THE LEGAL COUNSEL OF WYNN RESORTS pushed back on Friday against the notion that buying land for a casino in Everett from a convicted felon would not pose legal problems for the Las Vegas company, but she grudgingly admitted her firm did little on its own to investigate the background of the land owners until prodded by reporters or regulators.
Kim Sinatra, Wynn’s legal counsel, was testifying at the federal trial in Boston of Dustin DeNunzio, Anthony Gattineri, and Charles Lightbody, who are accused as owners of FBT Everett LLC of wire fraud in connection with efforts to conceal Lightbody’s part-ownership of the 35-acre casino property. Lightbody has been convicted of assault and battery and identify theft and was caught on tape boasting about his casino deal with a Massachusetts prison inmate with ties to organized crime.
Several witnesses have testified during the trial that there is no specific prohibition in Massachusetts law or regulations barring a convicted felon from profiting on the sale of land to a casino operator. Sinatra didn’t dispute the absence of a legal prohibition in the 2011 law launching casino gambling, but she said the issue wasn’t black and white.
“Since the law was new, people didn’t exactly know what was required,” she said, referring to her negotiations with FBT Everett on the Everett land deal in late 2012. “It was not a secret in the Commonwealth of Massachusetts that probity was really important.”
Model of the inside of the Wynn casino.
Sinatra said what mattered to her as Wynn’s legal counsel was what mattered to regulators. “In a gaming context, regulators are allowed to care about anything,” she said. “If they care about it, I care about it.”
Wynn Resorts was negotiating a land option agreement with FBT Realty in November and December of 2012 that committed the casino company to pay $100,000 a month for the option to purchase the property later for $75 million. While the deal was being negotiated, a reporter for the Boston Business Journal inquired whether Gary DeCicco, a convicted felon, had a role with FBT Everett. Sinatra referred the question to DeNunzio, who said DeCicco was no longer involved with the limited liability corporation.
Joshua Levy, the attorney for DeNunzio, pressed Sinatra repeatedly on whether she asked for more information about the owners of FBT Everett before signing the option agreement on Dec. 19, 2012. She didn’t answer the question directly, so Levy asked for a yes or no answer.
“I don’t know,” Sinatra said.
“Really? You don’t know?” Levy asked sarcastically.
When another reporter for the Boston Herald asked more questions about FBT Everett’s owners in January 2013, Sinatra asked DeNunzio for a list of the firm’s equity owners. He replied that the owners were Paul Lohnes, Gattineri, and DeNunzio. Background checks conducted by Wynn Resorts turned up nothing amiss with the three men.
Prosecutors claim FBT Everett concealed the ownership stake of Lightbody from Wynn Resorts, but defense attorneys say Lightbody’s interest was transferred to Gattineri prior to the option agreement being signed in return for a five-year promissory note for $1.7 million that was paid off, with $200,000 in interest, by June 2014.
Sinatra said she met with investigators from the Massachusetts Gaming Commission in July 2013 and learned for the first time about Lightbody’s involvement with FBT Everett. “They were concerned that the ownership of the land was a real problem for us,” she said. “Unless we did something with the land, our company suitability was going to be an issue.”
The solution Wynn hit on was to add a ninth amendment to the option agreement, reducing the purchase price for the land from $75 million to $35 million and requiring FBT Realty to pay $10 million toward environmental remediation on the polluted property. The theory was that the lower price eliminated the “casino premium” on the value of the property. In agreeing to the amendment, FBT Everett stated in the document that it did not agree that it had refused to cooperate with the Gaming Commission.
Levy asked Sinatra about a meeting at Mintz Levin where the ninth amendment was negotiated and whether she had said to DeNunzio at the meeting that “Wynn will sue you back to the stone age” if you don’t agree to the price reduction.
Sinatra said she didn’t remember making that comment. “It doesn’t seem like something I would say,” she said.
