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New Questions About Sheldon Adelson’s Casino Operations in Macau

Las Vegas Sands has insisted for more than a year that it needed approval from Macau authorities to turn over documents sought by federal investigators and a former employee suing the company for wrongful termination. Now, the company owned by the biggest single Republican donor acknowledges that many of the documents have been in the United States all along. 

People walk by the Sands Cotai Central, Sands' newest integrated resort, in Macau on April 11, 2012. (Aaron Tam/AFP/Getty Images)

Note: This story is not subject to our Creative Commons license.

This story was co-published with PBS' "Frontline."

A few days after Las Vegas Sands fired the president of its Macau casinos in July 2010, the company copied the hard drives of his office computers and moved the data to its headquarters in Las Vegas. In the months that followed, the company now acknowledges, its lawyers reviewed those records as they prepared to defend the casino giant against a civil suit by the executive for wrongful termination.

But when the executive, Steven Jacobs, asked in court for copies of his documents, a lawyer for the Las Vegas Sands subsidiary in Macau said it could not move files out of the Chinese enclave without permission from local authorities. The lawyer did not mention that copies of the documents were already in the United States.

Federal investigators examining Jacobs' claims that he had been ordered to overlook illegal activity in Macau faced the same roadblock, the lawyer told a Nevada judge.

In little-noticed court filings earlier this month, however, Las Vegas Sands disclosed for the first time that the copies of Jacobs' emails and other documents had been transferred nearly two years ago to the United States without notifying Macau authorities.

The filings did not explain the company's previous statements to the court, noting only that the transfer of records from Macau to the United States had been done "in error." The company also informed the judge it had destroyed at least some original files when it reused one of Jacobs' computers in Macau.

The owner of Las Vegas Sands, Sheldon Adelson, has been in the national spotlight as the largest individual donor to Republican candidates in the 2012 campaign. Last month, Adelson and his wife gave $10 million to a super PAC supporting Mitt Romney, which amounted to half of its receipts for June. The New York Times reported that Adelson is funding an effort to target pro-Romney Jewish voters in battleground states and is reportedly planning to meet with Romney in Israel on Monday.

Questions about Las Vegas Sands' business practices in Macau have emerged as a political issue in the campaign. Democrats recently seized on an allegation in Jacobs' legal pleadings — that Adelson tolerated prostitution at the Macau casinos — and issued press releases attacking Republican congressional candidates who accepted contributions from a PAC he supports.

Adelson adamantly denied the charge and his lawyer threatened to sue the Democratic Congressional Campaign Committee for libel for advancing the claim.

The company's recent court filings raise questions about whether Las Vegas Sands has been fully cooperative with the federal investigations of the company.

At a July 2011 hearing before the Nevada judge on the Jacobs case, Patricia Glaser, a lawyer for the Las Vegas Sands subsidiary, said Macau law posed a "stone wall" to federal investigators seeking documents. Glaser said the company had not provided investigators records from its Macau operations "in any way, shape or form."

People familiar with the federal inquiries said that Las Vegas Sands continued to make similar arguments to federal officials over the past year. The slow flow of documents hampered the case, delaying interviews of key witnesses, those people said.

A spokesman for Las Vegas Sands said the company would not respond to questions about the case, including whether it has turned over any documents since Glaser made her statements last year. The spokesman, Ron Reese, said, "These questions will be answered in due course in the most appropriate forum — namely the courtroom."

Judge Elizabeth Gonzalez, who is hearing Jacobs' civil suit, is now weighing financial sanctions against Las Vegas Sands for its conduct in the civil case. Gonzalez told lawyers in the case at a recent hearing that she wants to learn more about "the lack of forthrightness with respect to these documents that were taken out of Macau many years ago and which nobody's told me about during the entire litigation."

Gonzalez has allowed Jacobs' lawyers to take further testimony on the handling of the Macau documents from company officials, perhaps including Adelson, before a scheduled hearing at the end of August on possible sanctions.

The company, which disclosed to investors that the federal investigations involve possible violation of U.S. laws banning bribery of overseas officials, has said it is cooperating with authorities.

It is difficult to assess precisely how delays in turning over documents have affected the federal inquiries, which involve both the Department of Justice and the Securities and Exchange Commission. Jacobs' lawyers have said their client turned over copies of some of his documents to federal investigators in response to requests from the Justice Department.

But federal prosecutors and SEC attorneys in such cases typically seek to assemble a complete set of files from the company and its executives before they question witnesses.

Adelson is among the world's richest people with a personal fortune estimated at $25 billion, a substantial amount of which stems from his company's profits in Macau, the world's gambling capital.

* * *

The federal investigations and Jacobs' lawsuit have their origin in a meeting at the company's Macau offices on the morning of July 23, 2010. That day, Jacobs says in his lawsuit, he was told by Las Vegas Sands' CEO Michael Leven that he was being immediately dismissed as president of the Macau subsidiary, Sands China Limited.

A few days later, the parent company's deputy general counsel, Michael Kostrinsky, asked for copies of Jacobs' emails and of the hard drive on his computer, according to an account of his deposition filed by Jacobs' lawyers.

After a failed attempt to transfer the data via the Internet, the files were placed on a separate hard drive and delivered to the company's Las Vegas offices. Kostrinsky then had material copied to his laptop where it was stored in a folder marked "Jacobs emails," according to the summary of Kostrinsky's deposition.

Kostrinsky said that lawyers with Glaser's law firm, Glaser, Weil, Fink, Jacobs, Howard, Avchen & Shapiro, were aware that Las Vegas Sands had copies of the documents and had access to them, the summary alleged. The summary did not identify the lawyers, and it is unclear whether Glaser was among them.

Glaser declined to respond to requests for comment but directed reporters to Las Vegas Sands.

According to the summary, Kostrinsky said that J. Stephen Peek, a lawyer from the Las Vegas office of Holland & Hart working on the case for Las Vegas Sands, came to his office and spent an afternoon reading the files on his laptop.

Peek did not respond to a request for comment.

On Oct. 20, 2010, Jacobs sued Las Vegas Sands in Nevada, arguing that he had been wrongfully dismissed after a series of clashes with Adelson over what Jacobs alleged was improper and illegal conduct. One issue cited by Jacobs involved whether the company should continue paying a Macau legislator as its local lawyer.

Jacobs said in his lawsuit he ultimately warned Adelson and other executives that continuing this arrangement posed "serious risks" of violating the Foreign Corrupt Practices Act, the U.S. law that bans overseas bribery by American companies.

That assertion caught the eye of federal officials. On Feb. 9, 2011, the SEC sent a subpoena to Las Vegas Sands demanding documents in connection with possible violations of the anti-bribery law.

No copy of that document has been made public so it is unclear precisely what documents investigators are seeking. Las Vegas Sands publicly disclosed the existence of the inquiry in a filing with the SEC.

As the federal investigations moved ahead, the company mounted a vigorous defense against Jacobs' lawsuit, which Adelson argued was based on inventions by a disgruntled ex-employee.

The company's lawyers argued that Jacobs could not bolster his lawsuit with documents stored on his laptop because they were not his property and they contained material protected from disclosure by the attorney-client privilege. In response, Jacobs went to court and asked Las Vegas Sands to give him the same material from its files with the privileged material removed.

Lawyers for the Las Vegas Sands subsidiary said they could not move the documents to the United States without permission from officials in Macau.

At the July 2011 hearing before Judge Gonzalez, a lawyer for the Las Vegas Sands subsidiary in Macau said the Macau Personal Data Protection Act imposed strict procedures. The lawyer, Glaser, said the company would have to send lawyers to Macau and would have to "go document by document" and might have to ask "everyone who's named on any of these emails" to sign a form consenting to their transfer out of the country.

The documents would then have to be reviewed by Macau's Office for Personal Data Protection that would have the final say on each record.

David Fleming, a lawyer with the company's Macau subsidiary, said in a sworn affidavit that he had met with officials in Macau who had threatened to impose criminal and civil penalties if the law were ignored. The company estimated that lawyers would have to spend 8 to 10 weeks in Macau at a cost of more than $1 million to sift the documents.

Glaser told Judge Gonzalez that Macau's privacy requirements were so strict, lawyers in the United States were not even allowed to review documents remotely. She said Jacobs' requests for records had already put the company on "the cusp of violating the law."

* * *

Nearly a year later, lawyers for Las Vegas Sands stunned the Jacobs legal team, acknowledging they had moved Jacobs' files out of Macau and been studying them for nearly two years.

On June 28, Judge Gonzalez convened a hearing on the matter.

"Mr. Peek, I've got a question," she began, addressing the Holland & Hart lawyer who had read Jacobs' emails on Kostrinsky's laptop.

"Why didn't somebody tell me 11 months ago or so that the Macau Data Privacy Protection Act wasn't going to be an issue because somehow the document had already gotten to the U.S. and geez, it was by mistake."

Brad Brian, a lawyer for Las Vegas Sands' Macau subsidiary Sands China Ltd., told the judge that the transfer of Jacobs' files was "in error, it shouldn't have happened." It was only in late May, after months of talks with Las Vegas Sands lawyers, that Macau agreed the documents at issue, which were already in the United States, could be turned over to the Nevada court, Brian said.

Gonzalez reminded the lawyers that she had been told for months that it was not possible to negotiate directly with Macau authorities on their privacy concerns. "Nobody thought to say, 'Gosh, Judge, we're already talking to them because we screwed up and took this information we weren't supposed to and we're trying to see what we're supposed to do now.'"

"In hindsight, if you could roll the clock back, there's no doubt that it would have been better to advise the Court of that," said Brian, whose firm Munger, Tolles & Olsen was brought into the case earlier this year and was not involved in the initial decisions on the Macau documents.

In a court filing, Las Vegas Sands lawyers detailed other instances in which the company transferred data from Macau to the United States without review by local authorities. These included five other company employees whose records might be needed for the federal investigation and data that was used by another outside law firm working for the company.

Two months after Jacobs' attorneys delivered selected documents copied from his laptop to federal investigators, he reported a burglary at his Florida home.

According to a police report, Jacobs told investigators that someone had stolen a computer hard drive from its hiding place inside a coffee maker. Jacobs said other files were missing from a plastic crate near the door of his apartment.

Jacobs told the police nothing else was taken.

The coffee maker was sent to the Federal Bureau of Investigation for DNA testing.

The case remains unsolved.

Matt Isaacs and Lowell Bergman reported on this story for the Investigative Reporting Program of the University of California and PBS Frontline. Some of their work was underwritten by a grant from the Nathan Cummings Foundation. Engelberg is managing editor of ProPublica.

Do you think all this heat is about the fact that he is a big contributer to Romney ? hmmmmmm, Is anybody investigating Geores Soros ?

Let’s stop this nonsense, lets pay more attention to national security leaks, lets pay more attention to our attorney general’s lies before congress , these are unresolved issues that effect the American people, that’s important———

Nick - Your deflection here is just silly. You don’t have the right to demand that people only discuss the issues you’re interested in. How would you react if this was a story about the Teacher’s Union bribing international government officials and lying about the existence of evidence?

Personally, I think it’s essential that we continue to analyse the business practices of corporations moving billions of dollars around the globe. Actually, we should be looking at all the money, including the government’s - no-bid construction deals, military contracts, payouts to warlords and officials in the Middle East, aid to Israel, and Super PACS, to name a few.

The money from the profits of people like Sheldon Adelson (which includes government subsidies), flows back into our political system in anonymous floods, and you’re not the least bit intrigued by where it comes from?

Better yet, you say we shouldn’t investigate the dealings of one businessman (Adelson), but demand we look closer at George Soros.

This is just another example of the backwards logic so common today.

Taxes: The American people don’t need raised taxes, so instead of raising rates on the wealthiest, we should look at the “45% of people that don’t pay taxes.” So is raising taxes good or bad, and for whom?

Subsidies - This is a free market, so no subsidies for environmental projects and sustainable energy. However, taking away subsidies from some of the most profitable industries in the world (Coal, Oil) is labeled a tax hike on job creators.

Spending/foreign aid - We have to cut our spending to sensible levels, yet nearly every Republican wants to increase our military budget, and send more money to Israel.


There is no platform there, no consistent point of view or belief system. It’s gotta be so sad to believe in nothing other than your own exceptionalism.

Delay, delay, delay…...

Thank you!

i thank you also!

Heh.  Right.  Must be a party-lines thing.  Couldn’t possibly because someone running a casino in a highly corrupt part of the world MIGHT have skirted a few regulations.

Hm.  Casinos (and…uhm…large chunks of Asia) are traditionally involved with money laundering.  I wonder if any of these people has an account at HSBC…

(Not that Soros is any saint.  I think he’s a dangerous ass, personally.  But he’s not openly involving himself with what everybody in the world must assume is organized crime.)

@ nick petitte

Good point, but then again Propublica is going to look into the past (or present) activities of convicted inside trader George Soros because he writes them very large checks … much like the Sandler’s. After all, in the all the subprime reporting Propublica did, how many pieces did they do on Golden West Financial?

You don’t bite the hand that feeds you.

Mike: Source on the George Soros claim please. Also, do you really think American citizens are going to fall in large numbers to the primary Conservatice argument that “the other guys do bad stuff too! Pay attention to that instead!” or do you just lack the energy/honesty to try to have a real debate?

@ Stefan

http://dealbook.nytimes.com/2011/10/06/soros-loses-challenge-to-insider-trading-conviction/

Pay attention to that instead!

How about pay attention to all of it? Propublica did dozens of articles on the subprime crisis but not even a mention of Golden West Financial, one of the most prolific subprime lenders, because the Sandlers dumped tens of millions into Propublica’s coffers.

All corrupt individuals are treated equally by the press, some more equally than others.

@ Stefan

Google: “Soros insider trading conviction France”. Propublica holds comments with links for moderation.

Pay attention to that instead!

How about pay attention to all of it? Propublica did dozens of articles on the subprime crisis but not even a mention of Golden West Financial, one of the most prolific subprime lenders, because the Sandlers dumped tens of millions into Propublica’s coffers.

All corrupt individuals are treated equally by the press, some more equally than others.

Lets see i wonder if my former employer had strong political ties?
Here i uncovered serious safety problems and i documented what i was finding ,went through the chain of command warning my employer ,then after years of them telling me to look the other way (i time lined this also) i contacted OSHA.I was then fired 6 weeks later and had an excellent work record (time lined ).
And on the day they illegaly fired me they sent out and into a Sunoco refinery a five ton machine i just locked out unsafe with a major mechanical problem where you could lose control of the machine at any moment.Even the manufacturer even stated that machine put the truck driver loading it in danger let alone the workers using it.
I provided OSHA complete indisputible documentation with pictures of just this one violation and they swept it under the rug.Then i was handed inside information from a top OSHA offical that i used that exposed my employer not only lied to U.S Federal investigators but also conspired to lie to U.S Federal investigators and still no charges in this case. So this guy has got a fat chance in hell in winning his wrongful termination suit. What i stated in my comment above is just a fraction of what i have.It does not pay to step up and do the right thing for now i’m losing my home and everything i worked for my whole life.
Gregg
PROUD NAVY DAD

Mike: I appreciate the source link, and I agree that it’s troubling that Propublica has avoided discussing Golden West Financial (which was/is owned by the founders of the Propublica project). It’s unfortunate that even a respected investigative journalism group is susceptible to the same convenient silence that allows politicians to demand we cut spending while quietly cutting deals for billion-dollar arms systems and foreign aid to countries that don’t need it.

That being said, the fact that Propublica isn’t discussing one or two particular bad guys doesn’t diminish the importance of this story, and I trust that you can find all sorts of articles on the dirty dealings of Soros and Golden West from other sources. My main problem with your criticism is that it opens a lot of potential for hypocrisy. Many politicians have consistently blocked legislation to regulate the banking and lobbying industries more closely - but when an article is published about the potential crimes of these institutions, these same politicians will argue that we should look at George Soros. Are they for increased banking regulation or against it?

And that’s the whole problem with deflection. The deflector is only arguing to ridicule the “other side,”  not take a firm stand on policy.

Bruce Fernandes

July 27, 2012, 5:16 p.m.

There has never been a complete investigation of George Soros and his possible ties to the nazi’s in WWII.  Because Soros is a liberal he has been given a lifetime free pass without explanation for his activities during WWII.

Carola Von H.

July 27, 2012, 9:19 p.m.

Like Stefan sez ‘...that’s the whole problem with deflection. The deflector is only arguing to ridicule the “other side,”  not take a firm stand on policy.’

It’s an ideological illness afflicting the right & the left. But the rest of us suffer the consequences.

So this is the kind of person who’ll run a conservative president?  Great idea.

And the claim that people like Adelson see their payments to presidential campaigns as anything other than an investment plan, with intent to buy, is naive, deluded or a deliberate lie.

This is probably what happened in Macau:
http://www.youtube.com/watch?v=eWIgmH14_N4

BTW, Romney is a RINO free-trader and must be sent home to teach the RINO GOP a hard lesson in their globalist free-trade position. Anyone who tries to deflect from this story either can’t wipe their ass unless Limbaugh/Hannity tells them how OR they are hacks for whichever crony industry was hurt by one of ProPublica’s stories.

“naive, deluded or a deliberate lie.”
Except that the claim is the truth

In hindsight, if you could roll the clock back, there’s no doubt that it would have been better to advise the Court of that,”

I can sympathize with this remark.

Anytime I have told a blatant lie to a judge I wish I could have turned the clock back. (Either these lawyers are flatly lying on Adelson’s behalf or they are woefully incompetent.)

This is a pathetic story of Adelson’s desire to snuff both accusations that the Casino was using prostitutes (which is not against American law) and that it was corrupting a foreign official (which IS against American law).

Let’s hope the Justice Department fries his ass. BEFORE he makes a 20 megabuck contribution to the Obama campaign ...

{Stefan: Taxes: The American people don’t need raised taxes, so instead of raising rates on the wealthiest, we should look at the “45% of people that don’t pay taxes.” So is raising taxes good or bad, and for whom?}

Even the most cursory look at any description of Income Disparity in America will lead to the conclusions that it is seriously warped (for the rich and against any other class).

Here is the income percentage (of total income generated in the US) of the top 10% of American families for the past two decades:
1993   40,68%
1994   40,78
1995   42,11
1996   43,48
1997   44,64
1998   45,39
1999   46,47
2000   47,61
2001   44,82
2002   43,82
2003   44,53
2004   46,40
2005   48,33
2006   49,32
2007   49,74
2008   48,23
2009   46,50
2010   47,90
(From the “World’s Top Incomes DataBase”, T. Piketty, Paris School of Economics - just google it and do the numbers yourself)

Does anyone in their right mind actually think that our Income Distribution is fair, given that 10% of the population obtains 50% of the total? And that despite two decades in which lower incomes have stagnated, that of the super-rich have increased steadily.

And how do the rich accomplish that fact were it not for the very low tax schedules and loopholes of our Tax Code installed in the 1980s?

Our Tax Code, made grossly unfair by Reckless Ronnie Reagan’s administration, has produced the consummate greed found in the top echelons of corporations. This benighted group of “Executives” think they can manipulate national elections by employing their wealth to that end.

It is unfortunate that they can and trying evidently succeeds. The Koch Bros. financed the T-Party takeover of the HofR - when 52% of Americans stayed away from the polls to spectate as couch-potatoes in 2010.

And, of course, they proceeded to stonewall any Stimulus Spending employing a cockamamie theory that “Austerity makes businesses increase their “confidence”. And they would supposedly “invest in expanding production”. In fact, their objective was to keep unemployment high at election time to promote the election of any Republican candidate.

We, the sheeple, are fools to believe the mindless nonsense purveyed as “journalism” on the Boob-Tube.

Mike, honest question with no ulterior motive:  The incident you cite is discussed thoroughly on Soros’s Wikipedia page.  Do you really want an investigative journalist to spend time looking into a scandal that’s been documented to that degree?

I’m not asking to get under your skin.  To me, it looks like it’s over, he lost, it’s no longer news.  Kids have gotten out of college who were born since it happened and there are kids in kindergarten born since his failed appeal.

Again, I don’t like him.  I think that, without a strong human rights regime in place, his ideas on “semi”-planned economies and general globalism are a recipe for disaster (that greatly resembles the Bush era he claimed to be fighting against).  I think his desire to “change how we feel about death” is going to undermine human rights if he gets his way.  I don’t like how he’s exporting the sort of corporate activism we’re trying to stop here (and he claims to want to stop) overseas.

What I’m saying is that picking a white-collar crime committed a quarter-century ago in another country isn’t where I’d start, especially in contrast to Adelson.

Squirrel!

The reason no body “investigates Soros for ties to Nazis” is that he’s a) jewish and b) born in 1930, making him 15 years old in 1945. Admittedly, he side effects of his currency trading were to play havoc with the currencies of S.E. Asian countries. In that sense, indirectly, the poor (in general) and poor women (in specific) in Burma (e.g.) were more likely to be desperate enough to end up in prostitution.  But you could say that for anyone who does well enough to increase the disparity between rich and poor in any society.  If Adelson was darn near playing pimp, or allowing human traffickers to shop women to clients, in his casinos and bars, yeah, that’s smarmy.  If he hid material evidence, yeah, that’s illegal. Are there many other people doing illegal things in the world?  Sure.  But that’s [gasp] a different article.  Not every article will deal with every evil person, amazingly enough.

Some folks just don’t seem to be able to discern the difference between Fox and the Internet. 

What Fox does works because nobody is allowed to refute their fantasies with the truth; on the ‘net - say, here on ProPublica - absurd claims will attract that most difficult of all arguments to counter:  The facts.

I wonder why there is never anyone talking about Ann Coulter’s days in New Canaan, a place of eroded social norms, heedless experimentation with sex and drugs, and a stewpot of moral turpitude.  I understand it that during her matriculation at New Canann High there was a place called the “Fruit Lounge” which she was well acquainted with.  It was also during her sojourn in the corrupting and wanton New Canaan High that she became acquainted with the homosexual activist Warren Allen Smith and was in fact well known to be friends with many avid participants in his lectures.  Why is this being coverd up?

Perhaps because Coulter marginalized herself with her ludicrous-yet-paranoid commentary that revealed her to be a low-resolution, out-of-focus reproduction of Rush Limbaugh?

And so nobody cares?

Wynn is also a a china casino operator but he is not being investigated. I am sure that there is a good reason for giving him a free pass like that he is a a big supporter of democrats.

@dunce:  If Wynn does indeed support the Democrats, then that is de facto evidence that Wynn is smarter than Adelson in that he demonstrates that wants his businesses to keep on making money (or maybe it is because he is younger than Adelson, and so feels he has lots more time to make more money?).

The right/Republicans/people Adelson is of and supports want to concentrate all of America’s wealth into the hands of 10,000 (speaking very optimistically) or fewer people - and leave the rest of the country barely surviving…if surviving at all.

You can’t keep the 100,000 plus hotel rooms in Vegas filled if your every action and legislative effort is aimed at making most Americans poorer, which is the Republicans’ objective in a nutshell.