6 NEVADA ASSEMBLY
STANDING COMMITTEE ON WAYS AND MEANS
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16 AND
17 ADAM P. LAXALT
ATTORNEY GENERAL OF THE STATE OF NEVADA
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RECORDING MADE ON
19 MARCH 25,2016
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1 Beginning of recording.
2 Adam Laxalt: Yeah, and you're never really going to take thethe people are never going to
3 give up their right to select their judges, probably, but that's what business is like. You know, it's like,
4 until you get screwed by a judge, you don't realize how important it is.
5 A.G.Burnett: Yeah.
6 Mr. Laxalt: One other thingit's like, I'm always like "I don't know why you spend so much
9 Mr. Laxalt: You know, I mean, the Assembly people don't get anything actually done. It's the
10 judge that
14 Mr. Laxalt: What you could maybe get away with, and give a legitimate recall power, or, you
17 Mr. Laxalt: Butor some of them do hybrid systems, where you have an appointment and then
18 an election, kind of like we have with the Court of Appeal. Sandoval's point is that slate, that the way it
19 went on the ballot, and they have to get elected from here on out.
21 Mr. Laxalt: And so, at least you getmaybe some better quality, but you're still not getting
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1 Mr. Burnett: So anyways, what's thethere must be some kind of emergency brewing, of some
2 kind.
3 Mr. Laxalt: It's just timingI wanted to talk to you one-on-one about the Las Vegas Sands. I
4 know Brin and Ketan talked to you about it a number of weeks back
6 Mr. Laxalt: The privilege issue. I don't know if the Governor's spoke to you about it, or Mike.
7 Allegedly, they're in the loop, but you know, that's part of why I just want to talk to you one-on-one, so
8 there aren't so many cooks in the kitchen. Obviously, the Las Vegas Sands have requested support
10 Mr. Laxalt: And I think we've reviewed their broad request, and most of it is absolutely not
11 possible
15 Mr. Laxalt: I think their biggest thing that they want is this investigative hook where, if this is a
16 joint investigation, that everything is covered, and, you know, as far as I understand, there's just no way
17 that that's going to happen. That's sort of off the table, sois that correct?
19 Mr. Laxalt: Or at least it's something you guys are never going to represent.
20 Mr. Burnett: Well, I'll give you my understanding of the whole situation, because I'm not 100
21 percent familiar with the nuances of the federal law in regards to the collaborative or joint investigation,
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22 or separate paths or whatever, but Jacobs and Adelson are in this litigation. There's discovery requests
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1 Mr. Burnett: And you know, our policyforeverhas always been we don't interfere. If we do
2 get very concerned that there's going to be some encroachment or impingement of 463.120, the conflict
5 Mr. Burnett: In terms of this particular case, Brin and Ketan came, and my staff has also been
6 reviewing their requests, and there were, you know, like, seven, I think.
10 Mr. Burnett: You know, they came to us directly, initially, and we ended up telling Ira
14 Mr. Laxalt: I mean, some of these places don't have great lawyers, but he's a good one.
15 Mr. Burnett: Yeah, he's got a great resume. And we told him, "Look, Ira, we don't interfere in
16 litigation." We have, in the past, done some form of motion to intervene, or amicus, and I'm probably
17 misspeakingit's probably not a motion to intervene, it's probably an amicusand we've lost. In fact,
18 if you go back in time to about 2008, around that, Sheldon was on the winning side of one of those, and
19 it was the Sheldon vs. John Smith litigation, and I think Sheldon was asking for information from the
20 Board, or something along those lines, and then Chairman Neilander went in to try to fight, but it didn't
21 work, and the judge ruled that the judge could look at the stuff in camerawhich was okay, at the end
23 In terms of the type of investigation, it's definitely a separate one, and one of the reasons why it's
24 a separate one is because Sands requested that. Mark Clayton represents Sands, and early on when this
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1 startedin fact, I think Lipparelli might have been the chairmanwe said, "We're going to do an
2 investigation into these allegations," which is routine. Any time there's allegations made by someone
3 against someone else who's a licensee, we have a duty to look into it. So we said, "We're going to look
5 Mr. Laxalt: Why would you guys be investigating something likestepping totally back, why
6 would you guys even be involved in a CEO claiming they were compensated or not compensated?
7 Mr. Burnett: It was the claims that there was corruption, and there were a lot of corruption
claims regarding Macau. Yeah, in terms of the employment law dispute, we don't care about that, but in
9 terms of foreign gaming, I think Jacobs made some claims andyou know, we're lawyers, we know
10 that anyone can allege anything in a complaint, but he made some nasty claims, the stuff about Macau,
11 stuff about, you know, Adelson paying people off, or the company paying people off, or doing things
13 And so we started to look into that, but, early on, Clayton sent us a letter, and I have the letter,
14 where he said, "Look, we've created an audit committee, and that audit committee's going to investigate
15 these allegations into the corruption or FCPA issues that Jacobs is alleging," and they did. They formed
16 an audit committee to do that investigation, and he said, Clayton said, "Back off. If the Board can just
17 take a backseat right now and he will send you those audit papers when the results are in, then you can
18 take that and do with it what you will, or continue your own investigation," and we said okay, because
19 that's also kind of typical, to create an audit committee to look into those things.
20 And that was done, and that went on, but the Fedsthe FBI, I think, and DOJ andforgive me if
21 I have some of my facts wrong, it's been a while, but this's been going on for years, but they started
22 their own investigation. They're doing their own thing. Now, what we do is we communicate with
23 them and say, "Where are you guys at? What's going on? What do you think? Is there something you
24 find an issue with here," and we have that good relationship with them that isit's a very good
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1 relationship, but we never really worked with them, we never did anything in conjunction with them.
2 What happened isand where I think IraI thought Ira had backed off, I don't know who's coming to
4 Mr. Laxalt: No, Ira's the samethe same seven items, or whatever.
5 Mr. Burnett: The same push? Well, theI believe it was the audit committee, Adam, that began
6 to have some meetings where they invited several agencies who were looking into it to attend these
7 meetings. I don't know the physical location of where those meetings were at, but I had my chief, Mike
8 LaBadie, of investigations, and he had an agent that was solely dedicated to monitoring this stuff. They
9 just attended by telephone. I saw somewhere in a motion or in an order, somebody alleged that the
10 Gaming Control Board agents were in New York seven times, or something. Not truethey never went
11 to New York, they were just sitting on the phone, and what it is, is the audit committee saying to these
12 agencies who attended the teleconference, "Here's what we found, here's where we're looking, here's
13 what's going on," because it's an independent audit committee, and so I think O'Melveny was the firm
14 doing it, and so they attended like, six or seven of those meetings.
15 Mr. Laxalt: Okay, so it's the outshot of that process is what is being fought for right now?
16 Mr. Burnett: I think what's going on is, somebodyit must be Jacobsis making a discovery
17 request of those audit papers, I believe, or audit results or presentations or whatever it is, and I believe
18 Ira's theory iswhich is novel and one that we haven't heard, nor has a statute spoken to it or a court
19 it is, when you gave that presentationthe audit committee gave that presentation to these four
20 agenciesbecause you gave it to the Board also, 463.1 should attach to all, yeah. That's new, you
21 know, in my 18 years
24 Mr. Laxalt: And it's not something that our guys anyway think we should support, and it's not
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1 something I'm asking for support.
3 Mr. Laxalt: I mean, we can look at it down the road outside of this context, on whetherit'll be
4 up to you guys, I mean. Is this case going to create a chilling effect for you guys, and you guys will
5 have to figure that out and maybe there will be less cooperation and people will think there's an issue,
6 but
7 Mr. Burnett: That chance exists, and it does concern me, but here you have the case at the
8 District Court level. It's in front of Judge Gonzalez. She's under attack by the Sands people. They've
9 had reporters follow her around. We're well aware of all that. I don't want to affect her or interfere
10 with her. My thought, and my staffand I think if you ask Brin and Ketan they would agreelet the
11 judge make her ruling. Whatever the ruling is, it's going to get appealed, and that ruling in turn could
13 Mr. Laxalt: Except there's no more rulesso where it is now is, she said she was going to
16 Mr. Laxalt: Okay, so she said she's reviewing in camera, and then, since the Sands has appealed,
17 whether she's biased or qualified or whatever that isthey're unrelatedbut they've appealed
18 something else going on with her. That sentencethe reason we needed toI wanted to talk to you
19 today is because that's going in front of the Supreme Court April 5, which means they won't rule that
20 day, but they could have a ruling as soon as a week after that. And so let's say, odds would be that they
21 keep her. The Supreme Court says "We don't see anything here." Of course Sands thinks it's really
22 strong and they're going to throw her out, but regardless, let's assume they keep her.
23 Mr. Burnett: So that appeal to the Supreme Court is to get rid of the judge?
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1 Mr. Burnett: Okay.
4 Mr. Laxalt: So, assuming she stays, then basically effective the second the Supreme Court rules
5 on that, then that's just back to her. She stayed discovery, which would include the in camera review
6 until the Supreme Court. So as soon as that's undone, she's going to review. Then camera. And so I
7 think that the slight difference fromat least where I thought we were, and maybe you thought we
8 were, perhaps that's what Sands thought at the time or told us, and whatever Ketan and Brin came up
9 with and they ran it downI think what everyone thought that there was going to be an independent
12 Mr. Laxalt: And there's not. The judgethese people are gods in that respect. When it comes
13 to discovery review and especially in camera review, there's really no one that's going to tell her no, so
14 the onlyso, two parts to this. One, setting absolutely aside five or more of the things they're asking
15 for
17 Mr. Laxalt: What I wanted us to talk about is simply the Gaming Control-Sands privilege and
18 potentially the Sands-Gaming Control privilege. That narrow lane leaving everything else off, which
19 she otherwise will review. So the question is whether we would do an amicus in advance of, or be
20 prepared to file an amicus once the Supreme Court decides whether or not they're going to throw her out
21 or not, and I think that otherwise there'sas far as I understand, that the judge has actually made
22 noticenot that these judges don't have any idea what they're doingthe judge has made notice of the
23 fact that the State hasn't made their opinion, and that's somehow going to factor in, probably negatively,
24 that I think she's under the impression that if this is important enough to the Gaming Control Board or
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1 the State, they would have weighed in on this thing, even though if you're having a one-on-one with her
2 you would say, "No, we've never really had to get involved in this and we no longer would delay it
3 later," or whatever, but her impression is, "Hey, if this privilege thing is something that was real, then
5 So that's my question. I know you want to stay out of the broader piece. I know we don'tI
6 know you don't, and we agreedon't even want to touch this joint investigation and whether it covers
7 all these other agencies. Sands can battle that out and figure out whether they can convince a judge that
8 it should or shouldn't. But as to the narrow piece, are you going to supportI mean, I think it'd be a 4-
9 page amicus, and it'll be as narrow as you would be comfortable with, simply laying out "here's the law
10 as we see it." It doesn't even need to mention the facts of the case. It could be literally that narrow. It
11 is essentially for a nonfor a judge that probably has never operated in a space, or if anything one or
13 Mr. Burnett: She has. She should be well familiar with gaming law. And you know, I'd love to
14 sit down with her one-on-one, even like this, and chat with her, but
15 Mr. Laxalt: I'm not sure if you're allowed. No, I think you can. You don't have a party.
16 Mr. Burnett: I never would. I never would, simply because I don't want to interfere with her and
17 what she's doing. She's under a lot of fire. Now, if both parties came to me and said, "Go ahead and
18 file it," and there wasn't, I think, any beef on the other side in terms of "this is the factualthe law,"
20 Mr. Laxalt: Because, by the way, our brief, at least as I see it, would not be totally helpful of
21 Sands. I mean, it would be hurtful, in a number of ways. You know what I mean?
22 Mr. Burnett: Yeah, I don't know. I don't know enough about the nuances of the case.
23 Mr. Laxalt: Well, just in the sense that they're making this broader argument that the privilege
24 covers all of the stuff, to the extent that we'd weigh in and say, "The only thing we see the privilege
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1 covers is this narrow piece."
3 Mr. Laxalt: You follow me? I mean, it actually makes the rest of the case harder for them, I
4 think.
5 Mr. Burnett: You know, I wouldn't mind talking to Ira a little more. He hasn't called me about
9 Mr. Laxalt: Well, then, if it's okay with you, I'll have himobviously the time is short
11 Mr. Laxalt: if you're able to get him on the phone early next week, because
12 Mr. Burnett: Well, I'm going to be gone. I'm going to be on roller coasters all week.
17 Mr. Laxalt: I thought you meant you had a crazy work schedule.
18 Mr. Burnett: No, we're going to be going to the first family vacation in over a year. So we're
20 But the thing, you knowjust so you know, my main concern is the State, protecting the statute. I
21 am concerned about the confidence. It's not a privilege in 463.120. It's a confidence. Essentially, it
22 says whatever information a licensee or an applicant prepares, produces, creates, whatever, and gives to
23 the Board is confidential. But then there's carve-outs to that, where it says it can be released in the
24 administration of justice and under certain circumstances. So it's a good statute, but it's not 1000
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1 percent bulletproof.
2 My overall concern isn't for one licensee or another. It's just for the entire industry and the fact
3 that licensees or applicants should be able to produce stuff to us, full well knowing that we will never
4 turn it over, and we don't. Otherwise, as you know, wein every motion to quash on subpoenas that
5 are sent to usnow whether that document was also sent to someone else, like I said earlier, I don't
6 know if there have been any court rulings on that, or other dispositions or if there's statute
7 Mr. Laxalt: Yeah, I don't think weby the way, I don't think we should argue about it. Because
8 I'm trying to show you just how narrow that I think we should argue. I mean, we shouldn't argue the
9 fact that it's been shared with another agency. Let them argue that. I don't think we have the law on
10 that, but it would bethe question is, I need to be prepared for the Gaming Control Board, and you guys
11 have, for sureyou guyswe'd all fight to the end to protect that, but anything that is-meaning they
12 couldn't get it from you. So the question is that sameso you reach to the Sands and say, "I want you
13 to answer, in a 100-page report, the following five questions." Can the third party that's suing say, "I
14 want the 100-page report you made for the Gaming Control Board," and Brin saysand Katen says
20 Mr. Burnett: is bad. The overall law is bad, and it started with the Third Circuit, and then I
23 Mr. Burnett: Yeah, and we've been dealing with that issue for about 6 years now. If a company
24 feels that something inappropriate has occurred, they can create an audit committee or they can create an
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1 internal committee, hire law firms. The typical way to do an investigation. And the question is, "Okay,
2 did Joe Blow do something wrong in our company?" They hire a firm, do an investigation. The
3 traditional path was for the company to take that investigation and then go to the SEC or the DOJ on
4 bended knee, essentially, and say, "Look, we've uncovered an issue, we're coming to you with open
5 arms, here's our investigation, will you be lenient on us," and for years, it worked well in terms of the
6 SEC or DOJ would say, "Thank you for the information." That information was confidential and
7 protected, but there might be a fine or some disciplinary action or what have you. The plaintiffs'
8 lawyers started chipping away at that several years ago, and I think the Ninth Circuit has ruled now on
9 thatand I can't remember the name of the case; I had it, and it was about 3 years agothat indeed,
10 when you send that information to a federal agencyand this is all in the context of criminal cases,
11 Adam. It's never been tested in a gaming case or a civil case, to our knowledge. It's all criminal
12 actions.
13 Mr. Laxalt: Well, and in those cases, the privilege isn't made by state statute.
14 Mr. Burnett: No, and we do haveand see, that's the thing, at the end of the day, I think we've
15 got a good statute. I think we've got a solid statute. If Judge Gonzalez were to chip away at that
16 Mr. Laxalt: Don't go soft on me. Do you agree that anything made in preparation specifically
17 for a Gaming Control Board request has to be protected both ways? I mean, if not, then no one's going
19 Mr. Burnett: Well, under the statutethe Nevada Statute 120, anything made and given to us
23 Mr. Burnett: But if that same thing is given so someone elseif it's given to Adam Laxalt
24 Mr. Laxalt: Well, not that. Well, let's say forget giving it to someone else. I'm the Sands, I
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1 make a 100-page report for you, third party asks you for it, you're not going to give it. Can they ask the
3 Mr. Burnett: Well, they can ask. But I think that some of the circuit
5 Mr. Burnett: We would never give it, but I think some of the circuit courts have recently ruled
Mr. Burnett: Our state law does. I don't know about the federal law.
9 Mr. Laxalt: As we wereand Ira didn't disagree with me. Well, just because of the fact that
10 there's 100 items put into this request and sent to the Gaming Control Board, that doesn't mean that the
11 third party can't get to this information. I mean, they just can't say, "Hey, give me that report you
12 prepared for that group." They can still ask a lot of questions to get the exactI mean, it doesn't
13 actually protect any of the data or the underlying information. They just have tothey can't just say,
14 "Hey, give me that thing you produced for somebody else." They need to ask the questions that would
15 get to the same questions. So if they're asking for, you know, what are the firing procedures orI still
16 don't have any idea what the underlying case is, by the way, if it'sI mean, I know what the big thing
17 is, but I don't know what they're fighting over by way of information. I don't know what was passed to
19 Mr. Burnett: Well, that's the thing. Nothing was passed to us. The only thing that was passed to
22 Mr. Burnett: was information from the audit committee in terms of their findings, but it, you
23 know, was also, like I said, these teleconferences where the audit committee would update various
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1 Mr. Laxalt: But is that basically what they're asking for, is the audit report?
2 Mr. Burnett: I think. Well, I don't know. I don't know either. I don't know. We'd have to ask
4 Mr. Laxalt: Because again, the guysif you're the third party, then you could still get to all the
6 Mr. Burnett: What I can't understandhelp me with this. Why is Sandswhy are they so
7 adamant on this and not giving up? Why are they pushing you right now? Why are they pushing my
8 staff? They did initially, but then I thought they backed off. They must be talking to you about it.
11 Mr. Laxalt: Well, because they had the hearing. I mean, I think they didn't back off. They went
13 Mr. Burnett: Yeah, I don't think his stuff was entirely accurate.
14 Mr. Laxalt: Look, I'm.notbelieve me, I'm notI see everything. I'm not trying to pitch a side
15 or anything on it, but it's simply because they are still fighting, and they haven't given it up, and it's just
16 been the timing of stuff of the last few weeks. I guess they've been distracted.
17 Mr. Burnett: Well, there's some other concerns as well, you know, in addition, I mean, number
18 one, I'd like to hear if Judge Gonzalez has intimated that the Board must not care, or if they haven't
19 weighed in they must not care. I mean, if she said on the record
21 Mr. Burnett: Yeah, if she said on the record, "Hey, I'd love to hear what the Gaming Control
22 Board thinks," well that would mean something to me, because we just don't interfere in the litigation.
23 We just never have, and going back to what I said earlier, in the times that we have tried things like this,
24 we've lost.
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1 Mr. Laxalt: It's a tough request, and that's why I'm having the one-on-one conversation with
2 you. And they're asking methey've asked you, I'm following up with you and seeing where we are
3 on this thing. I think it is a challenging request because it will look like the Sands is getting a special
4 thing
6 Mr. Laxalt: and so I wouldn't do anything that jeopardizes me either, and that's why the only
7 way I think it's even possible is if we do think that the narrow privilege is in some way in jeopardy and
8 we kept it that way. I mean, that's the first thing I told to Ira, like this, you've got to be crazy, like
9 there's no way that we could argue all these things. It wouldn't even pass a whiff test as far as
10 Mr. Burnett: Well, the optics would be horrendous, and there is other litigation going on. You
11 know, there's hundreds of cases right now that these same lawyers are probably fighting on. The Bar
12 would become well aware of the Board and what it did and what it could do in terms of intervening, and
13 so it would be a slippery slope. But I was going to ask you, in terms of the ruling from Gonzalez, if it's
14 not something that can be appealed, it must not be something that can be relied on by another judge in
15 terms of precedent. I mean, there's no precedent created at the District Court level, right?
16 Mr. Laxalt: Well, I think that they'd be able to challenge the evidence. So she did the in camera
17 review and said "A-ha!" like a magic bullet, which I don't know if there is a magic bullet by the way. I
18 didn't ask. I don't want to know if there is. I don't think there is as far as I can understand, but I think
19 what they'd beif she did in camera review and accepted some evidence, then they'd be able to
20 challenge, "Hey, this evidence shouldn't be in here, it got in under the privilege, etc." But she would
21 have already reviewed it. She would have already gone through it. She would have already seen it, and
23 Mr. Burnett: I mean, for me, I think if a District Court judge were to make an adverse ruling that
24 I saw chipped away at 463.120 in a very problematic way, and it had some precedential value where
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1 others could rely on it, that's problematic. But I think you'd want to wait until it's on appeal or until it
2 becomes true precedent, say at the Supreme Court level. That's when you start to probably sweat in
3 terms of protecting the statute. Now we have, every Legislative Session, considered going in to bolster
4 the statute, because the real problem is the federal chipping away at it, but we never have, simply
5 because the statute we've all relied on in terms of being pretty solid, if you look at it. Have you looked
6 at it? Take a look at it. I mean, it's a pretty damn clear statute.
7 Mr. Laxalt: No, it reads solid, except for the reverse. I mean, forget the joint investigation thing,
8 which I think is potentially an issue, too, going, forward because everything's joint now, so we've got to
9 think about you guys, and we can help. We've got to figure out whether you need that bigger
11 End of recording.
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DECLARATION VERIFYING TRANSCRIPT
STATE OF NEVADA )
\ CO*
COUNTY OF CLARK )
4 I, Jordan Haas, declare under penalty of perjury under the laws of the State of Nevada that:
5 1. I am an employee of the Legal Division of the Legislative Counsel Bureau of the State of
Nevada.
2. On May 11, 2017, in my capacity as an employee of the Legal Division of the Legislative
Counsel Bureau, I was provided with an audio recording of a conversation between A.G. Burnett,
Chairman of the Nevada Gaming Control Board, and Adam P. Laxalt, Attorney General of the State of
11 3. On May 11, 2017, I truly and correctly transcribed that audio recording into typewriting as
12 appears in the foregoing transcript to which this declaration is attached, and such transcript is a true and
14 Pursuant to NRS 53.045,1 declare under penalty of perjury under the laws of the State of Nevada
16 lis
Executed on this /P
(P day of May, 2017.
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JORDAN HAAS
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