Macau Firm Sues Sheldon Adelson for $5 Billion
LAS VEGAS (CN) - A Macau gambling company claims in court billionaire Sheldon Adelson and Las Vegas Sands owe it at least $5 billion in profits from Macau gambling operations.
Asian American Entertainment sued Las Vegas Sands, the Venetian Casino Resort, Sheldon Adelson and two of Adelson's top officers, William Weidner and David Friedman, in Federal Court.
Asian American Entertainment is based in Macau, which, along with Hong Kong, is one of two "special administrative regions" that were surrendered to China in 1999. Macau quickly became a worldwide center of gambling.
In 2002, the Macau government awarded three gambling permits. Anticipating winning a permit, Asian American Entertainment entered into a gaming agreement with Las Vegas Sands in which the Sands would run gaming operations in exchange for minority ownership, according to the lawsuit, which was filed Wednesday.
Adelson, as chairman of Las Vegas Sands, negotiated the deal with Dr. Shi-Sheng "Marshall" Hao, chairman of Asian American Entertainment during two meetings in 2001.
"Las Vegas Sands had years of experience in the casino business as well operating resort casinos, including convention and trade show promotion, as evidenced by its Las Vegas operations," Asian American Entertainment says in the complaint. "Asian American Entertainment brought access to capital for the development of the gaming resort, non-gaming economic investment opportunities and was very experienced in the Asian business markets and Macau in particular."
Asian American Entertainment says that its own part was to provide financial backing.
"The fact that Asian American Entertainment could bring capital to the joint venture would be critical as it was very well known that during this period Las Vegas Sands was suffering from significant financial problems, facing large losses from its Las Vegas-related businesses and did not have the capital of its own or any access to capital to invest," the complaint states.
Sheldon and Hao agreed to use the Venetian name and that Las Vegas Sands would receive 2 percent of gross annual revenue and 10 percent of earnings before interest, taxes, depreciation and amortization, according to the complaint. Las Vegas Sands subsidiary Venetian Venture Development was to run the gaming operations, but Las Vegas Sands officials terminated the joint venture in February 2002.
Despite being a finalist for one of three gaming licenses, Asian American Entertainment lost to a joint venture between Las Vegas Sands and Galaxy, an early applicant for a gaming license that initially had been excluded from consideration. Galaxy entered into a secret joint venture with Las Vegas Sands and resubmitted an application that eventually won a gaming license along with Wynn Resorts and Sociedade de Jorgos de Macau, according to the complaint.
Asian American Entertainment claims that it owns 72.5 percent and Las Vegas Sands 21.5 percent of the Sands' operations in Macau, and that Adelson and Las Vegas Sands owe billions of dollars for its share of profits in the gaming enterprise.
It also claims that Las Vegas Sands officials likely shared confidential business plans with Galaxy, whose revised winning plan included $1.1 billion to develop the gaming resort that was a key element of the plaintiff's own business plan.
Asian American Entertainment seeks $5 billion in damages for misappropriation of trade secrets, conversion and breach of confidence.
It also seeks declaratory judgment that it owns 72.5 percent of the Las Vegas Sands' Macau operations, and co-ownership of the Venetian copyright.
It is represented by Brian T. Dunn with the Cochran Law Firm of Los Angeles.