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Tim O'Reiley

Discovery may lead to Las Vegas Sands sanctions

29 June 2012

Las Vegas Sands Corp. could face state court sanctions for not revealing that about 100,000 e-mails and other documents, previously said to be tied up in Macau and unavailable to a lawsuit plaintiff, actually have been in Las Vegas since 2010.

The documents, encoded on a hard drive, were requested by former Sands Macau executive Steven Jacobs in his wrongful termination suit against the company. In a pleading filed June 27 in Clark County District Court, Jacobs ticked off several areas where he said the documents would show that Las Vegas executives controlled the Macau properties "on matters of great import," contrary to Sands' assertions that Macau operated with a large degree of autonomy.

Potentially the most incendiary part was Jacobs' allegation that he had launched Project Clean Sweep in May 2009, designed "to ride the casino floor of loan sharks and prostitution." He added that his idea ran into "concern" among the Las Vegas Sands executives because "the prior prostitution strategy had been personally approved by (Chairman and CEO Sheldon) Adelson."

However, the elements of the "prostitution strategy" were not spelled out, including whether it was an alternate route to reach the same goal. According to Chinese press reports, Macau police arrested more than 100 prostitutes and 22 syndicate leaders at the Venetian Macau in December 2010.

Sands attorney Brad Brian attacked the Jacobs statement as "scurrilous" at a Thursday hearing.

A statement by the company said Adelson has "always maintained a strong policy against prostitution on our properties ... and any accusation to the contrary represents a blatant and reprehensible personal attack on Mr. Adelson's character."

But Judge Elizabeth Gonzalez focused on the document-rich hard drive that suddenly surfaced this week. She said her office had wrestled for months to determine how much of its contents could be released under Macau's Personal Data Protection Act, which covers documents that are actually in the former Portuguese colony now run as a self-governing part of China. To discover that the material had been in town all along "is a problem," she said.

She plans a hearing next month to put former Sands in-house attorney Michael Kostrinsky on the witness stand. Brian said Kostrinsky had brought the hard drive from Macau.

Gonzalez will look at possible sanctions as well as ramifications of whether the case is heard in Las Vegas or Macau. "I'm not putting anybody in jail. There will be no contempt," she added.

Jacobs attorney Todd Bice attributed the hard drive issue to Sands' attempts to conceal evidence.

Other than offering apologies for "a mistake," Sands attorneys did not elaborate except to promise to turn over more documents as Jacobs request them.

"It was not a good day," Sands attorney J. Stephen Peek said after the hearing.