Bloomberg News

Las Vegas Sands Sanctioned for Not Disclosing Evidence

September 15, 2012

Las Vegas Sands Macao

The sign for the Sands Macao hotel and casino is displayed behind Fisherman's Wharf in Macau, China. Photographer: Daniel J. Groshong/Bloomberg

Las Vegas Sands Corp. was sanctioned by a Nevada judge who said the company and its Sands China Ltd. (1928) unit intentionally deceived her by not disclosing evidence sought by the former head of its China operations in a lawsuit over his firing.

Clark County District Judge Elizabeth Gonzalez in Las Vegas said in a ruling yesterday that Las Vegas Sands and Sands China were precluded from raising Macau’s personal data privacy law as an objection to disclosing evidence that may bear on whether the Nevada court has jurisdiction over Sands China.

The judge also ordered the companies to pay $25,000 to the Legal Aid Center of Southern Nevada and to pay the attorneys’ fees of Steven Jacobs, the ex-chief executive officer of Sands China, related to those portions of hearings over the past year that were devoted to discussions of the Macau privacy law.

“The repeated nature of defendants and defendants’ agents conduct in making inaccurate representations over a several month period is further evidence of the intention to deceive the court,” Gonzalez said.

The judge ordered a sanctions hearing after Sands’ lawyers disclosed to Jacobs in June that his e-mails and other computer files had been in Las Vegas for more than a year while the lawyers argued to the court that the Macau law prevented them from bringing data to the U.S. from Macau and that all data had to be reviewed first by Sands China lawyers in Macau.

‘Illegal Demands’

Jacobs sued in 2010 after he was fired, alleging he was dismissed because he wouldn’t give in to “illegal demands” from Sheldon Adelson, the chairman and majority-owner of Las Vegas Sands. Jacobs said Adelson directed him to secretly investigate Macau government officials and use “improper leverage” against them.

Following Jacobs’s allegations, the U.S. Justice Department and Securities and Exchange Commission opened investigations into whether Adelson’s company violated the Foreign Corrupt Practices Act. That law prohibits companies with U.S. operations and their intermediaries from making improper payments to foreign officials to win or retain business.

Las Vegas Sands has denied Jacobs’s allegations and has said it is cooperating with the investigations. Lawyers for the casino company have said in court filings that Jacobs was dismissed for working on unauthorized deals and violating company policy.

Jacobs’s lawsuit was put on hold last year by the Nevada Supreme Court while Gonzalez resolves whether claims against Sands China belong in the state’s courts. Sands China, a majority-owned unit of Las Vegas Sands that is incorporated in the Cayman Islands, has said in court filings that it doesn’t do business in Nevada.

Las Vegas

During a three-day hearing in Las Vegas ending Sept. 12, Las Vegas Sands’ lawyers testified that they shipped Jacobs’s e- mails and a copy of his hard drive to the U.S. in 2010 to preserve evidence. The lawyers argued that they had disclosed to Jacobs and the judge that there was evidence from Macau in the U.S.

The Las Vegas Sands lawyers also admitted during the hearing that they reviewed Jacobs’s e-mails.

Last year Sands China said that evidence that Jacobs requested to determine whether the Nevada court had jurisdiction over the Chinese unit couldn’t be brought out of Macau and that all evidence from Macau had to be reviewed in the Chinese territory by Sands China lawyers and cleared with the local government.

Ron Reese, a spokesman for Las Vegas Sands, said in an e- mail that the company was reviewing the ruling and had no immediate comment.

The case is Jacobs v. Las Vegas Sands, 10-A-627691, Clark County, Nevada, District Court (Las Vegas).

-- Editors: Peter Blumberg, Glenn Holdcraft

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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