LAS VEGAS (CN) – Top executives at MGM Mirage lied about the resort’s finances in the past two years and dumped $91 million in stock in sales that were “unusual and suspicious in timing and amount,” a class action claims in Clark County Court.
Robert Lowinger sued on behalf of purchasers of MGM stock between Aug. 2, 2007 and March 5, 2009. Named as defendants are former Chairman and CEO Terrence Lanni, current Chairman and CEO James Murren, Senior Vice President Daniel D’Arrigo, and former CEO of Mirage Resorts Robert Baldwin.
Lowinger says the men made “false and misleading” statements about the company’s success and about CityCenter, the $8.8 billion mega-complex the company developing on the Las Vegas Strip with Dubai World, whose investment saved the nation’s most expensive private commercial development from bankruptcy.
A Mirage-issued news release falsely touted “record” financial results for its second fiscal quarter of 2007, according to the complaint. At a subsequent news conference, Lanni predicted that 2007 would be “at least as good as 2006,” and said construction of the CityCenter project was “progressing nicely.”
All lies, the class claims: “It was becoming increasingly less likely that the company would be able to line up sufficient financing to fund its portion of the CityCenter project, as a result of tightening crediting markets.”
Lowinger says the resort’s report violated securities laws and damaged investors.
“As a result of these materially false and misleading statements and failures to disclose, MGM’s common stock traded at artificially inflated prices during the class period,” according to the complaint.
Dubai World sued MGM in Delaware in March for breach of contract, several days after Murren, during a conference call, described their relationship as “outstanding,” noting that it “has been since August ’07 when we consummated the joint venture.”
Lowinger seeks class action certification and damages. He is represented by Ross Goodman.