1 '\.~ .!,~,".")nd S tre .:: .,. . t\ ~.~ ,.'.:.,.. u. ,_..~o ;A ' ; ~New 'York~N '\{ 10019a n df'l: "'~1:C ) . ~ t I > ; , _ 'tl':' niro Esq. ,.' { ., .> . :,.. 'j { ')1' ~;~>f"t.ir\l'bt:~(..," " " } ' 4 - tl ct.~. . t. ,. .: ) . ~/)l ~l,,~t{. \~d:.~m.~>u,J1'~'~5.l{JLASER \VEIL.FtNK JACOBSlIO\VA.RDl\VCHEN ~~,SH.:\.PJRO~LLP10259 Con ste lla tio n Bou leva rd . 19th Floor_., . . -., "Los Angeles, C/\ 90067

Attorneys forWynn Resorts, Limi ted

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EXHIBIT 1


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REPORTA tto rn ey - C lie nt / Wo rk P ro du ct / P riv ileg ed a nd C on fid en tialI. IntroductionWynn Res or ts , L im ite d ("Wynn Re so rts "), a p ub lic ly tr ad ed c ompa ny in c or po ra te d in th e

S ta te o f N ev ad a, o n b eh alf o f its C omp lia nc e Committe e, r eta in ed F re eh Spo rk in & Sullivan,L LP ("F SS ") o n N ov emb er 2 , 2 0 I I to c on du ct a n in de pe nd en t in ve stig atio n. T ha t in dep en de ntin ves tig atio n h as b ee n c on du cte d u nd er th e so le d irec tio n o f th e C omp lia nc e C omm itte e. T hep urp ose o f th e in ves tig atio n w a s to d ete rm in e w h eth er th ere is ev id en ce th at M r. K az uo O ka da , am em ber of the Wy nn R esorts B oard of D irec tors, m ay have: (i) b re ac h ed h is f id uc ia ry d utie s toWynn Reso rts ; (ii) e ng ag ed in c o nd uc t th at p ote ntia lly c o uld je op ar diz e th e g am in g lic en se s o fWynn Reso rts ; a nd /o r, (iii) v io la te d th e Wy nn R eso rts c omp lia nc e p olic y. S pe cific ally , F SS h asbeen asked to exam ine M r. O kada's efforts in c onnec tion w ith the c reation of a gam in ge sta blis hmen t i n th e Republic o f t he Ph ili pp in es .

T his is the R eport to the C om plianc e C omm ittee C hairm an on the results of F SS 'in vestig atio n. A s s et fo rth w i th g rea te r d etail in th e a tta ch ed a pp en dix , F SS h as p erfo rm ed itsin ve stig atio n b y in te rv iew in g d oz en s o f in div id ua ls a nd b y r ev iew in g th ou sa nd s o f d oc umen ts ,e le c tr on ic emai ls , c o rpor ate and pub lic r ec o rd s.

II. SummaryThe inve stig ati on h as p rodu c ed sub st an tia l e vid en c e th at:

1 . D espite b ein g advised by the Wy nn R eso rts B oard of D irec tors and Wy nn R esortsatto rn ey s o n th e stric t US a nti-b rib ery la w s w h ic h g ov ern Wy nn R eso rts a nd itsb oa rd , M r. O ka da stro ng ly b eliev es an d a sse rts th at w h en d oin g b usin ess in A sia, h esh ou ld b e a ble to p ro vid e g ifts an d th in gs o f v alu e to fo reig n g ov ernm en t o ffic ia ls,w h e th er d ire c tly o r b y th e u se o f th ir d p arty in te rmedia rie s o r c o ns ulta nts .

2 . M r. O kad a, h is a sso cia te s an d c omp an ies h av e a rra ng ed an d d esig ned h is c orp ora teg am in g b usin ess a nd o pe ra tio ns in th e P hilip pin es in a m an ner w h ic h a pp ea rs toc ontr av en e Ph il ip pi ne Cons tit utio na l p rovi sio ns and s ta tu te s th at r equ ir e 6 0 0 / 0own er sh ip b y Philip pin e n atio na ls , a s w e ll a s a Philip pin e c rim in al s ta tu te .

3 . M r. O kad a, his assoc iates and c om panies appear to have engaged in a long standingp ra ctic e o f m ak in g p ayme nts an d g ifts to h is tw o (2 ) c hie f g am in g re gu la to rs a t th ePhilip pin es Amu semen t a nd Gam in g Co rp ora tio n (" PAGCOR" ), w h o d ir ec tlyo ve rsee a nd reg ulate M r. O ka da 's P ro visio nal L ic en sin g A greem en t to o pera te in th atc ou ntry . S in ce 2 00 8, M r. O kad a a nd h is ass oc iates h av e mad e multip le p ayme nts toa nd o n b eh alf o f th ese c hie f reg ulato rs , fo rm er PAGCOR Chairm an E fraim Gen uin oa nd Ch airman C ris tin o N agu ia t (h is c u rre nt c h ie f r eg ula to r), th eir fam ilie s a ndPAGCOR assoc iates, in an am ount exc eeding US 1 10,000. A t tim es, M r. O kada, his

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REPORTA ttorney - C lient / W ork Produc t / Privileged and C onfidentialassoc iates and c om panies have c onsc iously taken ac tive m easures to c onc eal both thenature and am ount of these paym ents, w hic h appear to be prim a fac ie violations ofthe U nited States Foreign C orrupt Prac tic es A ct (H FC PA "). In one suc h instanc e inSeptem ber 20 I 0, M r. O kada, his assoc iates and c om panies, paid the expenses for aluxury stay at W ynn M ac au by Chairm an N aguiat, C hairm an N aguiat's w ife, theirthree c hildren and nanny, along w ith other senior PA GC OR offic ials, one of w homalso brought his fam ily. M r. O kada and his staff intentionally attem pted to disguisethis partic ular visit by C hairm an N aguiat by keeping his identity "Inc ognito" andattem pting to get W ynn R esorts to pay for the exc essive c osts of the c hief regulator'sstay, fearing an investigation. W ynn R esorts rejec ted the request by M r. O kada andhis assoc iates to disguise and to c onc eal the ac tual expenditures m ade on behalf ofCh airman Nagu ia t.

4 . A dditionally, M r. O kada, his assoc iates and com panies appear to have engaged in apattern of suc h prim a fac ie violations of the FCPA . For exam ple, in 20 I 0 it also ispossible that M r. O kada, his assoc iates and c om panies m ade sim ilar paym ents to aK orean governm ent offic ial w h o oversees M r. O kada's initial gam ing investm ent inthat c ountry. A dditional investigation is needed to develop and c onfirm thesepos sib le FCPA v io la tio ns .

S . The prim a fac ie FC PA violations by M r. O kada, his assoc iates and c om paniesc onstitute a substantial, ongoing risk to W ynn R esorts and to its B oard of D irec tors,c re atin g re gu la to ry risk , c on flic ts o f in te re st a nd p oten tial v io la tio ns o f h is fid uc ia ryduty to W ynn R esorts. Finally, M r. O kada's doc um ented refusal to rec eive W ynnR esorts requisite F CPA training provided to other D irec tors, as w e ll as his failure tosign an ac know ledgm ent of understanding of W ynn R esorts Code of C onduc t,in cre ase th is risk g oin g fo rw a rd .

6 . M r. O kada insisted in his interview that all of his gam ing efforts in the Philippinesprior to the c hange of the presidential adm inistration in the summer of20 I 0 w ereundertaken on behalf of and for the benefit of S teve W ynn and W ynn Resorts. Thisassertion is c ontradic ted by press releases dating bac k to 2007 on his w e bsite, w h ic hannounc e an independent effort by U niversal; his real estate investm ents; and theo w ne rsh ip o f h is c orp ora tio ns in th e P hilip pin es.

7 . (7) M r. O kada has stated that U niversal paid expenses related to then-PA GCORC hairm an G enuino's trip to B eijing during the 2008 O lym pic s.

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REPORTAttorney - Client IWork Product I Privileged and ConfidentialIII. Kazuo Okada's Relevant Corporate Affiliations

A. Wynn ResortsAfter an initial public offering which closed in October 2002, Aruze USA, Inc.,

controlled by Mr. Okada, became a 24.50/0 shareholder of Wynn Resorts. Mr. Okada's currentownership of Wynn Resorts through his control of Aruze USA, Inc. is 19.66%.

Mr. Okada became a member of the Wynn Resorts Board of Directors on October 21,2002, and remains on the Board of Directors as of the date of this Report. In the past, Mr.Okada has used the title of Vice Chairman of Wynn Resorts. In October 20I, the Wynn ResortsBoard of Directors eliminated the position of Vice Chairman.

As a Director of Wynn Resorts, Mr. Okada is entitled to receive the courtesy of what iscalled a "City Ledger Account." Such accounts were originally instituted as a result of SarbanesOxley's prohibition of extensions of credit, in the form of a personal loan from an issuer to anofficer or director. The accounts were funded by deposits from the director or his company.Such an account exists for billing conveniences related to charges incurred at various WynnResorts locales. Mr. Okada has availed himself of this courtesy and established such a CityLedger Account.' Within Wynn Resorts, this Okada City Ledger Account is referred to either asthe "Universal City Ledger Account" or as the "Aruze City Ledger Account." Accordingly, thephrases Universal City Ledger Account and Aruze City Ledger Account will be referred tointerchangeably within this report despite the fact that Aruze Corp. 's name was changed toUniversal Entertainment Corporation in November of2009.

Mr. Okada has been found to be suitable by the Nevada Gaming Commission.iB. Universal Entertainment Corporation of JapanMr. Okada currently serves as Director and Chairman of the Board of Universal

Entertainment Corporation e'Universal Entertainment"), registered in Tokyo, Japan. UniversalEntertainment Corporation is the current trade name of a company which was incorporated in1969 as Universal Lease Co. Ltd. and which became Aruze Corp. in 1998. Aruze changed its

IThe in itia l w i re to e sta blis h th e A ru ze Co rp . C ity L ed ge r A c c ou nt w a s d ate d F eb ru ary 1 5, 2 00 8.2Mr. O kad a w a s o rig in ally fo un d to b e su ita ble as a sh are ho ld er o f A ru ze C orp . as p art o f An Order 0/ Registrationissu ed jo in tly b y th e S ta te G am in g C on tro l B oard a nd th e N ev ad a G am in g C omm issio n o n Ju ne 4 ,2 00 4. O n Ju ne 5 ,2 00 5, in a sim ilar o rd er, th e N ev ad a C omm issio n a nd th e S tate G am in g C on tro l B oa rd fo un d A ru ze C orp . to b e (I)s ui ta ble a s a cont ro ll in g s ha re ho ld e r o f Wynn Re so rts , L im it ed , (2) s uita ble a s th e s ole s ha re ho ld er o f A ru ze USA,Inc. , (3) th at A ru ze USA, In c . is re gis te re d a s a n in te rm e dia ry c omp an y a nd is fo un d s uita ble a s a s ha re ho ld er o fWynn Re so rt s, L im it ed , a nd (4) th at M r . O ka da is s uita ble a s a s ha re ho ld er a nd c o ntro llin g s ha re ho ld er o f A ru zeCo rp . [ Se e Append ix )

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REPORTA tto rn ey - C lien t I Work P roduc t I Privi leged and Confiden ti aln ame to Un iv ers al E nte rta inmen t Co rp ora tio n in Novembe r 2009. Univ ersa l is liste d o n th eJA SDAQ stoc k exc hang e and is engaged in the m an ufac ture and sale of pac hinko and gam ingma ch in es a nd re la te d b us in es s a ctiv itie s. A s o f S ep tembe r 20 II, Ok ad a Ho ld in gs Godoka is hawa s Un iv ers al E nte rta inmen t's ma jo r s ha re ho ld er, w i th 67.90% o f th e is su ed s ha re s.

T he Nevada Gam in g Commis sio n h as a pp ro ved Un iv ers al E nte rta inmen t's s uita bility a sth e 100% s ha re ho ld er fo r a s ub sid ia ry , A ru ze USA , In c .

C. Aruze USA, Inc.A ru ze USA , In c. (UA ru ze USA ") is a w h olly owned su bsid ia ry o f U niv ersa l

Entertainm ent. A ruze U SA is a U S c om pany and w as inc orporated in the State of N evada onJune 9, 1999. Mr. O kada is a D irec tor of A ru ze U SA an d serv es as its P resid ent, S ec retary , andTreasurer.

A ruze U SA has b een fo und suitable by the N ev ad a G am ing C omm issio n as a m ajors ha re ho ld er o f Wynn Re so rts .

D. Aruze Gaming America, Inc.A ruze G am ing Am eric a, Inc . is a p rivate c om pany that is 100% p erso na lly owne d b y M r.

O kad a. H e c urre ntly s erv es a s a D ire cto r, S ec re ta ry , a nd T re asu re r o f th e c ompa ny . A ru zeG am in g Am eric a, Inc . is a U S c om pan y and w a s inc orp orated o n F eb ru ary 7 , 1983 . T hec ompa ny c ha ng ed its n am e from Univ ers al D is trib utin g o f N ev ad a, In c. to A ru ze G am in gAme ric a , In c . o n J an ua ry 6, 2006. A ru ze G am in g Americ a, In c. s ha re s a c ommon b usin essaddress w ith A ru ze U SA , In c. in L as V egas, N evada.

E. Business Interests in the Republic of the PhilippinesS inc e 2 008 , M r. O kada has been invo lved w ith a variety o f c orpo rate en tities and w ith

v ario us b usin ess a ss oc ia tes in th e c rea tio n o f a g am in g e stab lishme nt in a n are a o f th eP hilip pin es k nown a s E nte rta inme nt C ity M an ila. ' In fu rth era nc e o f th is en de av or, M r. O ka daa nd h is a sso cia te s h av e p ro cu re d la nd an d a p ro visio na l g am in g lic en se in th e P hilip pin es . Amo re d eta ile d re view o f M r . Ok ad a's c o rp ora te e ntitie s a nd bus in es s a ss oc ia te s in th e Philip pin esis se t fo rth in S ec tio n V (2 )(A ) b elow .

F. Business Interests in the Republic of KoreaMr. Oka da h as re ce ntly p ursu ed d ev elo pm en t o f a c asin o re so rt c omple x in th e In ch eo n F re e

E co nom ic Z on e in the R ep ublic of K orea. A more d etaile d re view o f M r. O ka da 's a ctiv ities inKore a is s et fo rth in S ec tio n V ( 4) b elow .

) O n th e Univ ers al E nte rta inme nt w e bs ite (v ie w ed Ja nu ary 3 0,2 01 2) th is p ro je ct is re fe re nc ed a s "Ma nila B ayReso rt s. " (See Append ix ]4


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REPORTA tto mey- C lient / W ork P roduc t / P rivileged an d C on fid ential

IV. Relevant Legal and Policy StandardsA. FCPAT he U nited S tates F oreign C orrup t Prac tic es A ct ("F CP A") c ontains tw o prim ary

c atego ries o f violations: (I) a book s and rec ord s p ro visio n, an d (ii) a bribery p rov ision . B asedu pon available inform ation, it seem s c lear th at A ruze U SA fits the definition of dom esticc onc ern" and U nited S tates persons provided in the F CPA , and that the F CPA applies both toA ruze U SA and to M r. O kada personally , in h is c apac ity as an offic er and direc tor of A ruzeUSA.

U nder th e d efinitions of dom estic c onc ern an d U nited States person , the statute applies toa c orp ora tio n, p artn ersh ip , u nin co rp ora te d o rg an iza tio n a nd o th er e nume ra te d e ntitie s th at h av etheir princ ipal plac e of business in the U nited States or w hic h are organized under the law s of aS ta te o f th e U nite d S ta te s. It also applies to offic ers and direc tors o f suc h c onc em s/'

In 1998 , the F CPA w as am ended and added an alternative basis to interstate c om merc efor jurisdic tion . A s the U nited S tates D istric t C ourt for the Southern D istric t of N ew Y orkwrote : H The am endm ents expanded FC PA c overage to 'any person ' -- not just 'issuers' or'dom estic c onc erns' .. . . [A ]ny U nited States person or entity v iolating the A ct outside of theU nited States is subjec t to prosec ution, regardless of w h eth er any m eans of interstate c omm erc ew ere used. C iting 1S U SC 78dd-l, 78dd-2 ... . (E mphasis added.)"

U nder this definition, A ruze U SA is a c overed party under the FC P A .T he F CPA provides that "[i]t shall be unlaw fu l for any dom estic c onc ern, other than an

issuer w hic h is subjec t to sec tion 78dd-l of th is title, o r for any offic er, d irec tor, em ployee, oragent of suc h dom estic c onc ern or any stoc kholder thereof ac ting on behalf of suc h dom esticc on cern , to m ake use o f th e m ails or any m eans or instrum entality of in terstate c omm erc ec orru ptly in furtheran ce o f an offer, paym ent, prom ise to p ay, or authorization of the pay men t ofany m on ey, or o ffer, gift, prom ise to g ive, or au thorization of the giv ing of anything of valueto--(I) any fo reig n offic ial for pu rpo ses o f-(A)

4 IS U.S.C. 78 dd - 2(a),(h).s 15 U . S. C . 78 dd - 2(i}.6 IS U.S.C. 78 dd - 2(g).7 In re Grand Jury Subpoena, 218 F. Supp. 2d 544, 550 ( S.D.N . Y 2002 ).

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REPORTA tto rn ey - C lie nt I Wo rk P ro du ct I P riv ile ged and Conf id en ti al(i) influenc ing any ac t or dec ision of suc h foreign offic ial in his offic ial c apac ity,(ii) induc ing suc h foreign offic ial to do or om it to do any ac t in violation of the law ful duty ofsu ch o ffic ia l, o r(iii) se cu rin g a ny im pro per a dv an ta ge ; o r(B ) induc ing suc h foreign offic ial to use his influenc e w ith a foreign governm ent orinstrum entality thereof to affec t or influenc e any ac t or dec ision of suc h governm ent orinstrum entality, in order to assist suc h dom estic c onc ern in obtaining or retaining business for orw ith, or direc ting business to, any person; .. ,u8

T he head ofPA GCOR fits w ithin the definition of foreign offic ial as used in the F CPA .A cc ording to PA GCOR's w ebsite, it "is a 100 perc ent governm ent-ow ned and c ontrolled

c orporation that runs under the direc t supervision of the O ffic e of the President of the R epublicof the Philippines." In addition to presc ribing m andates to generate revenue for c ertaingovernm ent program s and prom ote tourism in the Philippines, P AGCOR's c harter states that theentity w ill" .. . [r]egulate, authorize and lic ense gam es of c hanc e, gam es of c ards and gam es ofnumbers, particularly casino gaming, i n t he Ph il ipp ines. ". ,,10 (Empha sis a dd ed .)

A s set forth above, there is still the interstate c ommerc e basis for jurisdic tion, but there isalso an alternative. The alternative w ould require the sam e elem ents for an offense, but ashow ing of interstate c om merc e w ould not be required. I f the interstate c om merc e basis forjurisdic tion w e re used, the analysis set forth below w o uld be of signific anc e.

W ith regard to m eans or instrum ental ity of interstate c ommerc e, som e of the fac tsreferred to in this report pertain to M r. O kada utilizing the U niversal C ity Ledger A cc ount toc on fe r fin an cia l b en efits u po n P hilip pin e g am blin g reg ulato rs w h o c ou ld affe ct th e b usin essinterests of A ruze U SA , Inc . in the Philippines. Som e of those benefits w ere c onferred at W ynnM ac au. The follow ing fac ts c onc erning the U niversal C ity Ledger A cc ount, w hic h bear uponuse of m eans or instrum entalities of interstate c ommerc e, w e re established during theinvestigation:

The acc ount is m aintained at the corporate offic es of W ynn Resorts, L im ited in LasV egas, N evada w here periodic deposits are m ade from U niversal into the W ynn R esorts,L im ited operating ac count at B ank of A meric a in Las V egas, N evada to ensure that theam ount on deposit rem ains at or about U S 100,000. B ank doc um ents reflec t that thedeposits are rec eived from a U niversal E ntertainm ent ac count loc ated in Japan.'!

8 IS U.S.C. Section 78dd - 2(a).9 http://www.pagcor.ph/pagcor-fags-profile.php. viewed January 18,2012. [See Appendix]10 Ibid., viewed January 18,2012. [See Appendix]11 See, e.g, wire transfer documents from Sumitomo Mitsumi Bank to Bank of America. [See Appendix]

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REPORTA ttorney - C lien t / W ork Prod uc t / Priv ileg ed and C onfiden tial

W hen charges are incurred at W ynn M acau, W ynn M acau tracks all charges for theU niversal C ity L edger A cc oun t on its b oo ks, and th en the ac co un tin g departm enttransfers the c harg es to ac co untin g at W yn n R esorts, L im ited in L as V egas via a jou rn alentry . W ynn M ac au sends a pdf file to a staff ac countant at W ynn R esorts, L im ited in L asV egas w ith all the bac kup doc um entation . Invoic es issued by W ynn R esorts, L im ited arep erio dic ally sen t to a U niv ersal E ntertainm en t em ail address.P

B. Nevada Gaming Regulations and Wynn Resorts PoliciesT he question of w hether or not a gam ing lic ensee or lic ensee applic ant is deem ed

"su itable" in N ev ada is an sw e red by rev iew ing the N evad a R evised Statu tes ("N RS ") inc onju nc tio n w ith the regu lation s p romu lg ated b y th e N evad a G am in g C omm ission ("NGC "),w hic h is em pow ered by the N RS.13

I. L eg islativ e A uth orityT he standard for determ inin g suitability is fou nd in S ec tion 4 63 .17 0 of th e N RS .

P arag rap h (2 ) o f th e NRS 4 63 .1 70 , en titled Qualifications/or Iicense,jinding o f suitability orapproval; regulations, p ro vid es that the p erso n seek in g a lic en se o r a su itability determ ination issu bjec t to th e fo llo w in g c on sid eratio ns: U [a]n ap plic atio n to rec eiv e a lic en se o r b e fo un d su itab lem ust not be granted unless the C ommission is satisfied that the applic ant is: (a) A person of goodc harac ter, h on esty an d in teg rity ; (b ) A p erso n w h ose p rio r ac tiv ities, c rim in al rec ord , if an y,rep utatio n, h abits and assoc iations do not po se a th reat to the pu blic interest of th is State o r to theeffec tiv e reg ulatio n an d c ontrol o f g am ing ... . " In ad ditio n, p aragraph (3 ) p ro vides in pertinen tp art "[a] lic en se to operate a g am ing establishm en t o r an in ter-c asino lin ked sy stem m ust n ot beg ran ted u nless th e ap plic an t h as sa tisfied th e C omm issio n th at: (a) [t]h e ap plic an t h as ad eq uateb usin ess probity, c om peten ce and experienc e, in gam in g or gen erally .... "

T he N ev ada G am ing C omm issio n R egu lation s C 'N evad a G am ing R egu lation s") are alsorelev ant to th e c on ditio ns p lac ed u pon suitability. A cc ord in g to S ec tion 3.0 80 o f the N evad aGaming Regu la ti on s, e ntit le d Unsuitable affiliates, "[tjh e c omm ission m ay den y, rev oke,s us pe nd , lim it, c o nd itio n o r re stric t a ny re gis tra tio n o r fin din g o f s uita bility o r a pp lic atio ntherefor upon the sam e grounds as it m ay take suc h ac tion w ith respec t to lic enses, lic ensees andlic ensin g; w itho ut exc lusio n of any oth er groun ds." Parag rap h (I) o f S ec tion 3.09 0, en titled1 2(n a Wyn n Res orts M emor an dum to F ile from th e Co rp ora te A c c ou ntin g d ep ar tm e nt, d ate d J an ua ry 10,2012, th e" in voic e ls ] a nd a ll s uppor t d o cument ati on a re [email protected] [email protected] an d [email protected] o n th e S lh of eac h m on th fo rth e p ri or mon th [ si c] a c tiv it y. " [ S ee Append ix ]13 For fu rth er a dv ic e r eg ard in g s uita bility , p le as e c o ns ult d ir ec tly w i th Da vid A rr ajj, E sq . a nd /o r s ee Memo d ate dDe cembe r 9 , 20]] from K ate L ow en ha r- Fls he r, E sq . a nd J am ie L . T ha lg ott, E sq . to D a vid A rra jj, E sq . r eA s so c ia ti on s a nd t he Su ita b il ity Analy si s. [ S ee Append ix ]

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REPORTAttorney - Client / Work Product / Privileged and ConfidentialS ta nd ar ds fo r c om m is sio n a ctio n, provides in pertinent part that "[n]o license, registration,finding of suitability, or approval shall be granted unless and until the applicant has satisfied thecommission that the applicant: (a) Is a person of good character, honesty, and integrity; (b) Is aperson whose background, reputation and associations will not result in adverse publicity for theState of Nevada and its gaming industry; and (c) Has adequate business competence andexperience for the role or position for which application is made."

2. Underlying Corporate Documents of Wynn ResortsThe Second Amended and Restated Articles of Incorporation of Wynn Resorts, Limited

(filed September 16, 2002) also provide for standards that seek to define an "Unsuitable Person."As set forth on page 8 of the Articles of Incorporation, the phrase Unsuitable Person "shall meana Person who ... in the sole discretion of the board of directors of the Corporation, is deemedlikely to jeopardize the Corporation's or any Affiliated Company's application for, receipt ofapproval for, right to the use of, or entitlement to, any Gaming License." (Emphasis added.)

Finally, the Amended and Restated Gaming and Compliance Program of Wynn Resorts,Limited (adopted as of July 29,2010) defines an Unsui tab le person as a "[p]erson (i)who hasbeen denied licensing or other related approvals by a Gaming Authority on the grounds ofunsuitability or who has been determined to be unsuitable to be associated with a gamingenterprise by a Gaming Authority; or (ii) that the Company determines is unqualified as abusiness associate of the Company or its Affiliates based on, without limitation, that Person'santecedents, associations, financial practices, financial condition or business probity."

In the event of a finding of unsuitability, there are provisions within the aforementionedcorporate documents that provide for a resolution post determination, Specifically, on page 6 ofthe Second Amended and Restated Articles of Incorporation of Wynn Resorts, Limited, theArticles state in pertinent part, "[t]he Securities Owned or Controlled by an Unsuitable Person oran Affiliate of an Unsuitable Person shall be subject to redemption by the Corporation, out offunds legally available therefor, by action of the board of directors, to the extent required by theGaming Authority making the determination of unsuitability or to the extent deemed necessaryor advisable by the board of directors. If a Gaming Authority requires the Corporation, or theboard of directors deems it necessary or advisable, to redeem any such Securities, theCorporation shall give a Redemption Notice to the Unsuitable Person or its Affiliate and shallpurchase on the Redemption Date the number of shares of the Securities specified in theRedemption Notice for the Price set forth in the Redemption Notice .... " The Articles providefurther guidance as to the terms of the redemption.

In addition, according to Section 3.6 of the Fourth Amended and Restated Bylaws,effective as of November 13, 2006, the removal ofa director is premised upon ". .. the

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REPORTA ttorn ey - C lient / W ork P roduc t I Pr iv il eged and Confiden ti ala ffirma tiv e v ote o f th e h old ers o f n ot le ss th an two - th ird s (2/3) o f the voting po w er o f the issueda nd outs ta nd in g s to c k o f th e Co rp ora tio n e ntitle d to v ote g en era lly in th e e le c tio n o f d ire c to rs(v otin g a s a s in gle c la ss ) . .. . nRe sig na tio n is a ls o lis te d a s a n optio n " upon g iv in g w r itte nn otic e, u nle ss th e n otic e s pe c ifie s a la te r time fo r e ffe ctiv en es s o f s uc h re sig na tio n, to th ec hairm an of the board, ifany , the p resident o r sec retary, o r in th e absenc e of all of them , anyother officer."

C. Wynn Resorts Code of Business EthicsWyn n R eso rts first ad opted a C ode of B usin ess C ondu ct and E th ic s on M ay 4 , 200 4. T he

d oc um en t d efin es itse lf a s "a sta teme nt o f p olic ies fo r th e in div id ua l a nd b usin ess c on du ct o f th eCompany 's emplo ye es a nd D ire c to rs . .. . ,,14 T here are tw o sec tion s o f the C od e that arer el evan t to thi s invest iga tion : (i) conf lic t o f in te re st and (ii) i nte ra c tion w ith gover nmen t o ffi c ia ls .T he s ec tio ns a re in c lu de d b elow fo r re fe re nc e p urp os es .

I. C on flic t of In terest:"A Conflic t o f in te re st o c cu rs wh en you r p riv ate in te re sts in te rfe re , o r e ve n a pp ea r to in te rfe re ,w ith the interests of th e C om pany. A c on flic t situation c an arise w h en y ou take ac tio ns or havein te re sts th at m ak e it d iffic ult fo r y ou to p erfo rm y ou r Compa ny wo rk o bje ctiv ely a nde ffe ctiv ely . Y ou r o blig atio n to c on du ct th e Compa ny 's b usin es s in an h on es t a nd e th ic al m an ne rin c lu de s th e e th ic a l h an dlin g o f a ctu al, a pp are nt a nd pote ntia l c o nflic ts o f in te re st b etw e enp ers on al a nd bus in es s re la tio ns hip s. T his in c lu de s fu ll d is clo su re o f a ny a ctu al, a pp are nt o rp ote ntia l c o nflic ts o f in te re st a s s et fo rth b elow .S pe cia l ru le s ap ply to e xe cu tiv e o ffic ers a nd D ire cto rs w h o e ng ag e in c on du ct th at c re ates a na ctu al, a pp are nt o r p ote ntia l c o nflic t o f in te re st. B efo re e ng ag in g in a ny suc h c o nduc t, e xe cu tiv eo ffic ers a nd D ire cto rs m ust m ak e fu ll d isc lo su re o f all fa cts a nd c irc um sta nc es to th e Corp ora teS ec retary, w h o shall inform an d seek the prior app roval of th e A ud it C omm ittee of the B oard ofDirectors."

2 . In tera ctin g w i th G ov ernme nt:P ro hib itio n o n G ifts to Gov ernmen t O ffic ia ls a nd Emplo ye es

"D if fe rent gover nmen ts have d if fe rent laws r es tri c ting g if ts , in c lud ing meals , ente rta inmen t,tra ns po rta tio n a nd lo dg in g, th at may b e p ro vid ed to g ov ernmen t o ffic ia ls a nd gov ernmen templo ye es. Y ou a re p ro hib ite d from p ro vid in g g ifts , m ea ls o r a ny th in g o f v alu e to g ov ernme nto ffic ia ls o r emp lo ye es o r m embe rs o f th eir families in c on ne ctio n w i th Compan y b us in essw i th ou t p rio r w r itte n a pp ro va l from th e Complia nc e O ffic er. tI14 Wynn R eso rts C od e o f B us in ess C on du ct an d E th ic s d ate d M ay 4 , 2 00 4, p ag e 7 . (S ee A pp en dix ]

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REPORTA tto rn ey - C lie nt I Work P ro du c t I Pr iv il eged and Conf iden ti alB r ib e ry o f Gover nmen t Of fi c ia ls

"Th e Company 's P olic y Rega rd in g P aymen ts to F ore ig n O ffic ia ls , th e U . s. F ore ig n Co rru ptP ra c tic e s A c t (th e uFCPA t I) , an d the law s o f m any oth er c oun tries pro hib it th e C om pan y an d itso ffic ers, emp lo ye es a nd a ge nts from g iv in g o r o ffe rin g to g iv e mo ne y o r a ny th in g o f v alu e to afo re ig n o ffic ia l, a fo re ig n politic a l p arty , a p arty o ffic ia l o r a c a nd id ate fo r p olitic a l o ffic e ino rd er to in flu en c e o ffic ia l a c ts o r d ec is io ns o f th at p ers on o r e ntity , to o bta in o r re ta in b us in es s,o r to se cu re a ny im p ro pe r a dv an ta ge . P le as e re fe r to th e Comp an y's P olic y R eg ard in g P aym en tsto F ore ig n O ffic ia ls f or mo re d eta ils r eg ar din g p ro hib ite d p aymen ts to fo re ig n g ov ernmen tofficials."Disc ip line fo r Vio la tions :"T he Comp an y in te nd s to u se e ve ry re as on ab le e ffo rt to p re ve nt th e o cc urre nc e o f c on du ct n ot inc om plian ce w ith its C od e and to halt any suc h c on duc t th at m ay o cc ur as so on as reason ab lyp os sib le a fte r its d isc ov ery . S ub je ct to a pp lic ab le la w s a nd a gre em e nts, C omp an y p ers on ne l w h ov io la te th is C od e a nd o th er C omp an y p olic ie s a nd p ro ce du re s m ay b e s ub je ct to d is cip lin arya c tio n, u p to a nd in c lu din g d is ch arg e. " (Empha sis a dd ed .)

T he C od e h as sin ce been re vise d tw ic e, o nc e in 2 009 an d th en ag ain o n N ov em ber 1 , 20 11 .A lth ou gh th e a bo ve s ec tio ns h av e b ee n e xp an de d in th es e la te r e ditio ns, fo r th e p urp os e o f th isin ve stig atio n a nd th e d ate s in q ue stio n th e s ub sta nc e h as rema in ed b asic ally th e sam e a nd th eF CPA has c on tin ued to be a po int o f em ph asis.v. Report of Investigation

I. Mr. Okada's Attitude To\vard Wynn Resorts Compliance RequirementsMr. Ok ad a's p rim a fa cie v io la tio ns o fFCPA , in vo lv in g b oth h is g ov ernm en t re gu la to rs in

th e P hilip pin es an d po ssib ly in K orea , d o n ot ap pear to b e ac cid ental o r based u po n am is un de rs ta nd in g o f a nti- brib ery law s . Conv ers ely , d es pite b ein g a dv is ed by fe llow WynnRes orts B oa rd m emb ers a nd Wynn Res orts c ou nse l th at p aym en ts a nd g ifts to fo re ig ng ov ernmen t o ffic ia ls a re s tric tly p ro hib ite d, M r . Ok ad a h as in sis te d th at th ere is n oth in g w r o ngw i th th is p ra ctic e in A sia n c ou ntrie s. M r. O ka da h as s ta te d h is p ers on al re je ctio n o f WynnRe so rts a nti- brib ery ru le s a nd re gu la tio ns , a s we ll a s le ga l p ro hib itio ns a ga in st makin g s uc hp aymen ts to g ov ernmen t o ffic ia ls , to fe llow Wynn Re so rts Bo ard membe rs .

In a F eb ru ary 24, 20 II W y nn R esorts B oard of D irec to rs ("B oard ") m eetin g a t w h ic h M r.O kad a w a s p resent, after a leng thy d isc ussion b y th e B oard o f th e F CPA, IS including speci ficallyth e Un iv ers al p ro je c t in th e Philip pin es a nd pote ntia l Wynn Re so rts ' in vo lv ement, " [t] he15 ln a n em ail from K im S in au a to M ic hia kiT an ak a,d ate dF eb ru ary 2 6, 2 01 1,M s. S in atra re fe re nc ed a m ee tin gw i th M r . O k ad a in w h ic h s he fu rn is he d FCPA polic y a nd tra in in g m a te ria ls a nd r eite ra te d th e im p or ta nc e o f s tric tc om plia nc e w i th th e FCPA . [ Se e A p pe nd ix ]

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REPORTA ttorney - C lient I Wo rk P ro du ct I P riv ile g ed and Conf id enti alind epend ent m em bers o f th e b oard u nan im ously ad vised m anag em ent th at an y invo lvem en t [byW y nn R eso rts] in the P hilip pines und er the c urren t c irc um stanc es w a s inadvisable.v" Duringthis d isc ussion, M r. O kada c hallenge d the other bo ard m em bers o ver statem ents regarding th eim perrn issib llity un der th e F CP A of giv in g gifts ab ro ad in re turn for fav orable treatm ent, an dm ad e state men ts ab out hirin g "third party c onsu ltan ts" to give gifts to offlclals."

O ne board m em ber rec alled M r. O kada stating that, in A sia, one m ust fo llow the loc alc ultu re, and th at is w h y one sho uld h ire "c onsu ltan ts" to give the gifts. IS T his boa rd m em berunderstood M r. O kada to m ean that suc h use of c onsultants w ould help avoid prosec ution underthe F CPA . A nother board m em ber w ho w as present rec alled M r. O kada sta ting that c onduc tingbusiness in the Philipp ines w as all a m atter of "hiring the righ t people" to pay other people."Y et another board m em ber rec alled M r. O kada being "adam ant" during the FC PA disc ussion thatit is no t c orrupt to give "g iftS . ,,20 A board m em ber w ho partic ipated in the m eeting by phonerec alled M r. O kada c laim in g tha t, in th e P hilip pin es, "bu siness is do ne in a differen t m ann er, andsom etim es you have an 'interm ediary ' that w ill do w hatever he has to do," or w ords to thateffect.i' A differen t board m em ber rec alled being "shoc ked" by the c ontradic tion betw een tw oo f M r. O kada's statem ents durin g th is dlscussion.f E arly in th e disc ussion, M r. O kad ae xplaine d that there w e re n o lo ng er c orrup tio n issues in the P hilipp ine s w ith th e newa dm inistra tio n. H ow e ver, M r. O kad a sub sequen tly stated, in effe ct, that w h ile he him selfw o uldnot pay bribes, he w ould "hire som eone else" to bribe the nec essary person.

Pursuant to a c hain of em ails review ed by FSS, c om menc ing w ith an em ail on A ugust 4,20 II from R oxane Peper, D irec tor of Inte llec tual Property and C orporate R ec ords, to eac h of theboard m em bers (or their representa tives), and ending w ith an em ail from M s. Peper to K evinT ourek, Senior V ic e President and C orporate C ounsel, on O ctober 26, 20 II, the fo llow ing isclear:23

A ll board m em bers w ere notified of upc om ing FCPA training/board m eeting set forO ctober 31 - N ovem ber I, 2011 and asked to c onfirm attendanc e by A ugust 31, 20 II.

M r. O kada, through tw o of his representatives, w as em ailed at least th ree (3) separatetim es before Shinobu N oda, his assistan t, sen t an em ail on Septem ber IS , 2011c on firm in g that M r. O kad a w o uld atten d.

16 Min ute s o f Wynn Res orts B o ard o f D ire c to rs m e etin g, F eb ru ary 24, 2011, p .3 . [ S ee Appendi x]17 I nt er vi ew o f S te ve Wynn , November 7,2011.18 I nt er vi ew o f Rober t J. Mi ll er , Decembe r 16,2011.19 I nte rv ie w o f A lv in V . S ho em ak er, D e cembe r 20. 2011.20 I nte rv ie w o f Ma rc D . S c ho rr , D e cembe r 20, 2011.21 In te rv ie w o f A lla n Z em an , D e cemb er 21, 2011.IIIn te rv iew o f D . B oo ne W a yso n, D ec em be r 20, 20 II .IIS ee ema ils from R ox an e P ep er to K ev in T ou rek o n O c to be r 26,2011. [ See Append ix]

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REPORTA ttorney - C lient I Wo rk P ro du ct I P ri vi le ge d a nd Conf id en tia lSubsequent to the confirmation, M s. Peper received an email from M s. Noda on Oc tober

25, 2011. M s. N oda stated that the em ail contained a message to Kim Sinatra, Sen ior V icePresident and General C ounsel of W ynn Resorts, from M r. Okada." This part of the m essagew as entirely in Japanese and had to be translated. M r. O kada asked for the FCPA trainingm aterials to be provided in Japanese. He also stated that he w ould be arriving on "M onday[Oc tober 31]", w hich w as the day the FCPA training w as to commence. He asked if the trainingcould be held after the board m eeting or rescheduled . K im Sinatra sent a response to M s. N odavia em ail on O ctober 25, 20 II thanking M r. O kada for the note and stating further that the FCPAtraining m aterials had been translated and w ould be provided to him via em ail and that W ynnR esorts had m ade further arrangem ents to have the FC PA live training translated to Japanese viasimultaneous translation." She also stated that the date of the training c ould not be resc heduledbec ause it had been planned around his previous c onfirm ation and that outside c ounsel w asc om ing to L as V egas to provide the training.

M r. Okada failed to attend the training on Oc tober 31, 20 II. He w as the only member ofthe board not in attendanc e (all o thers attended in person or via telephone dial-in as evidenc edv ia a s ig n- in s he et). 26

2. Gaming Establishment in the PhilippinesEvidenc e obtained in the c ourse of the investigation establishes that M r. O kada, his

assoc iates and c om panies, m ay have arranged and m anipulated the ow nership and m anagem entof legal entities in the Philippines under his control, in a m anner that m ay have enabled thee va sio n o f P hilip pin e c o ns titu tio na l a nd s ta tu to ry re qu ireme nts . It is also noted that M r. O kada'stw o prin cipal P hilippine c orporations, E agle I L andho ld ing s, Inc . an d E ag le II H oldc o, lnc .,w h ic h m ay have been purpo sefu lly c reated to c irc um vent P hilippine c onstitutional restric tions onforeign ow nership of land, appear to be c losely intertw ined w ith Rodolfo Soriano, PaoloBombase and M anuel M . Camacho, w ho have numerous common ties to former PAGCORChairm an Efraim Genuino. For exam ple, w ith regard to Eagle II H oldco, Inc ., as late as 20 I0,Platinum G am ing and E ntertainm ent ("P latinum ") had ac quired 60% of its shares. According toa dated filing by Platinum on file w ith the Philippine SEC, Rodolfo Soriano controlled 20% ofPlatinum at the tim e of its incorporation. M r. Soriano, referred to by attorney Camacho as a "bagm an" for then-Chairm an G enuino, is a form er PAGCOR c onsultant and respondent in PAGCORc orru ptio n referrals (see pag e 15 infra). Sim ilarly, P aolo B om base, an offic er, direc tor andnom inal shareholder of Eagle I Landholding, Inc . and Eagle II H oldco., Inc . has a 1.25% share ofO phiuc hus R eal Properties Corp . T his O phiuc hus entity is 15% ow ned by a Philippine c om panynam ed SEAA Corp. In tum , SEA A is the fam ily ..c ontrolled com pany of form er PA GCO RC hairm an E fraim G enuino. A t this tim e, the signific anc e of this in terloc king shareholder link

24 See email from Shinobu Noda to Roxane Peper dated October 25, 20 II. [See Appendix 125 See email from Kim Sinatra to Shinobu Noda dated October 25, 20 II. [See Appendix 126 See FCPA Training Sign-In sheet dated October 31 t 2011. [See Appendix]

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REPORTA tto rney - C lient / W ork P ro du ct / P riv ileg ed an d C on fidentialbetw e en M r. O kad a, h is fo rm er P hilip pine gam in g reg ulato r, and the reg ulato r's asso ciates is n otknown .

A. Corporate Links benveen Mr. Okada's Business Interests and Those ofPhilippine Government OfficialsC lo se asso ciates an d c on su ltan ts o f th e fo rm er G en uin o PAGCOR adm in istra tio n

ev en tu ally attain ed p ositio ns as c orp orate o ffic ers, d irec to rs an d/o r n om in al sh areh old ers in leg alen tities c ontrolled b y M r. O kada, and , in som e c ases, served as lin ks b etw e en th e b usinessinterests of M r. O kada and those of form er PA GCOR c hairm an E fraim G enuino and m em bers ofG en uin o's imme dia te fam ily .

In o rd er to b etter u nd erstan d th e in te rrelatio nsh ip s amo ng c orp ora te en tities in th eP hilipp in es c ontrolled by M r. O kada and th ose c ontrolled by PAGCOR offic ials and theirassoc iates, F SS req uested the P hilipp in es law firm ofM . M . L azaro & Ass oc ia te s C 'L az aro ") top ro duc e a stu dy o f this issu e.27 D raw i ng u po n o ffic ial rec ord s o btain ed from th e P hilip pin esS ec urities an d E xc ha ng e C omm issio n, L az aro p ro du ced an a naly sis o f th e re latio nsh ip s c reatedb y th e ow nersh ip an d c on tro l stru ctu res o f th ese en titie s.28 T he c hart belo w , extrac ted from thata na ly sis , illu stra te s th es e re la tio ns hip s in s ch ema tic fo rm .

27 Manu el L aza ro w a s f orme rly a g ov er nment c or po ra te c o un se l w i th th e ra nk a nd p riv ile ge s o fa P hilip pin ep re sid in g ju stic e. c ou rt o f a pp ea ls , w h o F SS re ta in ed to a ss is t in th e in ve stig atio n a nd to a dv is e o n c er ta in a sp ec ts o fPh il ipp ine l aw . (See Appendix ]28 The c omp le te L az aro P PT is a tta ch ed to th is re po rt. [S ee Ap pe nd ix ]

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REPORTA tro rn ev - Client / Work P ro duc t / Priv ileg ed and C onfid ential. ~

1 1 1 1 1 1 ' 1 1 " ' 1 1 1......................., 1 .., I 1 """ " " ." _ " .. ,,' ,, .. _~ ~_~* ..,,: __A G A p b : n i p ~ l i n e ' 5 - ~

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ArUleUSA h n : : . .

TigerResorts, Leisure and Ernertainment, Inc, e~TigeT~')was incorporated in thePhiLippines on June 13~2008.:9 Its primarypurpose w as stated us:

T o ac quire, ow n, m aintain, operate and/or m anage hotels (city an d resort), i n n s ,apartments, private clubs, p en si on hou se s, c o n ve n t io n h alls , lo dg ing hou se s,restaurants, cocktail bars.and an y and all services and facilities related o r in c id en t'_ Vithereto.' ,

Tiger: is p re domin an tly ow ne d by Aruzc USA.~Inc. .}! In August 2 008 ~ PAGCOR g ranted Tiger HP ro visio na l L ic en sin g Agreeme nt 10 operate a gam ing establishm ent in the E ntertainm cnr C ityManila Zone. An official o f th e c urre nt PA(iCC)Rm,hllinislraHon told FSS in December 201 'jthat PAGCOl( was currently' reexamining this Hccns(~,n

~'~Articles of lm':QrporaHcm QfT~g~r. [See Appendix]J;:} Ibid, [Se c Append ix ]~ :G I S . o f T ig er, 2 01 0. [S e e A pp e nd ix J:I Z Combine d in te rv iew o1'J: :\)1Dan ie l R , S an tia go a nd Tha de o F ra nc is P . H er na nd o. o n Dec embe r 1 2~20 11 , Itshould he noted that a f te r the : in te rv ! ew \vith Santiago a nd Herna nd o . . F SS {tlongwith its P hihp pln c c ou nsc ], fo rpu rpose s o f t hi s i nvest iga ti on ) formaHy requested a copy of th e Pn}visicmal Licensing A g re em e n t f rom PAGCOR~ a s\ \ rcH as other re]m ed doc um ents, O n th e sam e date ~hm t he.form al req uest w as m ade, PAGCOR refused H) supply a

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REPORTA ttorney - C lien t / W ork Prod uc t / Priv ileged an d C onfid entialE agle I L andh oldin gs, Inc . ("E agle I") w as in corpo rated in the Ph ilipp ines on M ay 16,

2008 w ith 5 partn ers of th e P hilipp in es law firm Sy cip Salazar G atm aitan ("S yc ip") as thesh areh old ers, d irec to rs an d o ffic ers." B y c ertific atio n o n S ep tem ber 5 , 2008, t he o rigina lsh areh olders w ere all replac ed by , am ong oth ers, E ag le II H oldc o, Inc . ("E agle II"), w ithapproximately 60% ow nership. E agle II m aintained this perc entage of ow nership of E agle Ith ro ug h th e filin g o f th e latest av ailab le G en eral In fo rm atio n S tatem en t ("G IS ") fo r th e y ear2010. 34 E agle l's 2009 GIS , file d S ep tembe r 17,2009, in dic ates th at P ao lo B omba se , M an uelN . C am ac ho and R odolfo V . Soriano (w hose assoc iations w ith PA GCOR and M r. G enuino areexp lained below ) all h ad bec om e o ffic ers/d irec to rs an d nominal stoc kho lders of E agle I; th eyretained this status throug h th e filin g o f th e latest G IS fo r E agle 1.3S A ru ze U SA , Inc . firstap pears as th e ow ner o f ap pro xim ately 40% of Eagle I as of the 2010 G IS , o w ning th e sharep rev io usly ow ned b y Mo lly In vestm en ts C oo perativ e UA ("M o lly ,,).3 6

E agle II's filin gs w ith th e P hilip pin es S ec urities and E xc han ge C omm issio n ind ic ate ah isto ry sim ilar to th at o f E ag le I. In co rp ora ted o n M ay 19, 2008 by the sam e 5 S yc ip partners,"E ag le II re fle cte d th e a cq uisitio n o f a pp ro xima te ly 6 0 0 / 0 of its shares by P latinum G am ing &Entertainmen t C orp . ("P latin um ") o n its G IS filed S ep tem be r 17, 2009, w i th P la tin um ow nin gthe sam e perc entage as of the 2010 GIS .3 8 The s ame filin gs re fle ct th e a pp ea ra nc e- -in 2009 an dc o ntin uin g th ro ug h th e 20 I0 filin g-of M essrs. C am ac ho, S oriano and B om base aso ffic ers/d irec to rs an d n om in al sh areh old ers. In 20 I0 A ruze U SA , Inc . appears w ith the 40%sh areholding that w as attrib uted to M olly in 2009.39

P latin um w a s in co rp orated in th e P hilip pin es o n N ov emb er 21, 200 I, w ith a C ertific ate ofF ilin g o f Amen ded A rtic les o f In co rp oratio n (UAOI") issu ed b y th e P hilip pin es S ec urities an dE xc hange C omm ission on Jun e 10, 2002.40 Platinum h as n o G IS on file w ith th e P hilippinesS ec urities an d E xc han ge C omm ission , an d the o nly c orpo rate d oc um ent filed b esides th e A rtic leso f In co rp oratio n is th e 2004 F inanc ial S tatem ent. T he latest inform ation on file lists M r.

c o py o f T ig er 's P ro vis io na l L ic e ns in g Ag re ement. s ay in g th at th ey w e re b ou nd b y a n on -d is clo su re c la us e. T ha tre fu sa l w a s s ig ne d b y F ra nc is P . H ern an do , w h o is id en tifie d b elo w a s a PAGCOR emp lo ye e. w h o sta ye d in W y nnM ac au in Ju ne 2 0 II an d h ad U S 7 09 .7 2 o f expen ses paid fo r b y th e A ru ze C ity L ed ger ac co un t. S ee L etter o fR eq ue st a nd L ette r o f R ef us al. [S ee Ap pe nd ix ])) A rtic le s o f I nc o rp ora tio n o f E ag le I . [S ee Ap pe nd ix )34 G IS o f E ag le I fo r y ears 2 009 an d 2 01 0. (Se e A ppen dix) A G IS is req uired to be filed on an an nu al basisa c co rd in g to S ec tio n 1 41 o f th e C o rp or atio n Code o f th e P hilip pin es . [ Se e Ap pe nd ix ]lS Ibid . [See Appendix])6 Ib id . [S ee A pp en dix]; F SS h as d ete nn in ed M o lly to b e a w h olly o w ne d su bsid ia ry o f A ru ze C orp . S eehttp://www.universal-777.comlenlir/ir l ib /mater ia l /annual 20081119.pdft p ag e 3 2.17 Ar tic le s o f I nc o rp o ra tion o f E agl e 1 [. [ S ee Appendi x])8G IS o f E ag le I I, y ea rs 2 00 9 20 10 . [ Se e Ap pe nd ix ])9G [S o f E ag le 1 1,2 01 0. [ Se e Ap pe nd ix ]40 Artic le s o f I nc o rp ora tio n o f P la tin um , a s amende d J un e 1 0,2 00 2. [ Se e App en dix ]

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REPORTA tto rn ey - C lien t I Wo rk P ro du ct / P riv ile ged an d C on fid en tialS oriano , a fo rm er P AGCOR c on sultan t, as a d irec to r/offic er an d a 2 0% shareh old er inPlatinum."

Messrs. C am ac ho , B om base and S oriano are all direc tly asso ciated w ith form erPA GCOR C hairm an G enuino in signific ant w ays. M r. C am ac ho is an attorney and a princ ipal ofthe M an ila law fin n C am ac ho &A ssoc iates. H e w as for a tim e in a law partnership w ith M r.G en uin o's so n, E rw i n Genuino." M r. C am ac ho traveled to Japan w ith M r. Soriano at thenPA GCOR C hairm an G enuino's behest, to m eet w ith M r. O kada and other representatives ofAruze, T his m eeting resu lted in M r. C am ac ho's finn replac in g S yc ip in rep resenting A ru ze w ithre sp ec t to th e d ev elo pm en t o f th e p ro jec t in E nterta inme nt C ity M an ila ,"

S om etim e su bse qu en t to th is m eetin g, Aruze w ired retainer funds to the bank ac count ofM r. C am ac ho's firm , an ac count c ontrolled jointly by M r. C am ac ho and E rw in G enuino. L ater,M r. C am ac ho disc overed that all or m ost of these funds had been w ithdraw n by E rw in G enuino.W hen he questioned this w ithdraw al, he w as eventually told by M r. Soriano and/or thenPA GC OR C hairm an G enuino that the funds had been w ithdraw n to be used as a "cash payoff" tothe m ayo r o f the m un ic ipality in w h ic h the E ntertainm en t C ity M anila p ro jec t is loc ated , in ord erto fac ilitate approval of the use of som e plots of land to build roads needed for M r. O kada'sc asino projec t. M r. Cam acho c laim s to have had a falling out w ith Erw in G enuino and M r.S orian o, an d to b e inv olv ed c urren tly in a law s uit against E rw in G en uin o o ver th e dissolutio n oftheir law partnership .t" E rw in G enuino is nam ed as a respondent, along w ith form er PA GCORC hairm an G en uino , in tw o sw o rn c orru ptio n referrals ("PAGCOR R eferrals") filed w ith theR epublic of the Philippines D epartm ent of Justic e ("D OJ") in the summer of 20 II by the c urrentPAGCOR Adm in is tra tio n. 45

M r. B om base, also an attorney, is an o ffic er/d irec to r and shareh older ofO ph iuc hu s R ealP ro pertie s C orp oratio n ("O ph iu ch us"), in co rp orated in A pril 2 01 1 .46 A cc ording to its 2011 G IS,O phiuc hus w as 15% ow n ed by S EAA C orp oration ("S EAA,,).47 S EAA, w h ic h w as reg isteredw ith the Philippine SEC on Dec em ber 3,1997, is, ac cording to its 2011 GIS, 100% ow ned bym em bers offonner PA GCOR C hairm an Genuine's immediate family." T he A rtic les o f

41 M . M . L az aro & A ss oc ia te s, "Aru ze Co rp ora tio ns in th e P hilip pin es a nd 'R e la te d' C o rp or atio ns ", p . 1 8. [ Se eAppendix]42 In te rv ie w o f M . C am ac ho , D ec em ber 1 3, 2 0 II.43 In h is d isc ussio n w ith F SS , M r. C am ac ho re fe rre d to th e firm o nly a s "Aruze," no t f u rt her de fi ned .44 A lth ou gh M r. C am ac ho , w h o is in h is se ve ntie s, fa iled to re call some d eta ils o f h is d ealin gs w ith M r. G en uin o a ndM r . S oria no , F SS c re dits th e g en er al a cc o un t g iv en by h im d ur in g th e De cembe r 13.2011 interview.45 S ee PAGCOR Ref erra ls . [ Se e A p pe nd ix ]46 Ar ti c le s o f I nco rpo ra tio n o fOph iu chus . [ Se e Appendi x]47 G IS o fO p hiu c hu s, 2 01 1. [ Se e A p pe nd ix ]48 G IS o f S EAA , 2 01 1. [ Se e A pp en dix ]

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REPORTA tto rn ey - C lien t / W ork P rod uc t / P rivileg ed an d C on fiden tialIn co rp oratio n o fO ph iu ch us also list Em ilio M arc elo as an o ffic er/d irec to r an d sh are ho ld er/"M r. M arc elo is n am ed as a respo nd ent in the PAGCOR R eferrals.i''

M r. Soriano is a form er PA GCOR c onsultant, nam ed by M r. C am ac ho as a c lose businessassoc iate and "bag m an" for M r. Genuine." M r. Soriano is also nam ed as a respondent in thePAGCOR Re fe rra ls .52 A s of th e latest in fo rm atio n filed w ith th e Ph ilip pines S ec urities andE xc hange C ommission in 2002, M r. Soriano w as a 20% shareholder and an offic er/direc tor ofP latinum,S ) identified ab ov e as a 60% shareh older in E ag le II. If M r. S oriano still held the sam estake in Platinum w hen it ac quired its share of E agle II in 2009, then he bec am e an effec tiveow ner of 12% of Eagle II and approxim ately 7% in Eagle I.

B. Apparent Evasion of Republic of Philippines Legal RequirementsA s d esc rib ed in th e p rec ed ing sec tion , M r. O kada c aused variou s legal entities to be

inc orpo rated in th e P hilipp ines, in ord er to develop his c asin o resort projec t there, ov er tim erep lac in g th e o rig in al in co rp oratin g F ilip in o sh areh old ers w i th c ombin atio ns o f fo reig nshareh olders affiliated w ith o r c on trolled by h im and asso ciates o fthen -PAGCOR C hairm anG enu in o. A s disc ussed below , th ere are c onstitu tion al an d statutory req uirem ents in th eR ep ub lic o f th e P hilip pin es req uirin g th at p urc hasers o f lan d b e P hilip pin es c itizen s o r F ilip in o-o w ne d le gal en tities, an d th at leg