Japanese Gaming Mogul Kazuo Okada Arrested in Hong Kong on Fraud Charges
Posted on: August 6, 2018, 06:17h.
Last updated on: August 6, 2018, 06:58h.
Kazuo Okada — one of the original co-founders of Wynn Resorts — has been arrested in Hong Kong on “corruption-related offenses,” according to a filing to the Hong Kong Stock Exchange on Monday by Universal Entertainment.
The Japanese slot machine and pachinko billionaire was released on bail after being detained by the Independent Commission Against Corruption, according to the filing.
The 74-year-old Okada was chairman of Universal, a business he founded almost 50 years ago, until he was ousted from the board in June 2017 and accused of misappropriating $20 million of company funds.
Fraud and Intimidation
A subsequent third-party investigation commissioned by Universal alleged Okada carried out a series of fraudulent acts “for his own personal benefit.” These included allegedly siphoning some $17 million into a subsidiary to buy high-ticket fine art pieces.
The investigation also claimed Okada had “violently intimidated and threatened” Universal executive Yoshinao Negishi, who is accused of abetting the alleged fraud.
Okada claims the funds in question were legal director’s loans, which he says he invested legitimately into Okada Manila’s VIP junket operations. He says he is the victim of a boardroom conspiracy orchestrated by Universal executives and certain members of his family.
In May, Universal filed criminal complaints against its founder.
Okada is among the richest men in Japan, but it’s been a turbulent six years for the “Pachinko King.” In 2002, he formed Wynn Resorts with Steve and Elaine Wynn, becoming its largest shareholder in 2010 when the Wynns split their shares as part of a divorce settlement.
High Stakes Wynn Spat
But in 2012, he was ousted from the board and forced to redeem his 20 percent stake at a 30 percent discount from its market value, after the company accused him of corruption. Wynn Resorts claimed Okada had bribed gaming officials in the Philippines to gain approval for the project that became Okada Manila, which Wynn Resorts was not involved in.
Okada denied the allegations, claiming Wynn had become threatened by his power within the company.
Wynn sued Okada and Universal Entertainment for breach of fiduciary duties and endangering Wynn Resorts’ licensing, while Okada and Universal countersued in a bid to regain the shares. In March of this year, Wynn Resorts settled with Universal for $2.6 billion.
This allowed Steve Wynn to sell his equity in Wynn Resorts, which had been tied up by the ongoing litigation. Facing numerous allegations of sexual misconduct, it was now Wynn who was endangering the company’s licensing, and he needed to divest himself of ownership.
The settlement laid to rest a bitter battle between the two former friends — once among the most powerful men in the gaming industry — but both now disgraced and rejected by their own gambling empires.