Legal battle heats up between Las Vegas Sands, fired Macau executive

By Steve Green

Friday, Feb. 11, 2011 | 12:54 p.m.

Sensitive internal e-mails.

Allegations that secret company information was stolen.

Suggestions Nevada gaming regulators should be interested in allegations of wrongdoing against a Nevada gaming licensee in China.

These are the latest pieces of information to surface in the lawsuit between Las Vegas Sands Corp. and its fired CEO in Macau, Steve Jacobs.

Jacobs, who was fired for cause in July as CEO of Sands China Ltd., retaliated with a lawsuit against Las Vegas Sands in Clark County District Court in Las Vegas charging he was terminated over disputes with Las Vegas Sands Chairman and CEO Sheldon Adelson -- including Jacobs' resistance to Adelson's alleged demands that he engage in illegal activity.

Sands fired back in December, saying Jacobs was let go for working on unauthorized deals and multiple violations of company policy. Sands, in its response, asked that the lawsuit be dismissed because it maintains any disputes between it and Jacobs must be resolved in the courts of Macau.

Attorneys for Jacobs responded this week, saying Nevada is the appropriate forum for resolution of the dispute since Sands China is controlled by Adelson from his offices at the Venetian resort on the Las Vegas Strip.

To back that up, Jacobs' attorneys filed scores of documents showing Sands China conducts substantial business out of Las Vegas.

One e-mail, for instance, shows Sands President Michael Leven advising Jacobs that in order to get Adelson to sign off on a deal with Caesars Entertainment Corp. of Las Vegas that would involve Caesars expanding its presence in Macau, Adelson would need to think the idea came from him, Adelson, at the suggestion of Caesars CEO Gary Loveman.

In this May 11, 2010, e-mail, "sga" means Sheldon Gary Adelson. "genii" apparently means geniuses.

"If you want to get it, let Gary Loveman to suggest it in (a) one-on-one mtg (meeting) with sga. ... That's how billionaires think, we are just executors. They are strategic genii in their own minds," Leven wrote to Jacobs.

In an August 2009 e-mail to Leven, Jacobs disparages a longtime Sands executive in Asia, Stephen Weaver, who apparently was involved in the initial public offering of Sands China stock.

"Notwithstanding Sheldon's recent positive experiences with Weaver, as you (and most of Macau) are aware, Stephen is no fan of Sheldon's. More importantly, he simply is not up to the task. He can get you to the IPO, but near-term, he will fail," Jacobs wrote.

In a court declaration backing up his assertion that the lawsuit should proceed in the Nevada state court, Jacobs pointed out extensive ties between Las Vegas Sands and its Sands China unit.

"Notwithstanding that I was ostensibly the head of Las Vegas Sands Corp.'s Macau operations, both Leven and Adelson, in particular, exercised a high degree of control over me and my employment," Jacobs wrote in the declaration. "The control ranged from the mundane such as selecting disposable hand towel holders for the men's bathroom to items of significance.

"For example, when I wanted to pursue a possible partnership with Caesars Palace for a project in Macau, a project Leven and I had discussed in some detail, Leven told me there would be 'no chance' I could get it done unless the idea was made to appear to have originated with Adelson," Jacobs wrote.

His court filing also included documentation that:

-- Sands China has held board meetings in Las Vegas

-- Sands China and Las Vegas Sands share private jets, have arrangements for sharing trademarks and agreements for Sands China to use Las Vegas Sands' international marketing services

-- Sands China has an arrangement with Bally Technologies Inc. of Las Vegas to provide a slot machine management system

-- Jacobs regularly traveled to Las Vegas to conduct Sands China business including meeting with executives at Caesars and Bally

-- Sands China transfers "substantial sums of money" to Nevada on behalf of its customers for their use in Nevada. 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.

Attorneys for Jacobs -- Donald Campbell and J. Colby Williams of the Las Vegas law firm Campbell & Williams --- also argued Sands China's "gaming operations must be compliant with Nevada's gaming laws."

"Nevada unquestionably has an interest in the conduct of its gaming licensees, of which Las Vegas Sands is one. Equally undeniable is the fact that this state's interests -- including its gaming laws -- extend to a Nevada licensee's foreign gaming operations," Jacobs' filing said. "Jacobs has raised serious questions regarding the conduct of Las Vegas Sands, Sands China and certain of their senior management. Clearly, Nevada has a significant interest in the adjudication of this dispute."

Included in the latest lawsuit exhibits are letters from the Los Angeles office of the law firm Glaser, Weil, Fink, Jacobs, Howard & Shapiro LLP, representing Sands China, to Jacobs' attorneys accusing Jacobs of stealing three reports Jacobs had received while working at Sands China from a company called International Risk Ltd.

Attorney Patricia Glaser said in one of her letters these reports concerned investigations "regarding certain Macau government officials" and background investigations of individuals identified as Cheung Chi Tai and Heung Wah Keong.

The Cheung Chi Tai referenced in the letter likely is an organized crime figure and junket operator identified last year as being involved in a plot to injure a Sands Macau dealer suspected of helping a gambler cheat a VIP room at the casino linked to triads. It wasn't immediately clear how Heung Wah Keong is associated with Sands China.

Attorneys for Jacobs responded: "It has been our experience that wrongfully terminated corporate executives are often -- and properly -- in possession of a multitude of documents received during the ordinary course of their employment. Contrary to the allegations contained in your letter, this does not mean the documents were `stolen."'

Glaser demanded that the watermarked reports and any copies immediately be returned or any copies be destroyed. Records show Jacobs and his attorneys returned what reports they could find -- but retained copies that may come in handy for them as the litigation proceeds.

Records show Las Vegas Sands has not yet responded to these latest court filings.