United States District Court, D. Massachusetts
MEMORANDUM AND ORDER
PATTI B. SARIS CHIEF UNITED STATES DISTRICT JUDGE
lawsuit arises from the quest for a gaming license in the
Greater Boston area. Plaintiff Sterling Suffolk Racecourse,
LLC (“SSR”) alleges that the Defendants corrupted
the Massachusetts Gaming Commission's (“MGC”)
application process for the Region A, Category 1, License
(the “License”) conducted in 2013 and 2014 in
order to secure the only available license for Defendant Wynn
MA, LLC (“Wynn MA”). SSR would have been the
landlord of the other applicant for the License, Mohegan Sun
Massachusetts (“MSM”), and it claims that
Defendants' conduct denied MSM the License as well as the
resulting profits from operating the only casino in the
greater Boston area, some of which would have been owed to
SSR. SSR's Amended Complaint asserts claims for
substantive violations of and conspiracy to violate the
Racketeer Influenced Corrupt Organization Act
(“RICO”), violations of Massachusetts Chapter
93A, and tortious interference with contract and business
have moved to dismiss the Amended Complaint for failure to
state a claim under Federal Rule of Civil Procedure 12(b)(6)
on multiple grounds. Three of the Defendants -- Wynn Resorts,
Ltd., Wynn MA, and Michael Maddox -- also have moved to
dismiss the state law claims as impermissible under
Massachusetts' anti-SLAPP statute because they arise out
of protected petitioning activity.
hearing, and review of the extensive briefing, the Court
ALLOWS the Defendants' motions to
dismiss for failure to state a claim (Dkt. Nos. 72, 75, 77,
79, 83). The Court concludes that the viable alleged
predicate acts of racketeering activity arising from the
alleged “corruption” of the license application
process do not constitute a pattern sufficient to support a
RICO claim because the alleged scheme has neither open-ended
nor closed continuity. The Court dismisses SSR's federal
RICO claims with prejudice but dismisses the state law claims
without prejudice to being re-filed in state court. The Court
also DENIES AS MOOT the Wynn entities and
Maddox's motion to dismiss pursuant to the anti-SLAPP
statute (Dkt. No. 80).
otherwise noted, the following factual background comes from
the Amended Complaint and must be taken as true at this
stage. See Foley v. Wells Fargo Bank, N.A., 772 F.3d
63, 71 (1st Cir. 2014).
a Massachusetts limited liability company which owned the
Suffolk Downs Racecourse located in Revere and East Boston
until May 2017. SSR contracted with MSM to lease the Suffolk
Downs Racecourse to MSM for a percentage of its annual casino
revenues, subject to a $35 million minimum annual payment.
Resorts is a Nevada corporation with its principal place of
business in Las Vegas, Nevada. Wynn Resorts operates casinos
in Nevada, Macau, and, as of recently, Massachusetts. Wynn MA
is a Massachusetts limited liability company with its
principal place of business also in Las Vegas, Nevada. Wynn
MA is a wholly owned subsidiary of Wynn Resorts, which was
formed for the purpose of applying for a Massachusetts
Category 1 gaming license.
Wynn was the CEO of Wynn Resorts until his resignation in
February 2018. Steve Wynn also served as the CEO of Wynn
Resorts' majority-owned subsidiary Wynn Macau, Ltd. from
September 2009 to February 2018.
Sinatra was the General Counsel and an Executive Vice
President of Wynn Resorts and a director of Wynn Macau,
Limited until July 2018. After Steve Wynn, Sinatra was
functionally the senior most member of Wynn Resorts'
has been the President and Chief Financial Officer of Wynn
Resorts since 2013, and he has been the Chairman of Wynn
Resorts since Steve Wynn's resignation in February 2018.
Maddox also served as the President and Treasurer of Wynn MA
at all relevant times. Since March 2003, Maddox has held
various positions at Wynn Resorts' Macau-related
Everett Realty, LLC (“FBT”) is a Massachusetts
limited liability company with its principal place of
business in Cambridge, Massachusetts. Although the ownership
of FBT has changed over time, originally Paul Lohnes owned a
50% interest, Gary DeCicco owned a 19.5% interest, Anthony
Gattineri owned a 15% interest, Charles Lightbody owned a
12.5% interest, and Dustin DeNunzio owned a 3% interest. In
2009, FBT acquired a parcel of land in Everett, Massachusetts
(the “Everett Site”). Then, in November 2014, FBT
sold the Everett Site to the Wynn entities for $35 million.
Wynn Resorts opened the “Encore Boston Harbor”
casino at the Everett Site in June 2019.
filed an Initial Complaint on September 7, 2018. Defendants
subsequently moved to dismiss the Initial Complaint. Instead
of responding to Defendants' motions to dismiss directly,
SSR then filed an Amended Complaint on February 15, 2019.
Defendants renewed their motions to dismiss the Amended
Complaint on March 8, 2019. SSR then opposed Defendants'
motions. The Court held a hearing on the pending motions to
dismiss on May 6, 2019.
Amended Complaint alleges the following facts, many of which
The Application Process
2011, Massachusetts passed the Massachusetts Gaming Act,
which established a process for the development of three
destination resort casinos in Massachusetts, one in each of
three geographic regions. Region A covered the greater Boston
area, including Suffolk, Middlesex, Essex, Norfolk, and
Worcester Counties. In order to operate a casino, a
prospective operator was required to apply to the newly
formed Massachusetts Gaming Commission (“MGC”)
for a “Category 1 License.”
License application process was broken into two phases. In
Phase I, the MGC's Investigations and Enforcement Bureau
(the “IEB”) investigated the applicants'
suitability in matters related to finance and integrity. The
applicants, anyone with a financial interest in the
applicants' business, close associates of the applicants,
and all persons owning 5% or more of common stock of any
applicant were subject to the suitability investigation. Once
the IEB and MGC determined that an applicant was a suitable
candidate for the License, the applicant would move on to
Phase II of the application process. In Phase II, the
applicants submitted to the MGC a site-specific proposal
addressing issues related to finances, economic development,
building and site design, and mitigation for the proposed
casino project. The MGC considered these materials, sought
additional information from the applicants as necessary, and,
ultimately, held a vote to award the License to the applicant
with the best proposal.
2009, FBT purchased the Everett Site. Of FBT's five
original equity owners, two of those owners had criminal
histories. Lightbody was convicted of grand larceny and
identity theft in 2007. Over the years, he separately has
been charged with ten assaults, three counts of illegal
weapons possession, and two counts of witness intimidation.
Lightbody also is known to be associated with the mafia.
Meanwhile, DeCicco was convicted of multiple counts of mail
fraud related to insurance claims he filed in connection with
suspicious fires on his personal property.
has close ties to the Mayor of Everett, Carlo DeMaria. In the
fall of 2009, at the suggestion of Mayor DeMaria, the owners
of FBT gave a 3% non-equity interest in the company to Jamie
Russo. Russo was an “affiliate” of Lightbody and
a consultant for Mayor DeMaria. Dkt. No. 71 ¶ 59. The
purpose of giving Russo an interest in FBT was to pass on to
Mayor DeMaria some of the proceeds from any future sale of
the Everett Site. Russo also had a criminal history. In 1992,
Russo pleaded guilty to a charge of fourth-degree larceny --
a misdemeanor -- after being caught using forged and stolen
credit card numbers at a casino in Connecticut.
Resorts was interested in obtaining a Massachusetts gaming
license from at least 2012. Originally, Wynn Resorts
partnered with Robert Kraft, the principal owner of the New
England Patriots, to seek a license for a casino in
Foxborough, Massachusetts. This partnership fell apart in May
2012 when it became clear that the Town of Foxborough would
not approve the prospective casino project.
summer or fall 2012, Wynn Resorts began to explore a
partnership with FBT. Representatives for Wynn Resorts and
FBT met at the Everett Site for the first time in November
2012. At that meeting, FBT owner DeNunzio informed Sinatra
and Maddox that “an individual with a checkered
past” was then an owner of FBT but that he was taking
steps to give up his interest. Id. ¶ 81. Later
that same month, Wynn Resorts agreed to pay $100, 000 per
month for an option to purchase the Everett Site for $75
million if and when Wynn MA received the License. During the
legal due diligence process conducted in December 2012, Mayor
DeMaria informed a lawyer/lobbyist for Wynn Resorts that
Lightbody had a criminal history. FBT's lawyers
separately told Wynn Resorts' lawyers that at least one
FBT owner had a criminal history. And, on December 14, 2012,
the Boston Business Journal reported that DeCicco was a
convicted felon and that he appeared on FBT corporate
paperwork that had been publicly filed earlier in 2012. Wynn
Resorts took no further steps at this point to investigate
the ownership history of the Everett Site after DeCicco's
criminal record was publicized.
about December 19, 2012, Wynn Resorts and FBT formalized
their option agreement in writing (the “Option
Agreement”). In addition to setting the purchase price
for the Everett Site, the Option Agreement provided that FBT
would collaborate with Wynn Resorts and Wynn MA in the
development of the property, including with respect to
obtaining subdivision approvals, permits, and a permanent
road easement and performing environmental remediation. The
Option Agreement also contained the representation that
“[t]o the best of [FBT's] knowledge, neither [FBT]
nor any Person associated with [FBT] has ever engaged in any
conduct or practices which any of the foregoing Persons
should reasonably believe would cause such Person to
be” deemed unsuitable by the MGC. Id. ¶
90. Defendants knew that this representation was false due to
FBT's association with Lightbody, DeCicco, and, possibly,
Russo. Around the same time, Defendants reached “a
mutual understanding” that FBT would create whatever
false and backdated paperwork might be necessary for purposes
of Wynn MA's License application. Id. ¶ 88.
Maddox and Sinatra consulted directly with Steve Wynn before
making this deal with FBT.
January 2013, DeNunzio created a backdated 2012 operating
agreement for FBT (the “Backdated Operating
Agreement”) which falsely indicated that DeCicco did
not have an ownership interest in FBT as of January 2012. The
Backdated Operating Agreement claimed that DeCicco had
transferred his interest to Gattineri. However, prior to the
creation of the Backdated Operating Agreement, DeCicco
already had executed a Memorandum of Transfer dated
“April 2012, ” in which he transferred the
entirety of his interests to Lightbody. Id. ¶
92. On January 17, 2013, DeNunzio emailed Sinatra purporting
to confirm that the only equity holders of FBT were himself,
Lohnes, and Gattineri. Eleven days later, on January 28,
2013, DeNunzio arranged for Gattineri and Lightbody to
execute a Memorandum of Transfer, backdated to December 14,
2012, memorializing Lightbody's transfer of his interest
in FBT to Gattineri for a $1.7 million promissory note.
Wynn MA's License Application
about January 15, 2013, Wynn MA submitted its initial
suitability application materials for the License to the MGC.
Maddox, Sinatra, and Steve Wynn were each involved in
preparing, submitting, and/or directing the preparation and
submission of the application materials.
after Wynn MA submitted its application materials to the MGC,
the IEB began investigating the Everett Site's ownership
as part of assessing the suitability of Wynn MA. In the
course of that investigation, the MGC was tipped off by the
FBI that wiretaps in an unrelated case suggested that
Lightbody maintained a concealed ownership interest in FBT.
When FBT learned in July 2013 that the IEB was investigating
Lightbody's ownership interest in FBT, DeNunzio created a
new backdated Memorandum of Transfer showing that Lightbody
had transferred his interest in FBT to Gattineri as of August
15, 2012, four months before Defendants entered into the
Option Agreement. Pursuant to their “mutual
understanding, ” however, Sinatra and the other Wynn
Defendants knew that these documents had been falsified for
the purposes of Wynn MA's License application.
2013, Sinatra and Maddox also sat for under oath interviews
with the IEB. In those interviews, both Sinatra and Maddox
claimed to have never heard of Lightbody. They also claimed
to be unaware of any owners of FBT other than Lohnes,
DeNunzio, and Gattineri. Maddox testified that it was
“Not my job” to know whether a person with a
criminal background was involved in the deal with FBT.
Id. ¶ 100. Later, in his September 9, 2013
interview with IEB, Steve Wynn claimed that both Maddox and
he had “zero” knowledge of the fact that certain
members of the FBT ownership group had criminal backgrounds.
Id. Sinatra also testified that she had
“zero” knowledge of that fact. Id.
During the same interview, Steve Wynn stated, “Criminal
activity is criminal activity . . . . And there's no
place for it in a relationship with us. And if we're
sloppy and we allow people who are engaged in criminal
activity to do business with us, we should be criticized for
it and held responsible.” Id.
Wynn Defendants maintained a relationship with Lightbody
throughout 2012, 2013, and even into 2014. In the spring of
2013, the Wynn Defendants were attempting to purchase a small
piece of property adjacent to the Everett Site. The owner of
the property was reluctant to sell and told Maddox that he
would only deal with Lightbody. Maddox requested that
DeNunzio help, and DeNunzio in turn reached out to Lightbody.
Maddox then met with Lightbody at least twice in the spring
of 2013, and DeNunzio and Lightbody eventually convinced the
owner in June 2013 to agree to an option on a long-term lease
of the property to an affiliate of Wynn Resorts. Also, in
June 2013, Lightbody worked with Wynn employees to generate
public support in Everett for Wynn MA's casino proposal.
Maddox and Sinatra had primary responsibility within the Wynn
organization for overseeing the Everett referendum process
and knew of Lightbody's involvement. On June 22, 2013,
Everett voters approved Wynn MA's public proposal. And,
throughout 2013 and 2014, Lightbody campaigned against the
MSM casino project, spending thousands of dollars of his own
money on signs and advertising supporting the anti-SSR side
of the public referendum in Revere and donating to the
“No Eastie Casino” campaign that sought to block
the MSM casino project. Id. ¶ 101. Lightbody
was even arrested in October 2013 for physically assaulting a
participant at a pro-MSM rally in Revere.
November 21, 2013, the Boston Globe published a story
revealing Lightbody's concealed interest in the Everett
Site. On the same day, Defendants announced that they had
negotiated an amendment to the Option Agreement that reduced
the exercise price from $75 million to $35 million to
eliminate the so-called “casino premium.”
Id. ¶ 112. However, the Option Agreement
shifted other financial obligations from FBT to Wynn MA and
Wynn Resorts, which offset the reduction in exercise price.
MGC Suitability Hearings
December 13, 2013, the MGC held a hearing to address concerns
about the ownership of FBT. At the hearing, Sinatra testified
that she had been “shocked” and
“surprised” when she learned in the summer of
2013 that FBT's ownership included convicted criminals
and she complained that “it's awfully hard if
people are running around and not telling you the
truth.” Id. ¶ 111. The Wynn Defendants
claimed that they had acted in good faith and had not learned
of the criminal element in FBT's ownership until after
they entered into the Option Agreement. To cure the problem,
Defendants renegotiated the Option Agreement ...