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    Gaming panel will review whether Wynn is suitable to keep license

    Gaming chairman Stephen Crosby on Wednesday defended the state’s licensing investigation into Wynn Resorts.
    Keith Bedford/Globe Staff
    Gaming chairman Stephen Crosby on Wednesday defended the state’s licensing investigation into Wynn Resorts.

    Top state casino regulators sent a strong signal to Wynn Resorts’ board of directors on Wednesday that its handling of sexual misconduct allegations against its chief executive, Steve Wynn, will go a long way toward shaping Massachusetts’ review of whether the company is suitable to keep its casino license.

    The Wynn Resorts board has formed a special committee of independent directors to investigate the allegations, detailed in a Jan. 26 Wall Street Journal article. That investigation is led by Patricia Mulroy, a former member of the Nevada Gaming Commission.

    On Wednesday, the Massachusetts Gaming Commission discussed the allegations publicly for the first time, pledging that the commission’s enforcement arm would conduct its own fair, thorough, and transparent investigation.

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    “The people of Massachusetts have a right to know what the hell happened here,” said Stephen Crosby, the commission’s chairman, who called the accusations “appalling” and “deeply troubling.”

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    Wynn Resorts is building a $2.4 billion hotel casino on the Mystic River in Everett, the only resort casino permitted in Greater Boston.

    In their public comments, several commissioners hit a similar theme:

    Massachusetts will be paying close attention to how the Wynn board addresses the accusations.

    Crosby echoed the theme in comments to reporters after the meeting. Asked if Steve Wynn had become a distraction to the ambitious Everett project, Crosby said he hoped that was something the Wynn board would think about.

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    After The Wall Street Journal’s report, Wynn stepped down as finance chairman of the Republican National Committee. And Governor Charlie Baker asked the Republican Governors Association to return funds it had received in the past three years from Wynn and Wynn Resorts.

    Massachusetts law requires casino license holders to conduct themselves ethically and gives the commission broad authority to determine which companies — and which company executives — are suitable to hold a casino license.

    Character, reputation, and integrity are all elements of “suitability.”

    Wynn Resorts and its key officials passed a lengthy suitability review in late 2013; the company won the Boston-area resort casino license the next year.

    The Nevada Gaming Control Board, which regulates Wynn’s flagship properties on the Las Vegas Strip, has announced that it, too, would open an investigation into the allegations.

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    Wynn Resorts is one of the best-known and most successful casino companies in the world. And Steve Wynn, 76, is widely credited with inventing the modern Las Vegas casino resort, with elaborate, luxurious buildings and fanatical attention to the experiences of hotel guests.

    Medford, MA - 3/15/2016 - Steve Wynn smiles as he arrives to speak to reporters about a planned casino in Everett during a press conference in Medford, MA March 15, 2016. Jessica Rinaldi/Globe Staff Topic: 16wynn Reporter:
    Jessica Rinaldi/Globe Staff/file
    Steve Wynn presented information about his proposed casino on March 15, 2016.

    ‘The people . . . have a rightto know what the hell happened here.’

    Wynn Resorts runs casinos in Las Vegas and in Macau. The company has already spent hundreds of millions of dollars on its Everett project, dubbed Wynn Boston Harbor. It is deep into construction and scheduled to open in June 2019.

    “We respect the process outlined by the Massachusetts Gaming Commission and will cooperate fully with the investigation,” a Wynn Resorts spokesman said in a statement Wednesday. “Our construction is on schedule for a 2019 opening and continues to create more than 4,000 local union trade jobs.”

    The Wall Street Journal story reported that dozens of people “told of behavior that cumulatively would amount to a decades-long pattern of sexual misconduct by Mr. Wynn,” including acts of exposing himself and pressuring employees for sex. The story said that in 2005, Wynn forced a manicurist at his Las Vegas casino property into sex, and later paid her a $7.5 million settlement.

    Steve Wynn has sharply denied the allegations.

    “The idea that I ever assaulted any woman is preposterous,” he has said in a statement.

    “We find ourselves in a world where people can make allegations, regardless of the truth, and a person is left with the choice of weathering insulting publicity or engaging in multi-year lawsuits. It is deplorable for anyone to find themselves in this situation.”

    Wynn blamed his former wife, Elaine Wynn — whom he has been fighting in court over restrictions on the sale of her stock in Wynn Resorts — for instigating the accusations.

    Karen Wells, director of the commission’s enforcement arm, said Wednesday that a lawyer for Wynn Resorts confirmed to her “there was in fact a settlement,” and that the existence of the agreement was not disclosed to Massachusetts investigators who conducted a background check on Wynn Resorts and its key officers in 2013. Wells did not comment on the nature of the settlement.

    “This was a private agreement and steps were taken to keep it from the public domain,” Wells said. “The circumstances around this $7.5 million settlement and the decision not to disclose it to investigators remain a critical element of this review.”

    Wells said it is not the role of the commission’s Investigations and Enforcement Bureau to conduct a criminal investigation into sexual assault allegations, but that the bureau will:

     Review the suitability of individuals in Wynn Resorts, including Steve Wynn.

     Review corporate actions — or lack of them — at the time of the alleged misconduct.

     Monitor the corporate response to the allegations, now that they are public. “We will be looking at how the company, from the board on down, handles the allegations,” she said — a theme later magnified by several commissioners.

     Review how the allegations may affect the financial stability of Wynn Resorts. The company’s stock fell in the days after the allegations were published, though it has since leveled off.

    Any company that applies for a casino license in Massachusetts must pass a suitability investigation to be eligible to compete for a license. The investigation into Wynn Resorts was assigned to Michael & Carroll, an experienced New Jersey consulting firm. The investigators looked at the history and business practices of Wynn Resorts and the backgrounds of 11 individuals with key roles at the company, including Steve Wynn, other top executives, members of the board, and Wynn’s former wife, Elaine, who held a 9.7 percent equity interest in the company.

    The investigators found no information that would disqualify Steve Wynn from holding a high-level position in a casino company in Massachusetts, according to a December 2013 summary of the background check.

    On Wednesday, Crosby defended the professionalism of the investigators and the quality of their work. The scope of the investigation included reviews of civil and criminal litigation, credit profiles, incorporation documents, a national media search, personal financial statements, tax histories, motor vehicle records, and corporate minutes, among numerous other documents.

    Bloomberg News reported in December that the $7.5 million settlement Wynn allegedly paid in 2005 had been an issue in the lawsuit between Steve and Elaine Wynn, but that the details of what led to the settlement were “only hinted at in the heavily redacted court filings.”

    In 2013, Massachusetts investigators had asked Elaine Wynn in a sworn interview about the litigation. She said she was seeking changes in the restrictions on her shares for “estate planning and liquidity, and it is not any more complicated than that.”

    The Wynn Casino is under construction in Everett.
    David L Ryan/Globe Staff/File
    The Wynn Casino is under construction in Everett.

    Mark Arsenault can be reached at mark.arsenault@globe.com. Follow him on Twitter @bostonglobemark.