Judge: Fired exec’s lawsuit against Las Vegas Sands can move forward

By Steve Green

Published Tuesday, March 15, 2011 | 12:46 p.m.

Updated Tuesday, March 15, 2011 | 4:43 p.m.

An attorney for Las Vegas Sands Corp. subsidiary Sands China Ltd. didn't convince a state judge Tuesday to dismiss a lawsuit filed against the company by Sands' fired Macau CEO Steven Jacobs -- but she may have scored some public relations points against Jacobs.

Jacobs, who was fired in July as CEO of Sands' big gaming operations in China at Sands China Ltd., fired back with a lawsuit in October claiming Sands Chairman and CEO Sheldon Adelson had ordered him to commit illegal acts and that Sands had failed to pay him promised stock options by wrongly asserting he was fired for cause.

After Sands filed court papers saying Jacobs was fired for working on unauthorized deals and violations of company policy, Jacobs' attorneys introduced into the court record information about how Sands China transfers "substantial sums of money" to Nevada.

The transfers are in behalf of Sands' customers for their use in Nevada, Jacobs' filing said. This is accomplished by courier or by an "Affiliate Transfer Advice" in which funds are transferred electronically to Las Vegas Sands or its affiliates in Las Vegas, Jacobs' filing said.

The money -- potentially amounting to $68 million over a three-year period -- may be used for purposes including cash advances for customers to spend when they arrive in Nevada or to re-pay past debts incurred at Las Vegas Sands' Las Vegas properties, Jacobs' filing said.

Sands says Jacobs' lawsuit is responsible for Securities and Exchange Commission and Justice Department investigations of its compliance with the anti-bribery Foreign Corrupt Practices Act.

And the talk about Sands using a "courier" to bring customers' money into the United States fueled media speculation about potential money-laundering violations -- speculation addressed head-on Tuesday in court by Sands China attorney Patricia Glaser.

"This man lied to the court and said money was couriered," Glaser said, pointing at Jacobs.

She said funds transferred electronically between the company's casinos for the benefit of customers is regularly reported to authorities as required.

"This is a good, honorable business practice," Glaser said.

After the hearing in which Jacobs' lawsuit survived for further litigation, Jacobs' attorney, Donald Campbell, said he understood Sands had filed a criminal complaint against Jacobs in Macau and he characterized it as a defamation complaint.

"It didn't come as a shock. It seems punitive," said Campbell, who likened it to a defamation complaint Sands filed several years ago against the Las Vegas Sun and to a libel complaint that Adelson had filed against a Las Vegas Review-Journal columnist Campbell said he couldn't comment further on the criminal complaint.

Glaser, in seeking dismissal of the suit against Sands China, argued the Las Vegas court isn't the appropriate place to resolve the dispute since Sands China doesn't do business in Nevada and its stock options at issue in the lawsuit are subject to the rules of the Hong Kong Stock Exchange .

"If Mr. Jacobs has a beef with Sands China, it belongs in Hong Kong or Macau," she said.

J. Stephen Peek, attorney for Las Vegas Sands, focused his argument for dismissal of the case on the fact that Jacobs had not sued Sands' subsidiary Venetian Macau Ltd., which Peek said was Jacobs' employer.

Since it's not a party to the suit, Venetian Macau can't defend its firing of Jacobs, Peek said.

But Campbell noted Jacobs reported to Adelson and Sands President and Chief Operating Officer Michael Leven in Las Vegas and that Las Vegas Sands, in its SEC filings, had listed Jacobs as an executive officer.

He pointed out extensive contacts between Sands China and its parent, Las Vegas Sands, including shared services and the money-transfer system he said handled $68 million over a three-year period.

Jacobs even brought a recent W-2 tax statement from Las Vegas Sands to court listing him as a Sands' employee, Campbell said.

Clark County District Court Judge Elizabeth Gonzales in the end refused to dismiss the suit, offering little comment on the dispute but noting she has jurisdiction based on the contacts between the parties in Nevada where Sands is based.

Last week, Gonzalez rejected an objection by Glaser and Peek to a request by PBS' "Frontline" that it be allowed to record, broadcast or take photos during Tuesday's hearing, and a few photo and video journalists filmed and took pictures during the hearing.

The Sands attorneys said in their objection that Jacobs and his attorneys have immunity from defamation claims over statements they may make in court even if they are "false and inflammatory allegations."

"Plaintiff's strategy appears to be to make incendiary allegations, for an in terrorem (threatening) effect, in an effort to exert undue pressure to resolve this case," their filing said. "Defendants have already suffered damages as a result of the negative press based solely on plaintiff's allegations in the complaint and oppositions."

But Gonzalez signed an order finding camera access "would not distract participants, impair the dignity of the court or otherwise materially interfere with the achievement of a fair trial or hearing."

Jacobs in his lawsuit accuses Las Vegas Sands and Sands China of breach of contract for failure to pay him stock options after he was fired; and accuses Las Vegas Sands of breach of the implied covenant of good faith and fair dealing for the alleged "improper and illegal demands" made by Adelson, Adelson's "continual undermining of Jacobs' authority" and "the wrongful characterization of Jacobs' termination as being for `cause."'

Las Vegas Sands is also accused of tortious discharge in violation of public policy for allegedly firing Jacobs because he objected to and refused to participate in illegal conduct requested by Adelson and tried to perform as required by law and favored by public policy.

After Tuesday's hearing, Peek said he was disappointed in the ruling and he and Glaser said they would consider whether to appeal.