Published Wednesday, Jan. 28, 2009 | 2:10 a.m.
Updated Wednesday, Jan. 28, 2009 | 9:29 a.m.
Beyond the Sun
Veteran securities fraud attorney Marc Henzel has filed a lawsuit against Sheldon Adelson and the other Las Vegas Sands Corp. directors, alleging they failed to properly oversee the casino-resort giant and are responsible for a huge decline in the value of its stock.
Henzel, who is based in Pennsylvania, teamed with Las Vegas attorneys G. Mark Albright and Martin Muckleroy to file the suit Jan. 16 in Clark County District Court on behalf of shareholder Caleb Hartmann against the board of directors: Adelson (chairman of the board and chief executive), Irwin Chafetz, Charles Forman, George Koo, Michael Leven, James Purcell, Irwin Siegel and William Weidner.
This is a "derivative" lawsuit in which the attorneys are seeking approval to have Hartmann sue on behalf of Las Vegas Sands Corp. against its own directors.
A spokesman for Las Vegas Sands said the company would have no comment on the lawsuit.
But in a Jan. 16 response to a similar lawsuit filed in November by Albright, Muckleroy and several New York law firms, attorneys for Las Vegas Sands and the directors denied the allegations.
That response, filed by Las Vegas attorneys Steve Morris and Akke Levin and a Chicago law firm, said the plaintiffs' November lawsuit was improper because the plaintiffs had failed to first make a proper demand of the board of directors before suing.
The response also said: "Plaintiffs' complaint contains no particularized allegation of any 'intentional misconduct, fraud or a knowing violation of the law.'"
"Indeed, plaintiffs themselves repeatedly allege how the board responded to the unprecedented crisis in the financial markets and the gaming industry during 2008 by cutting short-term expenses and arranging for debt financing and equity infusions and taking action to enhance Las Vegas Sands' corporate governance policies,'' the response said.
The response also pointed that Las Vegas Sands was not alone in experiencing problems in 2008.
"This opportunistic lawsuit comes in the midst of a global recession that has deprived businesses worldwide of patrons and access to funds for operations and expansion,'' the response said.
Citing news reports and Las Vegas Sands regulatory filings since November, the suit recites several issues at Las Vegas Sands that caused its stock to fall from more than $125 per share in November 2007 to less than $7 per share in November 2008. The stock closed Tuesday at $5.66, well off its 52-week high of $95.26.
"Plaintiff, derivatively on behalf of Las Vegas Sands, therefore brings this action seeking redress for the damages sustained, and to be sustained by Las Vegas Sands, against director defendants, for unlawful actions and/or inactions that violated state law, including breaches of fiduciary duties, abuse of control, gross mismanagement and waste of corporate assets," the suit says. "This action is brought to recover for the company its potential losses from its exposure to and grossly imprudent risk-taking in spreading the company too thin with numerous and simultaneous casino construction projects in Macau, Singapore, Pennsylvania and Las Vegas, an exposure to which director defendants (in particular, director defendant Adelson) improvidently subjected the company."
The suit claims the defendants failed to prevent a cash crunch, resulting in the need to suspend unfinished construction projects.
The directors are accused of failing to "sufficiently control a company so clearly dominated by its majority shareholder, director defendant Adelson" and their actions have "called into question the financial solvency of a once successful and sound company, and massively diluted the value of Las Vegas Sands shares for its current shareholders by having to raise significant amounts of new capital."
The suit says Adelson’s ownership of more than 50 percent of the company’s common stock and his ability to elect the entire board makes Las Vegas Sands a "controlled company" and that his "longstanding personal and professional entanglements and relationships with other board members, including Messrs. Chafetz and Forman ... have prevented them from acting independently to fulfill the fiduciary duties owed to Las Vegas Sands and its shareholders."
The suit seeks an order requiring the defendants to pay unspecified monetary damages to the plaintiff, on behalf of Las Vegas Sands, to cover damages sustained by Las Vegas Sands because of the directors’ alleged "breaches of fiduciary duties, abuse of control, gross mismanagement and waste of corporate assets." The suit also seeks to have each director reimburse Las Vegas Sands for all profits, benefits and other compensation paid to them.
Henzel’s Web site lists dozens of securities fraud cases his firm has been involved with and names Las Vegas Sands as a company "under review." Concerning Las Vegas Sands, it says: "If you are a current shareholder and would like to discuss your options of exercising your rights as a
shareholder, please contact us. Please submit ... information so we can determine if you qualify for the suit. If you don’t know all the specific details, partial information is also acceptable."
Based in Las Vegas, Las Vegas Sands owns the Venetian and the Palazzo resorts on the Las Vegas Strip along with the adjacent Sands Expo and Convention Center on Sands Avenue. In China, it owns the Sands Macao and the Venetian Macao in Macau and is developing the Cotai Strip of resort casino properties in Macau.
Its other projects are in Singapore and Pennsylvania.