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Derivative Complaint Against Sheldon Adelson and Board of Las Vegas Sands

Posted by: on Fri, Jan 24, 2014

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G. Mark Albright

Nevada Bar No. 1394

William H. Stoddard, Jr.

Nevada Bar No. 8679

Albright, Stoddard, Warnick and Albright

801 S Rancho Dr D4, Las Vegas, NV 89106

Phone:
(702) 384-7111

Fax:
(702) 384-0605

Email:
gma@albrightstoddard.com

Email:
bstoddard@albrightstoddard.com

Attorneys
for Plaintiff

 

See Signature Page for Additional Counsel

 

UNITED STATES
DISTRICT COURT

FOR THE DISTRICT
OF NEVADA

 

 

W. A.
SOKOLOWSKI, Individually and On Behalf of LAS VEGAS SANDS CORP.,

 

Plaintiff,

 

v.

SHELDON G. ADELSON, MICHAEL  A. LEVEN, JASON N. ADER, IRWIN CHAFETZ,
CHARLES D. FORMAN, GEORGE P. KOO, CHARLES A. KOPPELMAN,  JEFFREY H. SCHWARTZ,

VICTOR CHALTIEL, IRWIN A. SIEGEL, and
FREDERICK HIPWELL,

 

Defendants,

– and –

 

LAS VEGAS
SANDS CORP., A Nevada Corporation,

 

Nominal
Defendant.

 

 

 

Civil Action No.

 

 

 

 

VERIFIED
SHAREHOLDER             DERIVATIVE COMPLAINT

 

 

 

 

 

JURY DEMAND

 

VERIFIED
SHAREHOLDER DERIVATIVE COMPLAINT

I.          JURISDICTION AND VENUE

1.
This Court has
jurisdiction pursuant to (a) 28 U.S.C. §1331 because Counts I and II assert
claims for violations of § 14(a) of the Exchange Act and SEC Rule 14a-9; (b)
diversity jurisdiction under 28 U.S.C. § 1332(a)(2), as Plaintiff and each
Defendant are citizens of different states, and the value of the relief
requested exceeds $75,000, exclusive of interest and costs; and (c) the Court’s
supplemental jurisdiction over the common law claims pursuant to 28 U.S.C. §
1367(a).

2.
This Court has
jurisdiction over each Defendant because each either is an individual with
sufficient minimum contacts with this District, or is a corporation conducting
business and operating in this District.

3.
Venue is proper
in this District pursuant to 28 U.S.C. §§ 1391(a)(2) and (3) and § 1401 because
some or all of the events, actions, and failures to act giving rise to the
claims asserted herein occurred or were initiated in this District.

4.
In addition to
Plaintiff’s individual claims asserted pursuant to federal law, this action is
brought pursuant to Rule 23.1 of the Federal Rules of Civil Procedure.  This action is not brought collusively to
confer jurisdiction on this Court which it would not otherwise have.

II.        NATURE OF ACTION AND SUMMARY OF
CLAIMS

5.
This is a
shareholder’s action brought by Plaintiff derivatively on behalf of Las Vegas
Sands Corporation (“Sands” or the “Company”).
No claims are asserted herein against Sands, which is a Nominal
Defendant.

6.
Sheldon G.
Adelson (“Adelson”), Michael A. Leven (“Leven”), Jason N. Ader (“Ader”), Irwin
Chafetz (“Chafetz”), Charles D. Forman (“Forman”), George P. Koo (“Koo”),
Charles A. Koppelman (“Koppelman”), Jeffrey H. Schwartz (“Schwartz”), Victor
Chaltiel (“Chaltiel”),
and Irwin A. Siegel (“Siegel”)(all of whom sometimes are referred to
collectively as “the Individual Defendants”), each of whom was serving on the
Company’s Board of Directors (“Board”), collectively and individually initiated
or actively participated in a course of conduct that was designed to, and did:

(a)
Conceal the fact that the Company’s management was improperly misrepresenting
Sands’ internal controls in order to allow a widespread scheme of overseas
bribery, kickbacks, money laundering and other wrongful behavior in violation
of applicable federal and other laws and, thereafter, cover-up such wrongdoing;

(b)
Assign to the Board’s Audit Committee and purportedly independent legal
counsel, an “investigation” that was intended as a pretext to avoid the
Individual Defendants having to account to Sands for their wrongdoing;

(c)
Deceive the investing public, including shareholders of Sands, regarding the
Individual Defendants’ management of the Company’s operations;

(d)
Fail to comply with the books and records, and internal controls provisions of
the Foreign Corrupt Practices Act (the “FCPA”) and the Bank Secrecy Act as well
as conceal such violations of law;

(e)
Conceal material facts with respect to purported audits performed by
PricewaterhouseCoopers, LLP (“PWC”), of which Defendant Frederick Hipwell (“Hipwell”)
is a Partner;

(f)
Waste Sands’ assets by means of, inter
alia
, causing the Board’s Audit Committee to carry out a purported
investigation of the wrongdoing alleged herein without any benefit flowing to
the Company;

(g)
Cause the issuance and dissemination of Sands’ 2013 Proxy Statement, which was
false and misleading;

(h)
Use Sands’ corporate assets to further the political interests of the Company’s
largest shareholders, Adelson and his wife;

(i)
Cause Sands to terminate its long-held plans to invest in a casino complex in
Spain because of, inter alia,
Defendant Adelson’s demand for relaxation of Spain’s anti-money laundering
laws, political activities and his negative reputation;

(j)
Disregard and/or intentionally breach the Company’s Code of Business Conduct
and Ethics as well as other written policies governing their conduct; and

(k)
Enhance the Individual Defendants’ positions as directors and/or officers of
Sands while providing each of them with substantial compensation, power, and
prestige.

7.
At material
times, while serving as Sands’ purportedly independent public accounting firm (i.e. auditor), Hipwell and PWC failed to
provide to the Company the independent auditing services it was
well-compensated to provide, negligently or otherwise failed to conduct its
audits of Sands’ financial statements in accordance with Generally Accepted
Auditing Standards (“GAAS”) as it was engaged to do, and issued false and
misleading “clean” opinion letters as to the Company’s year-end financial
statements.

8.
Sands has become
the subject of years-long investigations by the U.S. Department of Justice (“DOJ”),
the U.S. Securities and Exchange Commission (“SEC”), the Nevada Gaming Control
Board (“NGCB”), and the U.S. Federal Bureau of Investigation (“FBI”). Upon
information and belief, Sands’ activities are also being investigated by the
Chinese government.  The Company has
expended, and will continue to expend, significant amounts of resources and
hundreds of millions of dollars to address these investigations.  The Individual Defendants have admitted that
any finding of violations of the FCPA as described herein could have a material
adverse effect on the Company’s financial condition.  A violation of rules and regulations of the
NGCB could jeopardize Sands’ gaming license in Nevada.  It is likely that Sands will be subjected to
massive future fines and penalties, and be required to make material changes to
its business practices.

9.
The Company
already has suffered massive economic damages as well as damage to its
reputation as a direct result of the wrongdoing alleged herein.  On March 7, 2013, Moody’s Investor’s Service
(“Moody’s”) downgraded Sands’ rating outlook from positive to stable following
the Company’s disclosure that it likely had violated the FCPA’s books and
records provisions.  Keith Foley, a
Senior Vice President at Moody’s explained: “At this point, the primary
obstacle to a higher rating is [Sands’] current inability to provide
independent verification that the FCPA issue will be resolved in a manner that
does not materially impair the company’s reputation or financial profile.”  A negative rating action could occur,
especially if the SEC, DOJ or any other regulatory body discover violations of
any material corporate governance issue such as those alleged herein.

10.
In addition to
the common law claims alleged herein, this action charges the Individual
Defendants with directly participating in and/or aiding and abetting violations
of §14 (a) of the Securities Exchange Act of 1934 and Rule 14a-9 thereunder.  Plaintiff seeks to recover for Sands the
damages caused and currently being caused to the Company by the Defendants.
This action also seeks the appointment of a Special Master or Conservator to
oversee and direct the Company’s negotiations with the DOJ and the SEC with
respect to the wrongdoing alleged herein since the Board and legal counsel, due
to their personal conflicts of interest, cannot conduct such negotiations
consistent with their duty of loyalty to Sands.

11.
The allegations
in this Complaint are based upon personal knowledge as to Plaintiff and his
ownership of shares of Sands, and on information and belief as to all other
matters, such information and belief having been formed by the investigation
conducted by and under the supervision of his counsel, which included, among
other things: (a) review and analysis of the Company’s public filings with the
SEC; (b) review of the 2011, 2012, and 2013 Proxy Statements; (c) review of
other publicly available information, including articles in the news media; (d)
review of the Company’s website and press releases; (e) consultation with
persons knowledgeable regarding the facts and circumstances alleged herein; and
(f) review of the shareholder derivative Complaints and related materials in
litigations commenced against some or all of the Individual Defendants.

III.       PARTIES

12.
Plaintiff W.A.
Sokolowski owns, and has continuously owned, common stock in Sands during the
period of the wrongdoing alleged herein.
Plaintiff is a citizen of New Jersey.

13.
Nominal Defendant
Sands is a corporation organized under the laws of Nevada with its principal
executive office located in Las Vegas, Nevada. Sands’ stock is listed and
traded on the New York Stock Exchange. Sands is a Nominal Defendant only, and
no claims are asserted against it. Its role in connection with this litigation
is being controlled by its Board, all members of which are defendants herein,
and the Company’s Chief Executive
Officer, Defendant Adelson. In turn, Plaintiff alleges and believes that the
Board’s actions are being controlled by Richard A. Sauber, Esq., the law firm
of O’Melveny & Myers LLP (“O&M”), including partner Daniel Bookin,
Esq., and other lawyers working closely with Defendant Adelson to protect him
and his colleagues from personal liability for the wrongdoing described herein.

14.
The Company owns
and operates integrated resort properties featuring gaming, retail, convention,
and exhibition facilities in Asia and the United States, including in
Singapore, the Macao Special Administrative Region of the People’s Republic of
China, Las Vegas, Nevada, and Bethlehem, Pennsylvania. Until the project was
recently aborted, the Company was also planning a major casino resort
development in Spain. The Company’s presently existing developments include the
Venetian Resort Hotel Casino, the Palazzo Resort Hotel Casino, the Sands Expo
and Convention Center, and Marina Bay Sands.
Through its majority-owned subsidiary, Sands China, Ltd.(“SCL”), the
Company also owns the Venetian Macao Resort Hotel, Sands Macao Hotel, Four
Seasons Hotel Macao, and the Four Seasons Apartments in the Cotai Strip section
of Macao.

15.
The Individual
Defendants are named defendants solely with respect to the wrongdoing that
occurred while they served as directors of Sands.

16.
Defendant Adelson
has been the Company’s Chief Executive Officer (“CEO”), and Chairman of the
Board (“Chairman”) since August 2004.  As
a member of the Nominating and Governance Committee since April 2008, he has
dominated and controlled the Board, hand selecting who serves on the Board and
determining the remuneration they receive.
Adelson is a citizen of Massachusetts.
Adelson also serves as the Chairman of the Board of Directors of the
Company’s subsidiary, SCL.

17.
Since the
Company’s initial public offering in 2004, Adelson has been the Company’s
controlling shareholder, exercising unfettered control over the management and
daily operations of the Company.  Indeed,
as Defendants admit but understate in each of the Company’s Form 10-K filings
with the SEC, filed on March 1, 2011, February 29, 2012, and March 1, 2013,
Defendant Adelson “exercises significant influence over business policies and
affairs, including the composition of Board of Directors and any action
requiring the approval of stockholders, including the adoption of amendments to
articles of incorporation and the approval of a merger or sale of substantially
all of assets.  The concentration of
ownership may also delay, defer or even prevent a change in control of our
company and may make some transactions more difficult or impossible without the
support of Mr. Adelson.”

18.
Defendant
Adelson’s influence over the other Individual Defendants is demonstrated by the
circumstances surrounding the March 2009 forced resignation of William P.
Weidner (“Weidner”), then President and Chief Operating Officer (“COO”) of
Sands, and an employee of Sands for more than 14 years.

19.
Beginning in or
about 2008, Sands felt the impact of a deteriorating economy and experienced a
decline in share value from an all-time high of $148.76 on October 29, 2007 to
$1.42 on March 9, 2009.  Defendant
Adelson and Weidner disagreed on when to access capital markets in order to
avoid breaching the maximum leverage ratios set by Sands’ bank creditors, and a
bitter dispute erupted between them.

20.
A special
Executive Committee, comprised of Defendants Leven, Chafetz, and Siegel, was
formed on October 29, 2008 to “address governance concerns raised by the Senior
Management Members, address a number of outstanding differences between our
Chief Executive Officer and other Senior Management Members and in response to
a loss of confidence by certain Senior Management Members in the management of
the Company and our governance process.”

21.
In March 2009,
two Board members met with Weidner to inform him that the Company (i.e. Adelson) had decided to replace him
with defendant Leven, the Chair of the Executive Committee, and Adelson’s
trusted ally.  Four days later, Weidner
submitted his resignation.  With the
ouster of Weidner, the thorn in Adelson’s side, the Executive Committee was
then dissolved.

22.
In response,
James Purcell, a longtime Sands Board member, also submitted his resignation,
citing his disagreement with the Board’s process leading to the forced
resignation of Weidner.  In particular,
Purcell wrote: “It was in my judgment wrong to engage in discussions with
Weidner to request his resignation without a full and open discussion of the
potential consequences of the series of actions that were planned.  No business enterprise should undertake the
significant actions that have been and are proposed to be taken today without a
full meeting of its Board.”

23.
Defendant
Adelson’s response to Weidner’s resignation was that the departure was not a
loss for the Company, but “Just the opposite.”
Defendant Adelson made clear that he has “always been in charge” of the
Company and Board and that he was instrumental in the forced resignation.  He stated, “We just sort of helped [Weidner]
out a little bit…[w]e helped him resign a little bit.”

24.
One of Defendant
Leven’s first decisions as President and COO of Sands was to hire Steven C.
Jacobs (“Jacobs”) to head the Company’s Macau operations and later serve as CEO
of its spin-off, SCL.  Jacobs questioned
Adelson’s management of the Company and refused to comply with Adelson’s
unlawful directives to engage in illicit business practices that would have
violated the FCPA.  Defendant Adelson
responded that “he was Chairman of the Board and the controlling shareholder of
[SCL] and would do as [he] please.”
Jacobs was then dismissed.  The
ensuing litigation that followed on October 20, 2010 exposed the Individual
Defendants’ pervasive breaches of fiduciary duties, and blatant violations of
the FCPA, as well as Adelson’s unfettered control and domination of the
Company.

25.
Defendant
Adelson consciously and purposely has engaged in a course of conduct that
exposes the Company to potential fines and sanctions and severe scrutiny by
federal and state regulators.
Specifically, he has directed Company employees to use illicit means to
induce senior Macau government officials to obtain favorable business results,
as well as to aggressively grow the Company’s junket business, in violation of
Nevada state regulations.

26.
The Board
continuously has submitted to Adelson’s wishes and provided him and his family
with a slew of perquisites.  Defendant
Adelson and his family members receive security and transportation at
considerable expense to Sands, valued at more than $2.5 million annually.  Adelson’s wife, Dr. Miriam Adelson, has been
employed as Director of Community Involvement, and his step-daughter has been
employed as his Special Assistant since 2007.
Sands has also engaged in business transactions with entities owned
and/or operated by Adelson and his family members, including the purchase of
products from Deluxe Hotels Supply, LLC, a company owned by Adelson’s brother,
and time-sharing agreements with Interface Operations, LLC, a company
controlled by Adelson himself.  While
these arrangements purportedly have been made on normal, commercially-available
terms, the Company has not disclosed enough, either in its 2013 Proxy Statement
or otherwise, to evaluate the truth of such representations

27.
Defendant Leven
has been the Company’s President and Chief Operating Officer since March 2009,
Secretary since June 2010, and a Company Director since August 2004.  Leven is also a Director of SCL, had been
Special Advisor to SCL’s Board from October 2009 to July 2010 and SCL’s acting
CEO from July 2010 to July 2011.  Leven
was also a Director of Las Vegas Sands, Inc., the predecessor of Las Vegas
Sands, LLC, from May 2004 to July 2005.
The Board repeatedly has determined that Leven is not independent.  Leven is a citizen of Nevada.

28.
Leven knowingly
or recklessly allowed the Company to engage in illegal activities that violate
the FCPA by authorizing Company employees to improperly leverage Macau
officials to obtain favorable business results, to openly permit illegal money
laundering at Sands’ casinos and by failing to implement or maintain adequate
internal controls.  Defendant Leven
acknowledged that there were obvious FCPA issues arising from the Company’s
hiring of Leonel Alves (“Alves”) as its Legal Advisor, given Alves’ position in
the Macau government.  Nevertheless, the
Individual Defendants acquiesced in Adelson’s wishes and rubber-stamped Alves’
employment at Sands.

29.
Defendant Forman
has been a Company Director since August 2004.
He also has been a Director of Las Vegas Sands, LLC, a subsidiary of
Sands, since March 2004.  Defendant
Forman was the Vice President and Legal Advisor of the Interface Group, an
entity controlled by Defendant Adelson, from 1989 to 1995.  The Board repeatedly has determined that
Forman is not independent due to his close business and personal relationship
with Defendant Adelson.  Forman is a
citizen of Massachusetts.

30.
Defendant
Chafetz has been a Company Director since March 2005.  Chafetz was also a Director of Las Vegas
Sands, Inc., the predecessor of Las Vegas Sands, LLC, from March 2005 to July
2005.  The Board repeatedly has
determined that Mr. Chafetz is not independent due to his close personal and
business relationship with Defendant Adelson.
Chafetz is a citizen of Massachusetts.

31.
Over a span of
more than fifty years, Defendant Chafetz has held numerous jobs reporting to
Defendant Adelson and has maintained a close personal relationship.  From 1984 to 1990, Defendant Chafetz was the
President of Five Star Aircraft/Airlines, a division of the Interface Group,
LLC, an entity controlled by Adelson.  He
was a stockholder, vice president and director of Interace from 1989 to 1995,
where he reported to Adelson, who was the President and Chairman.  Many public media outlets have noted the
close relationship between Chafetz and Adelson, describing him as a “former
business partner who has known Mr. Adelson since grade school” and a “lifelong
friend of Mr. Adelson.”  Indeed, Chafetz
serves as the trustee of several trusts for the Adelson family.

32.
Defendant Koo
has been a Company Director since April 2008, and he is a member of the Board’s
Compensation Committee.  Koo was a
special advisor to the Chinese Services Group of Deloitte & Touche LLP from
April 2008 until March 2013, after having been its Director from April 1999
until April 2008.  Koo is a citizen of
New York.

33.
Defendant Siegel
has been a Company Director since February 2005 and the Chairman of the Audit
Committee since April 2008.  In violation
of his Audit Committee duties, Siegel knowingly or recklessly failed to oversee
the Company’s compliance with applicable legal and regulatory
requirements.  Siegel also has been a
Director of SCL since October 2009 and was a Director of Las Vegas Sands, Inc.
from February 2005 to July 2005.  Siegel
is a certified public accountant and was a partner at Deloitte & Touche LLP
from 1973 to 2003.  Siegel is a citizen
of Georgia.

34.
Defendant
Schwartz has been a Company Director, a member of the Audit Committee, and
Chair of the Board’s Compensation Committee since March 2009.  In violation of his Audit Committee duties,
Schwartz knowingly or recklessly failed to oversee the Company’s compliance
with applicable legal and regulatory requirements.  Schwartz also has been a Director of SCL
since October 2009.  Schwartz is a
citizen of Nevada.

35.
Defendants
Adelson, Leven, Schwartz, and Siegel breached their duties of loyalty by
directing SCL employees to illegally bribe Macau officials, and by instructing
the hire of Leonel Alves as Legal Advisor.
Defendant Adelson’s directives, and Defendants Leven, Schwartz, and
Siegel’s authorization and execution of Adelson’s directives, were in
contravention of the FCPA and Nevada gaming rules.

36.
Defendant Ader
has been a Company Director, a member of the Audit and Compensation Committees,
and Chair of the Board’s Nominating and Governance Committee since April 2009.  In violation of his Audit Committee duties,
Ader knowingly or recklessly failed to oversee the Company’s compliance with
applicable legal and regulatory requirements.
Ader is a citizen of New York.

37.
Defendant Koppelman
has been a Company Director, and member of the Nominating and Governance, and
Compensation Committees since 2011.  He
has been a director of Six Flags Entertainment Corp. since May 2010, where he
serves on the audit and compensation committees.  Koppelman is a citizen of New York.

38.
Defendant
Chaltiel has been a Company Director, and member of the Nominating and
Governance, and Compensation Committees since December 2012.  Chaltiel is a citizen of Nevada.

39.
Each of the
foregoing Individual Defendants either was hand-picked by Adelson to serve as a
Director of Sands, or Adelson personally acquiesced in their appointment.  Each has served on the Board, and thereby
reaped substantial fees, perquisites and emoluments, at Adelson’s pleasure.  None of these Directors can be considered
independent or disinterested, none is sufficiently removed from the underlying
wrongdoing described herein or its subsequent cover-up, and none of them can
address the demands made on them independently or with disinterest

40.
Each member of
the Sands’ Board knew that operating in Macao involved a higher than normal
risk of violating American and Chinese anti-corruption laws.  Nevertheless, in the face of such specific
knowledge, the Individual Defendants breached their fiduciary duties by failing
to implement or maintain adequate internal controls and accounting systems to
prevent violations of the FCPA as well as Nevada gaming regulations and/or to
require the Company’s management to do so.  Thus, each of them knowingly, recklessly,
and/or with gross negligence caused the Company to violate the FCPA as well as
the Bank Secrecy Act in order to generate business.  In the case of the Individual Defendants other
than Adelson, they participated and/or acquiesced in such conduct to maintain
the favor of Adelson and keep their positions as Directors of Sands and all of
the substantial personal benefits that inured to them as a result.

41.
The Individual
Defendants were well-informed about and/or actively participated in the
wrongdoing alleged herein, particularly the bribery of Chinese and Macau
officials, acquiescence in illegal money laundering activities at Sands’
casinos, failure to implement and maintain adequate internal controls as well
as deception of the investing public and federal and state regulators.  They abdicated their respective stewardship
responsibilities to the Company by acquiescing and/or participating in the
wrongdoing alleged herein and by placing their loyalty to Adelson above their
loyalty to Sands.

42.
The members of
the Sands Board, each of whom was personally appointed or approved by Adelson,
receive hundreds of thousands of dollars each year in fees and stock awards as
well as very liberal “reimbursement of expenses.”  In addition, they received stock options
potentially worth millions of dollars.

43.
Defendant
Hipwell is the Managing Partner of PWC at its Las Vegas office and is named a
defendant herein in his capacity as a partner of PWC.  The references to “Individual Defendants” in
this Complaint do not refer to Defendant Hipwell.  As a partner of PWC, Defendant Hipwell is
responsible for its breach of its contractual obligations to Sands and its
errors and omissions in connection with the conduct referred to herein.  At relevant times, PWC and the Individual
Defendants portrayed PWC as Sands’ independent auditor and, simultaneously, PWC
provided to Sands consulting and other services.

IV.       SUBSTANTIVE ALLEGATIONS

A.        FCPA
Requirements and Nevada Gaming Regulations

44.
Sands is a
multinational resort development and gaming company.  Sands’ stock trades on the New York Stock
Exchange under the symbol “LVS.”  As an
issuer under the United States federal securities laws, Sands’ business and
operations are subject to the FCPA.

45.
The FCPA,
enacted in 1977, makes it unlawful for, inter
alia
, United States issuers of registered securities, such as Sands, to
make improper payments, bribes, and kickbacks to any foreign official as a way
to obtain or retain business.  15 U.S.C.
§78dd-l.  The FCPA also requires covered
companies to devise and maintain a system of internal accounting controls to
ferret out such illicit payments.
Non-compliance with the FCPA may result in fines, sanctions, and other
adverse actions, including exposing the Company to civil liability.

46.
Sands, as a
company incorporated and headquartered in Nevada, must also comply with the
state’s gaming laws, which prohibit “unsuitable” associations that “reflect or
tend to reflect discredit upon the State of Nevada or the gaming industry.”

B.        Sands’
Macau Operations

47.
According to
Sands’ annual report, Macau is the largest gaming market in the world and the
only market in China to offer legalized casino gaming.  Many American gaming companies have stayed
away from Macau since it has been plagued by bribery, political corruption and
the influence of organized crime.  A 2011
International Narcotics Control Strategy Report by the United States State
Department noted that Macau is “vulnerable to becoming a hub for the laundering
of criminal proceeds.”

48.
In June 2002,
Sands, in a joint venture with a Hong Kong based corporation, Galaxy
Entertainment Group (“Galaxy”), was granted one of three gambling concessions
by the Macau government and became the first American operator to open a casino
on Chinese soil.  When Sands and Galaxy
parted ways, Macau officials changed its gambling policy and awarded Sands
gambling concessions independent of Galaxy.

49.
Three separate
civil suits were filed against the Company alleging that Sands failed to pay
contracted fees for brokering the joint venture between Sands and Galaxy.  Weidner, the Company’s former President and
COO, testified that the joint venture was orchestrated by the Macau
government.  Out of concern that the
pending litigations would reveal violations of the FCPA, Sands retained outside
legal counsel specializing in FCPA issues in order to prepare a defense in case
the SEC or DOJ were to investigate the 2002 bidding process.

50.
On October 15,
2004, Richard Suen and Round Square Company Limited filed an action against
Sands, Adelson, and Weidner in the District Court of Clark County Nevada
asserting a breach of contract to pay a success fee of $5 million and 2% of the
net profits from the Company’s Macau resort operations.  On May 24, 2008, the jury returned a verdict
in favor of Suen and his company in the amount of $43.8 million.  On June 30, 2008, a judgment was entered in
the matter in the amount of $58.6 million.
The Company appealed the verdict to the Nevada Supreme Court, and on
November 17, 2010, the judgment was reversed and remanded to the District
Court.  The case went to trial in April
and May of 2013 and a jury verdict in the amount of $70 million was awarded to
the plaintiffs which award, together with pre-judgment interest, was $101.6
million.  On July 30, 2013, Judge Rob
Bare denied Sands’ request for a new trial or to reduce the jury award.

C.        Hiring Alves

51.
Sands hired
Alves, a local Macau attorney, as SCL’s Legal Advisor, despite the Board’s
knowledge of his extensive ties to the Macau government, and probable FCPA
violations associated with his retention.
Alves was a member of both the Executive Council, which serves as the
government’s top advisory body, and the Legislative Assembly, which is
responsible for enacting, amending, suspending, and repealing legislation, as
well as Chairman of the Audit Committee for Macau’s monetary authority.  The impropriety of Alves’ employment by SCL
while Sands actively pursued concessions from the Macau government to sell
strata-title ownership of the Four Seasons Apartments in the Cotai Strip
highlights the Individual Defendants’ failure to implement adequate internal
controls.

52.
In a Macau Daily Times article dated
September 19, 2010, Defendant Leven stated of Alves, “He was a close advisor of
[SCL] throughout the last year and we would be very interested in having him
back.”  Leven acknowledged “[w]hen we
deal with an individual that is a Government official – Alves is also a member
of the Executive Council, an advising body to the local government – we have to
follow the rules of the U.S.”

53.
In 2011, ProPublica disclosed internal corporate documents
that indicate that Defendant Adelson ordered that $700,000 in purported legal
fees be paid with Sands’ funds to Alves.

D.        Association with Chinese Organized Crime

54.
Sands also has
been directly linked to Chinese organized crime in Macau, which uses casino
property to run their loan-sharking, junket and prostitution operations.

55.
Reuters published an article on March
29, 2010 detailing Sands’ ties to organized crime as follows:

“The
murder-for-hire case sheds light on the links between China’s secretive triad
societies and Macau’s booming gambling industry. It also raises potentially
troubling questions about one of the world’s largest gaming companies, Las
Vegas Sands, which plans to open a $5.5 billion Singapore casino resort in late
April.

Cheung [Chi-tai]
was not just named as a triad member but also, according to a regular casino
patron testifying in the trial, “the person in charge” of one of the VIP rooms
at the Sands Macau, the first of three casinos run here by Las Vegas Sands. In
addition, Cheung has been a major investor in the Neptune Group, a publicly
traded company involved in casino junkets — the middlemen who bring wealthy
clients to Macau’s gambling halls. Documents show that his investment allowed
him a share in the profits from a VIP gambling room at the casino.

An examination
of Hong Kong court records, U.S. depositions from the former president of
Sands, and interviews with law enforcement and security officials in both the
U.S. and Macau, reveals a connection between Las Vegas Sands and Cheung — ties
that could potentially put Sands in violation of Nevada gaming laws.”

56.
Jacobs alleges
in his lawsuit that he objected to Adelson’s scheme “to intimidate and mislead Reuters and its investigative
journalists as to the accuracy of the March 29, 2010 article by sending Reuters a demand for retraction which
falsely claimed defamation.” Additionally, Jacobs alleges that the Company
commissioned background checks on Cheung, who was in charge of running the
junket rooms at Sands Macao, and a few others connected to him.

57.
Defendant
Adelson and, upon information and belief, each of the members of the Sands’
Board of Directors, were aware of a report distributed to Sands’ senior management
documenting Cheung’s connection with Chinese organized crime, but never caused
Sands to sever the relationship with Cheung.
After all, the junket system is extremely profitable.  According to the March 2011 Reuters article, the junket companies “generated
an incredible 72 percent of the region’s gaming revenues last year.”

58.
The Individual
Defendants knew that the Company’s well-known association with “unsavory or
unsuitable persons” was in direct violation of Nevada gaming laws, but they
refused to stop
such associations notwithstanding the risks to Sands in Nevada and
elsewhere.  They also knew that the FCPA
anti-bribery violations, and Sands’ involvement with Chinese organized crime
was being investigated by various state and federal regulatory agencies, and
the results could lead to the loss of Sands’ gaming license and/or severe
financial effects for the Company.

E.         Knowledge
and Disclosure of the FCPA Violations

59.
The Individual
Defendants’ attempts to manipulate and induce the Macau government’s cooperation
with the Company’s business agenda was first revealed to the public on October
20, 2010 when Jacobs filed a lawsuit in Nevada disputing the terms of his
dismissal on July 23, 2010 and exposing the Company’s series of FCPA violations
and breaches of applicable state laws at the behest of Defendant Adelson.

60.
Jacobs alleges
that Defendant Adelson instructed him (a) to use “improper leverage” against
senior Macau government officials in order to obtain a concession from the
Macau government to sell strata-title ownership to the Four Season Apartments
in Macau; (b) to threaten Chinese banks in order to improperly induce them to
pressure senior Macau government officials to deliver strata-title of the Four
Seasons Apartments and give favorable concessions with respect to labor quotas
and table limits; (c) to conduct secret investigations of senior Macau
government officials in order to uncover information that could be used to
thwart government initiatives adverse to Sands; (d) to hire as SCL’s Legal Advisor
Leonel Alves, a local Macau attorney and member of Macau’s Legislative Assembly
and the Macau Executive Council, despite known FCPA issues; and (e) to grow the
junket business but to avoid disclosing material information to SCL’s Board
regarding Company involvement with notorious Chinese organized crime figures,
in direct contravention of Nevada gaming regulations and other applicable
law.

61.
While it was not
until early 2011 that shareholders began to learn of the magnitude and severity
of Sands’ FCPA problems, the Individual Defendants became aware of the
potential violations much earlier, but did nothing to address the issues.

62.
On March 1,
2011, Sands filed its annual report on Form 10-K for the period ended December
31, 2010.  There, the Company disclosed
that the SEC and DOJ were conducting investigations for possible violations of
the FCPA.  Specifically, the Company
stated:

“On February 9,
2011, LVSC received a subpoena from the Securities and Exchange Commission
requesting that the Company produce documents relating to its compliance with
the Foreign Corrupt Practices Act.  The
Company has been advised by the Department of Justice that it is conducting a
similar investigation.  It is the Company’s
belief that the subpoena may have emanated from allegations contained in the
lawsuit filed by Steven C. Jacobs described above.  The Company intends to cooperate with the
investigations.”

63.
The Form 10-K
further stated, “Any determination that we have violated the FCPA could have a
material adverse effect on our financial condition.”  Notwithstanding such disclosure, which
discussed a possible adverse effect upon Sands, the Individual Defendants were
advised by their legal counsel that the financial consequences of the FCPA
violations would be quite substantial and material to the Company’s financial
condition, which consequences have remained concealed. In addition, the
Individual Defendants did not disclose the extent to which the SEC and DOJ were
seeking substantial penalties, both financial and otherwise, from Defendant
Adelson.

64.
Defendant Leven
has stated that the SEC and DOJ investigations may take several years, and they
involve “a voluminous amount of information, [that] go back probably five years
at least.”

65.
Many investors
reacted to the news and rushed to dispose of their shareholdings. Sands’ market
capitalization fell by over $2.1 billion, or 6.3% in one day, on March 1, 2011.

66.
On March 2,
2011, The Wall Street Journal
reported that the NGCB began a probe into the Company’s FCPA violations and
association with Chinese organized crime.

67.
On March 11,
2011, in an article entitled “Special Report: Macau Connection”, Reuters revealed that the FBI had begun
its own investigation as well.  It also
reported that Sands provided NGCB with a report on an alleged criminal figure, “but
it has gone out of its way to stop the reports from reaching the public eye.”

68.
Upon information
and belief, the Board delegated to the Audit Committee the authority to
investigate the matters raised in the SEC subpoena and DOJ inquiry, as well as
other transactions in mainland China, as described below.  Richard W. Grime, Esq. and Daniel Bookin,
Esq., partners at O’Melveny & Myers, LLP (“O&M”) were retained,
purportedly by the Board’s Audit Committee, to perform an independent investigation
in connection with the government probes.

69.
Beyond the
investigations into Sands’ Macau ventures, the Board’s Audit Committee is
allegedly investigating at least three transactions in mainland China: a $50
million payment for office space for the Adelson Center for U.S.-China
Enterprise in Beijing, Sands’ sponsorship of a Chinese basketball team, and a
contract for ferry service between Macau and Hong Kong.

70.
In 2005, Sands
announced a plan to invest more than $1 billion to build the Adelson Center,
which was to be a non-gambling convention center and retail complex on the
Chinese island of Hengqin, near Macau.
Sands spent $50 million to secure space for the Adelson Center, hiring
Yang Saixin as an intermediary to make the payments and help facilitate this
deal and others in China.  The Company
has disclosed that China’s State Administration of Foreign Exchange fined Sands
about $1.63 million in 2010 for improperly using funds earmarked to the Adelson
Center to pay a company associated with Mr. Saixin.  Sands decided in 2008 to stop construction,
purportedly due to financial reasons.

71.
Sands paid $8
million to sponsor and take control of a professional Chinese basketball
team.  Mr. Saixin bought the team on
Sands’ behalf.  The Audit Committee and
NGCB purportedly are investigating whether any payments were made to government
officials, since, upon information and belief, approximately $1.45 million is
not accounted for.  The basketball deal
was terminated in 2008.

72.
The
investigations are also purportedly probing the creation of a high-speed ferry
service to bring gamblers from Hong Kong to Macau.  The ferry is operated in partnership with a
company controlled by China’s Guangdong province and a company affiliated with
Mr. Saixin.

73.
In an October 20,
2011 article in The Wall Street Journal,
it was reported that Sands’ General Counsel, Gayle Hyman, circulated an
internal memo instructing Sands employees to retain documents regarding “transmission
of anything of value” to current and former Macau government officials and
their family members, including Alves, and seeking a list of government
officials who have gambled in the Company’s casinos in Macau.

74.
According to The Wall Street Journal, as reported on
August 9, 2012, the Audit Committee provided to the NGCB a preliminary report,
prepared with the aid of outside counsel, O&M, that said the Company’s “controls
and books and records were not sufficient.”
The report apparently notes that the issue of deficient controls and
records has previously been investigated internally, and the Board adopted new
measures in February 2010.

75.
On March 1,
2013, the Company disclosed that it had informed the SEC in its December 31,
2012 10-K that an internal review, presumably by the Audit Committee, found the
casino had “likely violated” the books and records and internal controls
provisions of the FCPA.

76.
The Company
further stated that “[b]ased on the information provided to management by the
Audit Committee and its counsel, the Company believes, and the Audit Committee
concurs, that the preliminary findings: do not have a material impact on the
financial statements of the Company; do not warrant any restatement of the
Company’s past financial statements; and do not represent a material weakness
in the Company’s internal controls.”
Notwithstanding such statement, which the Individual Defendants knew or
should have known was unjustified, the 10-K Report went on to state that the
Audit Committee’s “investigation” was “largely completed” but still
continuing.  Significantly, the 10-K
contradicted the statement above by saying: “Based on proceedings to date,
management is currently unable to determine the probability of the outcome of
this matter, the extent of materiality, or the range of reasonable possible
loss, if any.”

77.
The details
about the “investigations” into Sands’ business practice and possible
violations of the FCPA have been closely guarded and not fully disclosed to
Sands’ shareholders. Notwithstanding such secrecy, the members of the Audit
Committee and their counsel, Daniel Bookin, Esq., have long-known of the
serious violations of the FCPA and other laws by the Individual Defendants.
Upon information and belief, the timing of the conclusion of the “investigations”
and the issuance of a final report thereupon has been delayed at the request of
Defendant Adelson or counsel representing his interests in connection with
ongoing DOJ and SEC negotiations over the extent of the sanctions that would be
imposed on Sands and, possibly, Defendant Adelson.

F.         Resignation
of PWC as Outside Auditor

78.
During the 2012
annual audit of Sands’ financial statements, the Audit Committee advised the
Board and PWC that “there were likely violations of the books and records and
internal control provisions of the FCPA” but that the Company’s practice “has
improved” in those areas in recent years.

79.
In an SEC filing
in April 2013, Sands reported that PWC resigned as the Company’s auditor after
having worked for Adelson and companies he controlled for 25 years.  The Company reported that there had not been
any “reportable disagreements.”  Upon
information and belief, Sands’ disclosure of likely FCPA violations, without
notifying PWC, created hostility between Sands and PWC, particularly given the
increasingly serious discomfort PWC and its Las Vegas and Hong Kong-based
partners had with respect to Sands’ business practices, its lack of adequate
controls, its fundamental doubts as to whether Sands’ financial statements were
prepared in accordance with Generally Accepted Accounting Principles (“GAAP”)
and PWC’s own conflicts of interest by serving as an auditor while, at the same
time, providing other lucrative services to the Company.

80.
Additionally,
PWC appears to have been concerned at potential exposure from the re-trial of
the lawsuit by Richard Suen referred to above.
According to Sands’ 2009 proxy statement, PWC was paid more than
$200,000 in 2008 for consulting services on the Suen case.  This payment was made to PWC while it served
as Sands’ outside auditor.  It is a
violation of auditor independence rules to advocate for an audit client in
court while also opining on the client’s books and records.  Moreover, as PWC well knew, but disregarded in
opining on Sands’ financial statements, the Company had “likely violated” the
books and records and internal controls provisions of the FCPA over a
multi-year period.

81.
A month after
PWC resigned, Sands appointed Deloitte & Touche LLP to serve as the
independent outside accounting firm.

 

G.        Money
Laundering

82.
On August 4,
2012, The Wall Street Journal
reported that beyond the FCPA probes, Sands was also being investigated for
possibly violating money-laundering laws in its handling of two so-called “high-rollers.”

83.
In its 10-Q
quarterly filing with the SEC, Sands reported that it received subpoenas on August
1, 2013 seeking documents relating to two prior customers, Zhenli Ye Gon, the
owner of a pharmaceutical company that manufactured ingredients used in
methamphetamines, awaiting extradition to Mexico for drug trafficking offenses,
and Ausaf Umar Siddiqui, a former vice president at Fry’s Electronics,
convicted of taking illegal kickbacks from the chain’s suppliers.

84.
Under the Bank
Secrecy Act, casinos are required to report suspicious illegal activity of
patrons’ funds.  Upon information and
belief, the money laundering activities are widespread within the Company’s
casinos.

85.
Mr. Ye Gon had
wired the proceeds of his narcotics sales to himself at Sands in Las
Vegas.  Even though he was “the largest
all-cash, up-front gambler the Venetian-Palazzo had ever had to that point”,
Sands management did nothing to identify the source of his funds, pursuant to
the Board’s “look the other way” policy.
The Company should have identified as “suspicious” the wire transfer of
approximately $45 million and the depositing of approximately $13 million in
cashier’s checks between February 2005 and March 2007.  The DOJ obtained evidence that “when casino
personnel asked Ye Gon to wire the money in larger lump sums, as opposed to
breaking it up incrementally, and use consistent listed beneficiaries, Ye Gon
stated that he preferred to wire the money incrementally because he did not
want the government to know about these transfers.”  The Company’s failure to report this activity
was in violation of the Bank Secrecy Act, all of which violations were known or
should have been known to the Individual Defendants.  While the members of the Sands’ Board may not
have known about individual money laundering transactions, they certainly knew
that their acquiescence therein generally encouraged management of the Company’s
casinos to do nothing about them, despite their illegality.

86.
Besides failing
to report on Ye Gon, who had lost more than $125 million gambling at Las Vegas
casinos between 2004 and 2007, Sands also did not report on Siddiqui, who had
transferred $121 million to Sands and MGM Resorts International casinos while
earning just $225,000 annually from Fry’s.

87.
In January 2013,
The Wall Street Journal reported that
Sands was, purportedly, improving its anti-money laundering compliance program
and ceased “executing international money transfers for its high-roller
customers.”  As part of this overhaul,
Sands retained Jerry Markling in July 2013 to be the Venetian’s Director of
Investigations.  Notwithstanding these
relatively cosmetic steps, Defendant Adelson, in attempting to develop
EuroVegas in Spain, was urging the Spanish government to relax its own
anti-money laundering enforcement.

88.
In June 2013, The Wall Street Journal reported that a
grand jury had been empaneled in Los Angeles to investigate the money
laundering at Sands’ casinos.

89.
On August 27,
2013, the Justice Department announced that it had resolved its money
laundering investigation of the Company and that Sands agreed to “return”
$47,400,300 to the U.S. Treasury in order to avoid criminal prosecution.  This settlement does not resolve the DOJ’s
FCPA and other investigations into Sands’ business operations.

90.
In addition to
the substantial damages caused the Company arising out of the DOJ’s money
laundering investigation and settlement, which cost it millions of dollars in
excess of the $47.3 million payment, the Company was forced to cancel its
long-planned EuroVegas development in Madrid arising out of Defendant Adelson’s
demand, among others, that Spain relax its anti-money laundering enforcement as
a condition to the casino complex being built. Adelson, had proposed the 22
billion-euro ($30 billion) EuroVegas project, which was to include 12 hotels,
six casinos, a convention center, golf courses, theaters, shopping malls, bars
and restaurants and was in its planning stages for approximately 7 years.  The negotiations were, at times, hostile.  The union that would have benefitted from the
EuroVegas project has said it welcomes the decision not to proceed with the
project and, in particular, does not accept the demands of Adelson, pointing to
his and Sands’ “dubious” reputation.  The
Company had expended tens of millions of dollars on this now-terminated
project, the loss of which was caused in part due to Adelson’s regrettable
demand that Spain relax its anti-money laundering laws and, as well, the “dubious”
reputation Adelson and Sands have developed in connection with the wrongdoing
referred to herein.

H.        False
Certifications

91.
As senior
officers of Sands, Defendants Adelman and Leven, among others in management,
had extensive duties to ensure the accuracy and completeness of financial
information disseminated to investors.

92.
As noted in
American Institute of Certified Public Accountants (“AICPA”) auditing standard,
Section 110.03, a public company’s management is responsible for preparing
financial statements in accordance with GAAP:

“The financial
statements are management’s responsibility.…
Management is responsible for adopting sound accounting policies and for
establishing and maintaining internal controls that will, among other things,
initiate, record, process, and report transactions (as well as events and
conditions) consistent with management’s assertions embodied in the financial
statements. The entity’s transactions and the related assets, liabilities, and
equity are within the direct knowledge and control of management.  The auditor’s knowledge of these matters and
internal controls is limited to that acquired through the audit. Thus, the fair
presentation of financial statements in conformity with generally accepted
accounting principles is an implicit and integral part of management’s
responsibility.”

93.
In Accounting
Series Release 173 (July 2, 1975), the SEC reiterated the duty of management to
present a true representation of a company’s operations:

“[I]t is
important that the overall impression created by the financial statements be
consistent with the business realities of the company’s financial position and
operations.”

94.
Pursuant to the
Sarbanes-Oxley Act of 2002 (“SOX”) and SEC rules promulgated thereunder, the
chief executive officer and chief financial officer of reporting corporations,
such as Sands, are required to certify as to the accuracy and completeness of a
company’s financial statements.

95.
At all relevant
times, Sands’ senior management, including Defendants Adelson and Leven and the
Audit Committee, repeatedly opined that internal controls over financial
reporting were adequate, despite the fact that there was no check on Defendant
Adelson’s behavior, and that there was known, widespread bribery in Macau,
money laundering generally, as well as other serious wrongful conduct as
referred to herein directed by Defendant Adelson, and acquiesced in by the
Individual Defendants.  Notwithstanding
such wrongdoing, Defendants Adelson and Leven unjustifiably executed “clean
certifications” pursuant to Sections 302 and 906 of Sarbanes-Oxley.  These certifications falsely and deceptively
stated, inter alia, that the Company
had disclosed all significant deficiencies and material weaknesses in the
design for operation of internal control over financial reporting which are
reasonably likely to adversely affect the Company’s ability to record, process,
summarize and report financial information.  As such, Defendants Adelson and Leven are
liable to the Company as a result of their false certifications.

V.        BREACHES
OF COMPANY POLICIES

  1. A.
    The Individual Defendants’ Roles and
    Responsibilities

96.
As officers
and/or directors of the Company, the Individual Defendants owed to the Company
and its shareholders fiduciary duties of trust, due care, candor, good faith,
and loyalty.  Each of the Individual
Defendants knew it was his fiduciary duty and responsibility to use his utmost
ability to oversee the management and administration of Sands’ business and
affairs, to ensure the Company complied with all of its legal obligations and
operated in a diligent, honest and prudent manner, and to ensure that effective
policies, procedures, systems, and internal controls are in place to prevent,
detect and promptly terminate any unlawful corporate conduct or unethical business
practices such as those described above.

97.
Each Individual
Defendant acquiesced in at least some of the wrongful conduct described herein,
thereby breaching his fiduciary duty of loyalty and good faith owed to the
Company and its shareholders.  Such conduct
is not the product of a valid exercise of business judgment, and constitutes a
non-exculpable breach of fiduciary duty for which each director faces a
substantial threat of personal liability.

98.
Each Individual
Defendant breached his respective duty of loyalty and good faith by knowingly
permitting management to engage in violations of the FCPA, anti-money
laundering laws and other laws, rules and regulations applicable to Sands and
its subsidiaries, as described herein, and by failing to implement and/or
maintain adequate internal controls to check Defendant Adelson’s domination
over the Company and to prevent violations of the FCPA and other laws, as
described herein.

99.
The Individual
Defendants, as a result of their service on the Board and on the committees
described fully in Sands’ 2010, 2011, 2012, and 2013 Proxy Statements, their
knowledge and expertise as alleged therein, the receipt by the Board and those
committees of regular and complete reports, and as reflected in the Company’s
belated 2013 disclosures of probable FCPA violations and violations of federal
anti-money laundering laws, were aware of the unlawful and unethical business
practices alleged herein, yet knowingly and/or recklessly breached their
fiduciary obligations as officers and/or directors of Sands, by permitting them
to be continued.

100.
Sands’ improper
inducements and underhanded practices aimed at influencing Macau government
officials in order to secure favorable concessions for the Company were not the
result of a rogue employee or division, but instead, notwithstanding the Code
of Business Conduct and Ethics and Anti-Corruption Policy, reflected a
Company-wide, “anything goes” business philosophy, directed, encouraged and
aggressively pursued by Defendant Adelson. Such philosophy was aimed at
increasing Sands’ revenues and profits through the payment of bribes in
violation of the FCPA, the engagement in money laundering and acquiescence in
prostitution at Sands’ casinos over compliance with laws and regulations designed
to protect the Company without due regard to the long-term consequences of such
wrongdoing.  Upon information and belief,
these widespread practices were well known to senior management and the entire
Board, and were knowingly pursued despite their knowledge of its illegality
and/or cover-up and the inevitable harm to Sands.  The Company’s management, accompanied by
Board passivity, knowingly made a calculated bet that any legal consequences
from the bribery and other wrongful conduct described herein would not be found
out by governmental regulators and enforcement agencies.  By knowingly or negligently permitting this
strategy to continue, notwithstanding its well-publicized codes of behavior,
the Board adopted it as Company policy, and committed a sustained and
systematic failure of compliance oversight in breach of each Board member’s
fiduciary duty of loyalty and good faith.

101.
None of the
Individual Defendants took steps to disclose Sands’ bribery, money laundering
activities and passive encouragement of prostitution promptly to the DOJ, the
SEC, Nevada gaming authorities and other regulatory agencies, as they were
legally required to do. Were it not for the falling out between Steven Jacobs
and Defendant Adelson leading up to the Jacobs lawsuit, the government
investigations may not have commenced and/or commenced when they did.

102.
As pointed out
below, the Individual Defendants flagrantly disregarded Sands’ Audit Committee
Charter, Anti-Corruption Policy, Code of Business Conduct and Ethics, and the
Board of Directors’ Corporate Governance Guidelines.  The Company’s Board published such documents
hypocritically, knowing that they would not be and were not being followed.

B.        Breach
of Sands’ Audit Committee Charter

103.
Defendants Ader,
Schwartz, and Siegel (the “Audit Committee Defendants”) owed specific
heightened duties as members of the Board’s Audit Committee.  Pursuant to the Audit Committee’s Charter, in
effect since April 2006, and as amended in April 2008, these Defendants are
responsible for being the Board’s front line in the oversight of compliance
with laws and regulations and enforcement of Sands’ Code of Business Conduct
and Ethics and Sands’ Anti-Corruption Policy.

104.
Sands’ current
and prior Audit Committee Charters state, in substance:

“The primary
purpose of the Audit Committee is to assist the Board…. of [Sands] in
fulfilling its oversight responsibilities with respect to (a) the accounting
and financial reporting processes of the Company, including the integrity of
the financial statements and other financial information provided by the
Company to its stockholders, the public, any stock exchange and others, (b) the
Company’s compliance with legal and regulatory requirements, (c) the
independent registered public accounting firm’s qualifications and
independence, (d) the audit of the Company’s financial statements, (e) the
performance of the Company’s internal audit function and independent registered
public accounting firm and (f) such other matters….”

105.
Both before and
since being charged with responsibility to investigate the claims made in
pre-existing shareholder derivative litigations, and following the sending of
Plaintiff’s Demand Letter to the Board, the Audit Committee has abjectly and
knowingly, with the advice of legal counsel, failed to fulfill the foregoing
responsibilities.

106.
In particular,
during the period of the wrongdoing alleged herein, the members of the Audit
Committee failed to fulfill their oversight responsibilities with respect to
the accounting and financial reporting processes of the Company, including the
integrity of the financial statements and other financial information, which
they knew or should have known were not accurate, were not audited by an independent
auditor and suffered material control shortcomings.

107.
Moreover, each
of the members of the Audit Committee serving at the times of the wrongdoing
alleged herein were personally aware or should have been aware that the Company
was not in compliance with legal and regulatory requirements including, inter
alia, the FCPA and anti-money laundering laws.  At all relevant times, the members of the
Audit Committee had total access to all documents and information bearing upon
the Company’s operations, including the information relevant to the wrongdoing
referred to herein.  In addition to each
of such members of the Audit Committee being members of the Board, they were
charged with specific responsibilities that enhanced their access to such
documents and information pursuant to, inter
alia
, ¶¶IV 9-12, 16, 20, 27 of the Audit Committee Charter which required
them to:

“9. Meet to
review and discuss the Company’s annual audited financial statements with
management, the internal audit group and the independent registered public
accounting firm, including reviewing specific disclosures made in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations.
10.  Discuss with the independent
registered public accounting firm the matters required to be discussed by
Statements on Auditing Standards Nos. 61, 89 and 90, as amended, or any other
Applicable Requirements. 11.  Based on
the review and discussions referred to in paragraphs 4, 9 and 10 above,
recommend to the Board whether the Company’s annual audited financial
statements should be included in the Company’s annual report on Form 10-K for
filing with the Securities and Exchange Commission. 12.  Prepare the report required by the Securities
and Exchange Commission to be included in the Company’s periodic reports,
annual proxy statement and any other reports of the Audit Committee required by
Applicable Requirements. 16.
Periodically meet separately with each of management, the independent
registered public accounting firm and the internal audit group. At such
meetings review (a) any significant disagreement between management and the
independent registered public accounting firm or the internal audit group in
connection with the preparation of the financial statements, (b) any
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information and (c)
management’s response to each. 20. Review and discuss with management, the
internal audit group, the independent registered public accounting firm and the
Company’s in-house and independent counsel, as appropriate, the Company’s legal
compliance report and any legal, regulatory or compliance matters that could
have a significant impact on the Company’s financial statements, including
applicable changes in regulatory and accounting initiatives, standards or
rules. 27. In consultation with the independent registered public accounting
firm and the internal audit group, review the adequacy of the Company’s
internal controls and its procedures designed to ensure compliance with laws
and regulations and any special audit steps adopted in light of material
control deficiencies.”

108.
By knowingly and
recklessly failing to ensure internal controls were in place, and by allowing
Defendant Adelson to exercise unbound discretion and personal autonomy over the
Company’s operations resulting in the wrongdoing described above, the Audit
Committee Defendants breached their fiduciary duties of loyalty and good faith
owed to the Company.

109.
In light of the
widespread nature of the wrongdoing referred to herein, particularly the
violations of the FCPA and anti-money laundering laws, the members of the Audit
Committee effectively acquiesced therein and were (and are) personally
responsible for the cover-up of such wrongdoing.  As such, they were not and could never be
considered independent, disinterested or investigating the wrongdoing claimed
by Plaintiff and other Sands’ shareholders in good faith.

C.        Breach


of Sands’ Anti-Corruption Policy

110.
Sands’ current
and previous Anti-Corruption Policy states, in substance:

This Policy is issued to assure that the
hospitality and business development practices of all operations of [Sands]
anywhere in the world are fully consistent with applicable record keeping and
anti-corruption laws, including the U.S. Foreign Corrupt Practices Act and the
Sarbanes-Oxley Act of 2002. This Policy reflects the fundamental values of [Sands]
,
and all employees, consultants and agents employed by [Sands] are expected to
honor them fully, both in letter and spirit. Violation of this Policy can be
grounds for immediate termination.

Under the laws
of every state and country in which we do business, it is a crime to pay a
bribe to obtain or maintain government business or to obtain an unfair
advantage. Under U.S. law, LVSC, its affiliates and subsidiaries may not give
anything of value, directly or indirectly, to, or for the benefit of, any (i)
foreign government official, (ii) foreign government agency, (iii) foreign
political party, or (iv) candidate for foreign political office, in exchange
for influencing any official action in favor of the Company.

“Anything” means
anything as liability can attach from the first dollar and includes currency,
monetary instruments and in-kind payments and gifts.

“Directly and
indirectly” includes to the official (as broadly defined above), to their
family members, and through third-parties such as agents, consultants,
junketeers, and other contractors.

The term “foreign
official” is interpreted broadly and includes employees as well as those who
are appointed or elected. It also includes employees of state owned or
controlled enterprises as well as governmental bodies. This means gaming
licensing officials outside the U.S. are “foreign officials” for purposes of
this Policy.

It is the policy
of LVSC to comply with all applicable laws, including anti-corruption laws such
as the FCPA, and to avoid even the appearance of impropriety. [emphasis in
original]

As all of our
financial records must be complete and accurate, any payments to or for the
benefit of foreign officials or entities must be recorded accurately and fairly
in our books, records, and accounts. The records for all such payments shall be
made available to the Company’s auditors and others responsible for the
preparation and review of the Company’s financial statements to ensure that the
Company’s financial statements are accurate and comply with all applicable
accounting principles.”  [emphasis added]

111.
Defendant
Adelson, directly and/or through subordinates, blatantly violated the Company’s
stated Anti-Corruption Policy by, inter alia, causing the direct and/or
indirect payment of bribes to foreign officials in violation of the FCPA and
acquiescing in the violation of Nevada, federal and other laws by permitting
the laundering of money at the Company’s casinos, all of which caused Sands
tens of millions of dollars in damages.

D. Breach of Sands’ Code of Business Conduct and
Ethics

112.
In 2005, the
Board said it adopted Sands’ Code of Business Conduct and Ethics in order to “maintain
high business ethics and standards.”  The
Code of Business Conduct and Ethics mandates compliance with
“both the letter and spirit of all laws, rules, and regulations applicable to
the Company’s business” and
specifically directs strict compliance with the internal accounting control and
record-keeping requirements of the FCPA, which the Individual Defendants have
breached and/or disregarded repeatedly. [emphasis added]

113.
On January 4,
2012, Defendant Adelson sent a widely-publicized and wholly hypocritical letter
to Sands’ Directors, Officers and Employees.
In such letter, also published on the Company’s website, Defendant
Adelson stated:

“Every day, we
do business in a world that is increasingly focused on the appearance of
conduct as well as the conduct itself. We function in a highly regulated
environment that presents unique challenges and opportunities for us to
demonstrate that the trust we have earned…is well-founded.”

114.
Defendant
Adelson attached to his letter the then-updated Sands’ Code of Business Conduct
and Ethics which, among its lofty but un-observed proclamations of the Company’s
policies states:

“As every member
of the Las Vegas Sands Corp. (sometimes referred to as the “Company”) team
knows, our core commitment is to “unmatched guest service” that complements
maximizing shareholder value. An essential component of that commitment is
integrity. In order to preserve the integrity of the Company’s business and the
manner in which we are perceived by co-workers, government regulators,
customers, suppliers, competitors, and the communities in which we live and
work, it is imperative that each officer, director and employee conduct his or
her business and personal affairs with integrity.”

115.
The updated Code
of Business Conduct and Ethics (the “Code”), attached to Adelson’s letter,
discusses some of the ethical and legal principles that must guide all of the
Company’s officers, directors, employees in their work.  The Code states as follows:

This Code is intended to prevent violations
of law and corporate policy, and to promote:

(1)        Compliance
with all applicable governmental laws, rules and regulations;

(2)        Full,
fair, accurate, timely and understandable disclosure
in reports and
documents that the Company files with or submits to governmental agencies,
including the Securities and Exchange Commission and gaming regulatory bodies
and in other third-party communications made by the Company;

(3)        Honest
and ethical conduct
, including the ethical handling of actual or apparent
conflicts of interest between personal and professional relationships;

(4)        The
prompt internal reporting of possible violations of this Code
to an
appropriate person or persons identified in this Code; and

(5)        Accountability for adherence to this
Code…

All persons
subject to this Code have a duty to cooperate truthfully and fully in the
investigation of any alleged violation of the Code. In addition, an employee
may be subject to disciplinary action, which may include termination of his or
her employment, if the employee fails to cooperate in an investigation,
deliberately provides false or misleading (including diverting, misdirecting,
or offering incomplete) information during an investigation, or deliberately
conceals or destroys records or anything in order to hinder the investigation.
If, at the conclusion of the investigation, it is determined that a violation
of this Code has occurred, we will take prompt remedial action commensurate
with the severity of the offense. This action may include disciplinary action
against the accused party, up to and including termination. Reasonable and
necessary steps will also be taken to prevent any further violation of the
policy at issue.”

[emphasis added]

116.
Notwithstanding
such Code, Defendant Adelson repeatedly violated its terms.  Moreover, upon information and belief, despite
their knowledge of ongoing investigations of the Company’s illegal practices,
neither the members of the Audit Committee nor the Board as a whole commenced
any serious internal investigation.  It
was only after publicity regarding the DOJ/SEC investigations and the
commencement of shareholder derivative litigation in 2011 did the Board and
Audit Committee set in motion their own purported investigation, which
investigation (later to allegedly include the claims made in Plaintiff’s Demand
Letter) was intended to generate a “whitewash” of the culpability of Defendant
Adelson and all members of the Board.

117.
The Code of
Business Conduct and Ethics states, inter
alia
:

“ Full, fair,
accurate, timely and understandable disclosure in the reports and other
documents that the Company files with, or submits to, the Securities and
Exchange Commission, gaming and other regulators and in its other public
communications is critical for the Company to maintain its good reputation, to
comply with its obligations under the securities laws and any other applicable
laws and regulations and to meet the expectations of its shareholders,
bondholders and other members of the investment community. Persons responsible
for the preparation of such documents and reports and other public
communications are to exercise the highest standard of care in their
preparation in accordance with the following guidelines:

•           all accounting records, and the
reports produced from such records, must be in accordance with all applicable
laws;

•           all accounting records must fairly
and accurately reflect the transactions or occurrences to which they relate;

•           all accounting records must fairly
and accurately reflect in reasonable detail the Company’s assets, liabilities,
revenues and expenses;

•           no accounting records should contain
any false or intentionally misleading entries;

•           no transactions should be
intentionally misclassified as to accounts, departments or accounting periods;

•           all transactions must be supported by
accurate documentation in reasonable detail and recorded in the proper account
and in the proper accounting period;

•           no information should be concealed
from the internal auditors or the independent auditors; and

•           compliance with the Company’s system
of internal controls is required…”

118.
Indeed, contrary
to the letter and spirit of Defendant Adelson’s January 4, 2012 letter and Code
of Business Conduct and Ethics, the Board and legal counsel used every means at
their disposal (a) to frustrate the investigations of the DOJ and SEC and to
delay, as long as possible, (b) to delay public disclosure of the wrongful
conduct of the Board and senior management as described herein; and (c) to
avoid ultimate accountability for such wrongdoing.  From the time of the wrongdoing alleged herein
to the present, the Board and senior management of the Company specifically
breached their obligation to make “Full, fair, accurate, timely and
understandable disclosure in reports and documents that the Company files with or
submits to governmental agencies, including the Securities and Exchange
Commission” as specifically mandated by the Code of Business Conduct and
Ethics.  In fact, the Board’s Compliance
Committee, which was charged by the Code to oversee compliance with its terms,
abjectly failed and continues to fail in carrying out the responsibilities
which it has been assigned.  Indeed,
there is no evidence that such Committee even functions.

119.
Each member of
the Sands’ Board, among others, was required to and, upon information and
belief, did execute the following statement, which appears at the end of the
Code:

DIRECTOR,
OFFICER & EMPLOYEE STATEMENT:

I have read,
understand and acknowledge the principles and standards of conduct contained in
the Las Vegas Sands Corp. Code of Business Conduct and Ethics. I will adhere to
and comply with such principles and standards. I am presently unaware of any
violation of this Code that I have not reported as required. I understand that
this statement and agreement does not constitute or give rise to any contract
of employment.

Please sign
here: _____________________________

Please print
your name: _______________________

Date:____________________

120.
Notwithstanding
the execution of the foregoing statements, Defendant Adelson, the members of
the Audit and Compliance Committees and each of the other Individual Defendants
knowingly failed to adhere to “the principles and standards of conduct
contained in the Las Vegas Sands Corp. Code of Business Conduct and Ethics.”  Moreover, each of the Individual Defendants
who executed the foregoing statement, despite their personal knowledge of the
wrongdoing alleged herein, falsely stated, “I am presently unaware of any
violation of this Code that I have not reported as required.”  In addition to the violations of the FCPA and
anti-money laundering laws referred to herein, each of the Individual
Defendants and members of senior management were well aware that prostitutes
were given free access to the Company’s casinos and were further aware that
casino management routinely devised various subterfuges to have prostitutes
provided to gamblers.

E.         Breach of Sands’ Board of Directors
Corporate Governance Guidelines

121.
Sands’ current
and previous Board of Directors Corporate Governance Guidelines states, in its
most significant provision:

“Majority of
Independent Directors. The Board will be composed of a number of independent
directors sufficient in order to comply with the requirements of the Securities
Exchange Act of 1934 (the “Exchange Act”) and the New York Stock Exchange
listing standards. The Board will determine, based on all of the relevant facts
and circumstances, whether each director satisfies the criteria for independence
and must disclose the identity of each independent director and the basis for
the Board’s determination of independence in the Company’s annual proxy
statement or, if the Company does not file an annual proxy statement, in the
Company’s annual report on Form 10-K.”

122.
As a result of
his and his wife’s direct and indirect Sands shareholdings, Defendant Adelson
controls every aspect of the Company’s business including, inter alia, all nominations to the Company’s Board of Directors.  Although the Guidelines proclaim that a
majority of Board members should be independent, none of the Sands directors
is, in fact, free of the control of Defendant Adelson.  Each of them owes his appointment, power and
lucrative compensation package to Adelson, who has either directly caused each
of them to be appointed to the Board or has acquiesced in their appointments as
directors.  Thus, each of Sands’
directors owes fealty to Defendant Adelson and will take no action contrary to
his personal interests. Even if the nominally independent Board members satisfy
the rather lax standards for independence set by the Exchange Act and the New
York Stock Exchange listing standards, the reality is that each director owes
personal fealty to Defendant Adelson and, thus, cannot seriously be considered
independent.

VI.
WRONGDOING
OF PWC

123.
During the
period of the wrongdoing alleged herein, the Audit Committee of the Board
appointed PWC as Sands’ independent registered public accounting firm (i.e.
auditor).  As an integral part of its
obligations to Sands and its shareholders and pursuant to the terms of its
annual retention until it resigned, PWC was obligated to, inter alia:
carry out its audits in conformity with GAAS, and render its opinions that the
Company’s financial statements were prepared in conformity with GAAP and were
otherwise accurate in all material respects.

124.
It was PWC’s
responsibility to evaluate Sands’ internal controls, which it repeatedly failed
to do over a period of at least five years or, to the extent that it did so,
any such evaluation was performed negligently.
Thus, despite knowing otherwise, PWC stated in each of its annual
opinion letters, as follows:

“in our opinion,
the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, [each such year], based on criteria
established in Integrated Internal Control Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO).”

125.
If PWC had
conducted its year-end audits of Sands’ consolidated and subsidiary financial
statements in conformity with GAAS, as it was contractually obligated to do,
and as an expert in the auditing of casino businesses, it either was obvious or
should have been obvious to PWC that the Company’s internal controls were
materially deficient and that Sands was engaging in the material wrongdoing
alleged herein.

126.
During the
fiscal years ended December 31, 2011 and 2012 and through April 23, 2013, both
PWC and the Company maintained, either by words or deeds, that there were no
disagreements between them as to any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreements if not resolved to the satisfaction of PWC would have
caused it to make reference to the subject matter of the disagreements in
connection with its reports on the Company’s consolidated financial
statements for such years.

127.
PWC, its
engagement partners and their colleagues, were motivated to “look the other way”
and deliver “clean” opinions as to Sands’ year-end financial statements when,
in fact, PWC knew that such “clean” opinions were wholly unjustified.  In order to retain the continued patronage
and substantial fees generated by Sands and the other Adelson-controlled
entities, other than in fiscal year 2008,[1]
PWC repeatedly generated “clean,” unqualified opinions that the year-end
financial statements of the Company and its subsidiaries were prepared in
accordance with GAAP and that such statements were audited by it in conformity
with GAAS when PWC knew such representations were false and would deceive the
investing public and the SEC.

128.
Thus, despite
its knowledge to the contrary, PWC repeatedly opined in its annual opinion
letters provided to the Board and to Sands shareholders, that:

“[i]n our
opinion, the consolidated financial statements listed in the accompanying
index, present fairly, in all material respects, the financial position of Las
Vegas Sands Corp. and its subsidiaries at December 31 [of each year], and the
results of their operations and their cash flows for each of the three years in
the period ended…. in conformity with accounting principles generally accepted
in the United States of America.”

129.
The statements
made by PWC in its annual opinion letters on Sands’ year-end financial
statements were materially false and misleading because of, inter alia, the widespread deficiencies
in Sands’ internal controls known or which should have been known to PWC and
each of the members of the Audit Committee that allowed much of the unlawful
conduct complained of herein to occur, including, bribing Macau officials to
obtain favorable concessions in violation of the FCPA, failing to report
suspicious money laundering activities in violation of the Bank Secrecy Act,
and associating with Chinese organized crime in running a junket business in
the Macau ventures.

130.
Notwithstanding,
or perhaps because of PWC’s acquiescence, Sands’ Audit Committee repeatedly
selected PWC as the Company’s auditor and proposed its choice to Sands’
shareholders for ratification.

131.
Additionally,
for approximately 25 years, PWC was beholden to Defendant Adelson and/or Sands
and/or Adelson-controlled entities, and provided auditing, consulting, and
other services. At such times as it was providing non-audit services to Sands
and/or was providing services to Defendant Adelson and entities controlled by
him and his family, PWC was not independent insofar as Sands was concerned.
Notwithstanding such lack of independence, until its resignation as Sands’
auditor on or about April 23, 2013, it represented falsely in its opinion
letters to Sands Board that it was independent, a fact known or which should
have been known by all Board members.

132.
Sands was
damaged by the continued engagement of PWC during at least the last three years
thereof as PWC continued to be in breach of its engagement, for which Sands
continued to pay it substantial sums. In the course thereof, Sands paid
millions of dollars in fees which, under the circumstances, were unjustly paid
and received.

133.
PWC resigned as
Sands’ auditor once the Company disclosed publicly in early 2013, in an SEC
filing: “There were likely violations of the books and records and internal
controls provisions of the FCPA.” Oversight of the “books and records [of
Sands] and internal control provisions of the FCPA” went to the heart of not
only the Audit Committee’s unfulfilled responsibilities but, in particular, to
the purported audits carried out by PWC as falsely represented in its annual
opinion letters.

134.
PWC, by acting as it did, either negligently
or deliberately, participated in the cover-up of the wrongdoing alleged herein,
and allowed the Individual Defendants cover-up to be perpetuated even after PWC
resigned as Sands’ auditor.

135.
Ultimately, PWC’s
failure to acknowledge publicly and, in particular, in filings with the SEC,
Sands’ lack of adequate financial and operational controls, harmed the Company
to a substantial extent, to a degree that cannot presently be determined.

VII.     DERIVATIVE ALLEGATIONS

A.        General
Derivative Allegations

136.
Plaintiff brings
this action derivatively in the right and for the benefit of Sands to redress
the breaches of fiduciary duty, waste of corporate assets, unjust enrichment
and other wrongful conduct by the Individual Defendants as alleged herein.

137.
Plaintiff owns
and has continuously owned common stock in Sands beneficially during the period
of the wrongdoing alleged herein.

138.
This action is
not a collusive one to confer jurisdiction that the Court would otherwise lack.

139.
Plaintiff will
adequately and fairly represent the interests of Sands and its shareholders in
enforcing and prosecuting its rights, and has retained counsel experienced in prosecuting
this type of action.

B.        Plaintiff
has Made Pre-Suit Demand Pursuant to Rule 23.1

140.
Sands’ Board of
Directors at the time Plaintiff commenced this litigation was comprised of the
following ten individuals: Defendants Adelson, Ader, Leven, Chafetz, Forman,
Koo, Schwartz, Siegel, Koppelman, and Chaltiel.  Each such defendant owes his position as a
director, together with the substantial financial and other benefits thereof,
to Defendant Adelson.

141.
On January 22,
2013, Plaintiff made a pre-suit demand on the Board as required by Fed. R. Civ.
P. 23.1.  Copies of the letter from
Richard D. Greenfield, Esq., one of Plaintiff’s counsel, setting forth such
demands (the “Demand Letter”) is attached hereto as Exhibit “A”.  The Demand Letter and the allegations therein
are incorporated herein by reference.

142.
In making the
demands set forth in the Demand Letter, Plaintiff was in no way conceding the
disinterestedness or independence of any of the Sands directors (nor does he
now concede such with respect to the directors selected after such dates whose
appointments were specifically made by or acquiesced in by Defendant
Adelson).  Rather, the pre-suit demands
were made to give the Board the opportunity to cause the Company to assert the
claims directly, in the first instance, that Plaintiff now asserts
derivatively.

143.
In his Demand
Letter, Plaintiff stated:

The demands made herein and the fact that
they have been made should not be taken to mean that any of you is independent,
dis-interested or can properly and objectively deal with such demands, which
you cannot.
  Similarly, O&M is
also not disinterested or independent given the manner and circumstances of its
retention and the manner in which its purported “investigation” is being
carried out and its participation with those of you on the Board’s Audit
Committee in generating the “whitewash report.” [emphasis added]

144.
The Demand
Letter did not include direct claims against PWC; however, under the
circumstances, no demand is necessary because any such demand would have been
futile under the circumstances. Had the Demand Letter included the claims
against PWC as alleged herein, the Board and its Audit Committee would have
included such claims in the “referral” to the Audit Committee, as described
below, and those claims would have been the subject of the same sham
investigation and whitewash that has been underway with respect to the claims
against the Individual Defendants.  Moreover,
if Sands had brought claims against PWC, it would have implicated Defendant
Adelson and the Individual Defendants including, in particular, the members of
the Audit Committee.

C.        The Audit Committee’s So-Called Investigation

145.
Despite the fact
that conduct described in the Demand Letter and in previous “demand futile”
shareholder derivative litigation complaints involved fundamental failures of
the Audit Committee and its specifically tailored responsibilities, on or about
July 26, 2011, the Company’s Board of Directors appointed the seriously
conflicted and hardly disinterested Audit Committee purportedly to “investigate”
the issues raised in such litigation.

146.
Among such
failures of the Audit Committee were its toleration of and lack of adequate
controls over the payment of bribes in China and serious money laundering at
the Sands’ casinos.  Indeed, in early
2013, in an SEC filing, Sands finally acknowledged: “There were likely
violations of the books and records and internal controls provisions of the
FCPA.”  Oversight of the “books and
records [of Sands] and internal control provisions of the FCPA” went to the
heart of the Audit Committee’s unfulfilled responsibilities.  Moreover, the members of the Audit Committee
also continued to select PWC as the Company’s auditor each year despite knowing
that it was not fulfilling the terms of its engagements by the Company and/or
carrying out its audits of the Company’s financial statements in a negligent
manner.

147.
The Audit
Committee supposedly retained O&M as its counsel.  However, upon information and belief, O&M
was selected to represent it by lawyers representing Defendant Adelson’s
interests.

148.
Within only a
few days following the sending of the Demand Letter and before it had even been
seen by its addressees, Richard A.
Sauber, Esq., a lawyer representing defendants in a pre-existing
shareholder derivative litigation, wrote to Mr. Greenfield on January 31, 2013,
in the guise of acting for the Company and the Audit Committee, whose internal “investigation”
he described.  He stated therein that the
Demand Letter had been referred to the Audit Committee, implying that it had
been the Board which made such referral, when he knew that this was not the
case and had probably made such “referral” himself. In his letter, he states as
to the Audit Committee’s activities: “To date, the Committee has interviewed in
excess of 200 individuals and reviewed millions of potentially relevant
documents in multiple languages.”

149.
In fact, Mr.
Sauber, after being asked who he represented, given his knowledge of the
purportedly independent investigative activities of the Audit Committee, only
belatedly acknowledged in a February 8, 2013 e-mail to Mr. Greenfield:

“This firm
represents the served defendants in the ongoing derivative actions” and, in
connection with the Demand Letter, he stated: “Daniel Bookin in the SF office
of [O&M] has been taking the lead for the Audit Committee.”

At
all relevant times, Mr. Sauber, who represented Sands at the Suen trial, has
ignored serious conflicts of interest, representing Defendant Adelson, others
of the Individual Defendants and Sands simultaneously, including in connection
with pre-existing shareholder derivative suits.

150.
Following the
identification of Mr. Bookin by Mr. Sauber, Mr. Greenfield attempted to set up
a meeting with Mr. Bookin.  When such a
meeting apparently was not convenient for Mr. Bookin and in light of the
curious communication from Mr. Sauber regarding the Board’s purported referral
of the Demand Letter to the Audit Committee, Mr. Greenfield wrote to Mr. Bookin
on March 7, 2013 which e-mail stated, in material part:

“I am sorry that
we could not get together while I was in San Francisco. Nevertheless, some of
what I wanted to discuss with you I have set out below. I also would appreciate
it if you would let me know whether you or anyone acting on behalf of the Sands
Board of Directors (or its Audit Committee) will be responding formally to my
letter to the Board of January 22, 2013 (the “Demand Letter”). If not, I will
regard the demands set forth in the letter as constructively rejected.

I note from a
Declaration that you caused to be filed on October 30, 2012 in Moradi v.
Adelson, Case Nos . 2:11-cv-490-MMD-(RJJ) [that] you stated:

On June 10, 2011
, the Board of Las Vegas Sands Corp. (“the Company “) ratified an earlier
decision authorizing its Audit Committee—composed of three outside directors,
Messrs. Irwin Siegel, Jason Ader, and Jeffrey Schwartz—to respond to a
subpoena from the Securities and Exchange Commission (“SEC”) and an inquiry
from the Department of Justice (“DoJ”) concerning the Company’s operations in
Macau. The Board also authorized the Audit Committee to retain any outside
counsel or other advisors necessary to perform those responsibilities. On July
26, 2011, the Board designated the Audit Committee as a “special litigation
committee,” and expanded the Audit Committee’s powers and responsibilities to
include investigating the allegations in the [Moradi] action.

Pursuant to the
authority ratified on June 10 and July 26, 2011, the Audit Committee retained
my law firm to assist with an independent investigation of the matters raised
in the SEC subpoena, the DoJ inquiry, and the above-captioned action.

Since then, my
law firm has interviewed in excess of 200 individuals in both the United States
and Macau to gather information relevant to the SEC subpoena, the DoJ inquiry,
and the above-captioned action.

In reviewing
your Declaration, several questions come to mind. I trust that you will be kind
enough to provide me with answers to the following questions as soon as
possible:

1.         Were you or a representative of your
firm present at any portion of the June 10, 2011, July 26, 2011 or any earlier
meeting of members of Sands’ Board of Directors or its Audit Committee?

2.         What criteria were used by the Board to
determine which of its members would be appointed “to respond to a subpoena
from the Securities and Exchange Commission (“SEC”) and an inquiry from the
Department of Justice (“DoJ”) concerning the Company’s operations in Macau”
and, ultimately, to serve as the members of a so-called “special litigation committee”
(the “Committee”)?

3.         Who participated in the determination
of such criteria?

4.         Were there any factors or facts that
the Board considered that might serve to disqualify any individual LVS Director
from serving on the Committee?

5.         What process did the Board utilize to
select those of its members who would be appointed “to respond to a subpoena
from the Securities and Exchange Commission (“SEC”) and an inquiry from the
Department  of Justice (“DoJ”) concerning
the Company’s operations in Macau” and, ultimately, to serve as the members of
the Committee?

6.         Did anyone investigate each of the
proposed members of the Committee to determine whether there were any facts or
circumstances which would disqualify any of such members from serving? If so,
who performed such investigation and when?

7.         Were any of the more than 200
interviews referred to in your Declaration conducted under oath and/or with
transcripts of the interviews? If not, in what form were the facts gleaned from
such interviews recorded and/or otherwise preserved for use by the Committee?

8.         Were interviews taken of each member of
the Sands Board and those former members who were serving during the period of
the possible wrongdoing being investigated by the DoJ and/or the SEC? If not,
why not?

9.         Were attempts… made to interview former
employees of Sands and/or its subsidiaries whose conduct is implicated in the
alleged wrongdoing or who are otherwise knowledgeable with respect to it
including, inter alia, Steve Jacobs, former chief executive of Sands China
Ltd.?

10.       Did any members of the Committee conduct
any of the interviews taken?

11.       Will your firm and/or the members of the
Committee attempt to calculate the extent of the economic and non-economic
damages alleged in the Demand Letters and as alleged in the derivative
Complaints that have been filed?

12.       Will the Committee be investigating any
of the issues raised by the Demand Letter beyond those raised by the DoJ and
SEC subpoenas or in any of the shareholder derivative Complaints that have been
filed?

13.       Will your firm or the Committee be taking
any action as to any remedial measures which address any of the wrongdoing
alleged in the Demand Letter and/or in any of the shareholder derivative
Complaints that have been filed?

14.       Which persons played a role in the
selection of you and/or your firm to represent the Committee?

15.       When did you first learn that you and/or
your firm learn that you and/or your firm were being considered to represent
the Committee, the entire Board of Directors or any of the LVS Directors in
connection with a response “to a subpoena from the Securities and Exchange
Commission (“SEC”) and an inquiry from the Department of Justice (“DoJ”)
concerning the Company’s operations in Macau.” From whom did you learn this
fact?

16.       What steps were taken to insure that
there were no facts or circumstances that might justify disqualification of you
and/or your firm from acting as counsel to the Committee?  By whom and when?

17.       Assuming your firm performed a conflict
check before being considered for the assignment ultimately accepted by you,
when was such conflict check performed?

18.       Have you and/or the Committee concluded
preliminarily or otherwise that Sands and/or any of its subsidiaries violated
the Foreign Corrupt Practices Act (“FCPA”) including “likely violations of the
books and records and internal controls provisions of the FCPA” and/or
applicable provisions of the federal securities laws?

19.       Have you or any member of the Committee
shared any of the facts that you have uncovered and/or your conclusions,
directly or indirectly with Sheldon Adelson or any other member of the Sands
Board?

I would also
appreciate receiving from you (a) each Board resolution delegating
responsibilities to the Committee as referred to above and/or appointing its
members and (b) A copy of each written demand upon Sands Board referring to any
of the issues/claims in the Demand Letter I sent to it on behalf of my firm’s
client.”

151.
Mr. Bookin
responded on March 14, 2013 and provided none of the answers or documents
requested.  Thus, at such time and at no
time subsequently did Mr. Bookin, Mr. Sauber or anyone else provide any
evidence of the disinterestedness, independence and/or bona fides (nor could
they be provided) of the Audit Committee or the investigations purportedly
carried out by it.

152.
As Mr. Sauber
indicated and as alleged in the Demand Letter, the so-called investigation “of
the issues” being carried out by O&M was not only well along but virtually
concluded by the time the Demand Letter was received.

153.
As alleged in
the Demand Letter, the Audit Committee and O&M were and have been engaging
in a massive “whitewash” of Defendant Adelson and the other Individual
Defendants. Aided and abetted by O&M, which was the primary recipient of
its largess to the tune of millions of dollars, the members of the Audit
Committee wasted Sands’ assets.  The
so-called investigation provided absolutely no benefit for the Company but was
carried out for the sole benefit of insulating Defendant Adelson and the other
Individual Defendants from liability for their wrongful conduct and ultimate
accountability to Sands therefor.  At the
time the Audit Committee was authorized by the Board to “investigate” the claims
in the shareholder derivative suits pending in Nevada, Mr. Sauber and his
colleagues undoubtedly anticipated and planned on using the final report of the
Audit Committee as their principal defense to the shareholder claims alleged
therein.

154.
The Demand Letter
states:

“According to The Wall Street Journal, a preliminary
version of the ‘whitewash report’ said the ‘company’s controls and books and
records were not sufficient,’ but even then, that ‘conclusion’ appears to have
been based on a review of transactions initiated by previous senior officers,
including former president Weidner, from 2003 to 2009, rather than a
comprehensive review…It is not surprising that the ‘investigation’ is not
pursuing all material leads that would generate…evidence.”

155.
Besides the fact
that the purported “investigation” was intentionally circumscribed in such
manner as to avoid finding liability on the part of the Individual Defendants,
instead of developing a record that could be used by the Company if it was to
ever pursue litigation against the Defendants herein or others (the
determination of which was a principal stated mission of the Audit Committee),
none of the more than 200 interviews that had been conducted (purportedly by
the Committee but, in fact, by O&M) were recorded, transcribed or under
oath.  Thus, if the Company was ever to
pursue litigation, it would be forced to expend massive amounts to create a
record that could have been maintained ab initio.

156.
In addition, upon
information and belief, neither the Audit Committee nor O&M interviewed (or
attempted to interview) some of the most knowledgeable witnesses in connection
with the wrongdoing alleged in the Demand Letter including: Richard Suen;
Steven Jacobs; Jerry Markling; Qian Qichen; Liu Qi; Tom DeLay; Edmund Ho; Marc
Stanley; Leonel Alves; Marshall Hao; Fernando Chui Sai On; Yang Saixin; Cheung
Chi-tai (a.k.a. Tsang Pau); Wong Kam-ming; Steve Vickers; Steve Wynn; Jim
Murren; Ausaf Umar Siddiqui and Zhenli Ye Gon.

D.  The Board’s
Constructive Rejection of Plaintiff’s Demands

157.
Despite the fact
that O&M and the Committee were already implicated in the “whitewash”
described in the Demand Letter, Plaintiff’s counsel repeatedly sought to learn
from Messrs. Bookin and Sauber material facts relating to the Demand Letter and
the purported “investigation” of the “issues” raised thereby.  He was repeatedly “stonewalled” by Messrs.
Bookin and Sauber.  In fact, the Board’s
response to the Demand Letter has been corrupted and, because there has been no
response to it despite the passage of so much time, the demands set forth
therein have been constructively rejected.

158.
Besides the
substantial passage of time since Plaintiff’s Demands were made (as well as the
most serious wrongdoing was brought to Board members’ attention), the
prevailing circumstances indicate that Plaintiff’s Demands have been
constructively rejected by the Sands’Board.

159.
The Individual
Defendants are exposed to potential liability for operating Sands without
adequate internal controls for compliance with, inter alia, the FCPA,
state gaming laws, and the Bank Secrecy Act, that would have detected and
prevented, among other wrongful conduct, improper inducements that occurred in
Macau for an extended period of time, the operation of the Company’s junket
business with Chinese organized crime, and the Company’s involvement in money
laundering activities.

160.
The Individual
Defendants have benefited from the wrongdoing, alleged herein, and have engaged
in conduct to preserve their positions of control and the perquisites derived
therefrom and to protect themselves from personal liability for their acts of
mismanagement and for their breach of fiduciary duties.

161.
To properly
prosecute this lawsuit, the Individual Defendants would have to sue themselves,
which would expose themselves to tens of millions of dollars in civil liability
and/or sanctions.

162.
The officers’
and directors’ liability insurance policies covering the Individual Defendants
contains an “insured versus insured exclusion” clause which would eliminate
coverage for any action brought directly by Sands against the Individual
Defendants.  As such, the Individual
Defendants, not wishing to face liability, will not cause Sands to sue the
Board.

163.
In light of the
Individual Defendants’ personal culpability and responsibility for the wrongful
acts described herein, and the insurance policies in place, the Individual
Defendants are not disinterested with respect to responding to Plaintiff’s
Demand Letter.

VIII.    PROXY STATEMENT ALLEGATIONS

164.
At all relevant
times, each of the Individual Defendants, because of their advisory, executive,
managerial, and directorial positions, had access to adverse, non-public
information about the Company’s financial condition and operations, including
the wrongdoing alleged herein.

165.
Each of the
Individual Defendants, because of their positions of control and authority as
officers and directors of Sands, directly and/or indirectly, exercised control
over the contents of the various public statements issued by the Company,
including Sands’ proxy statements issued and disseminated by them.

166.
On or about
April 26, 2013, the Individual Defendants caused the issuance and dissemination
of Sands’ Notice of Annual Meeting and Proxy Statement (“2013 Proxy Statement”)
announcing and soliciting shareholder votes in connection with Sands’ Annual
Meeting of Shareholders held on June 5, 2013.

167.
Among the items
of business for consideration by Sands’ shareholders at the Company’s 2013
Annual Meeting was the re-election of four directors named in the 2013 Proxy
Statement, Defendants Adelson, Chafetz, Chaltiel and Koppelman, each of whom
was put forward for re-election by the Board.

168.
At the time of
the 2013 Annual Meeting, the Board had ten directors, consisting of the Individual
Defendants, each serving three-year terms.
The four nominees for re-election, Defendants Adelson, Chafetz, Chaltiel
and Koppelman, were for a three-year term, which does not end until 2016.

169.
Upon information
and belief, each of the 10 directors serving as of April 26, 2013, personally
approved the substantive content of the 2013 Proxy Statement and/or indirectly
controlled its content, all the while omitting material facts bearing upon how
the shareholders of the Company would vote upon, inter alia, the Board’s
nominees for directorships.

170.
Despite federal
disclosure requirements, the Board caused the Sands’ 2013 Proxy Statement to be
issued on the Company’s behalf to misrepresent the manner in which the Board
members were and are selected and evaluated.
The 2013 Proxy Statement represents, “In addition to the specific
professional experience of each director, we chose our directors because they
are highly accomplished in their respective fields, insightful and
inquisitive.  In addition, we believe
each of our directors possess sound business judgment and is highly ethical.”  In reality, Defendant Adelson handpicked all
of the directors.

171.
More
significantly, if the Proxy Statement had disclosed the facts set forth herein
in neutral, non-pejorative terms, Sands’ shareholders would have been able to
conclude from such fact that the statement “we believe each of our directors
possess sound business judgment and is highly ethical” was false.

172.
Moreover, the
Board never conducted any objective evaluation of the conduct of its members
including, in particular, the wrongful conduct of Defendant Adelson, to whom
each other director owed his highly lucrative position on the Board.

173.
The 2013 Proxy
Statement also omitted non-pejorative material facts about the four nominees
for re-election to the Board, which the Company’s shareholders would have
wanted to know in voting upon the re-election of  directors.
Specifically, it failed to disclose the extent to which such members of
the Board participated in and/or acquiesced in the Company’s violations of, inter
alia
, the FCPA, Bank Secrecy Act, the Sands’ Board of Directors Corporate
Governance Guidelines, the Audit Committee Charter, the Anti-Corruption Policy
and the Code of Business Conduct and Ethics.

174.
In order to
induce Sands’ minority shareholders to vote in favor of the re-election of
Defendant Adelson and the other three nominees and to bolster their apparent
legitimacy as directors, the 2013 Proxy Statement set forth various
representations that the Board followed (including the four nominees), inter
alia
, the Code of Business Conduct and Ethics.  Each of the following representations was
false and misleading so as to lead Sands shareholders to believe that the
nominees for re-election warranted favorable votes when they did not.

175.
The nominees for
re-election to directorships of Sands, as set forth in the Company’s 2013 Proxy
Statement, were elected, and such elections were an essential link between the
false and misleading proxy statement and the wrongdoing such directors engaged
in following the 2013 Annual Meeting.  To
the extent that their serving as directors damaged the Company, as described
herein, such damages would not have taken place but for their election.  These directors receive lucrative
compensation packages from Sands for sitting on the Board, including fees for
committee chairs and “reimbursement of expenses.”  Such compensation paid to the directors
amounted to damages that would not have been sustained by the Company but for
the 2013 Proxy Statement.

IX.       DAMAGES
SUFFERED BY SANDS

176.
The Board and
senior management of Sands, including Defendant Adelson, in particular, failed
to act in accordance with any legitimate exercise of business judgment and
consistently with the fiduciary duties owed by them to Sands and its
shareholders.

177.
Sands’ directors
utterly failed to implement validly functioning reporting and controls to
prevent Sands’ serious violations of the FCPA and Defendant Adelson’s blatant
directives, and to stop the Company’s ties to organized crime in Macau.

178.
As a result of
the Individual Defendants’ breaches of their fiduciary duties as described
herein, Sands has been exposed to substantial injury to its reputation and
corporate good will, as well as to potential criminal and civil liability, and
the possibility of having its gaming license revoked or suspended.

179.
As a direct
result of the wrongdoing referred to herein and the Individual
Defendants’
concealment thereof in filings with the SEC and otherwise, investors have been
defrauded and the Company has been named as a defendant in class actions
commenced by such investors.

180.
The Company also
has been caused to expend tens of millions of dollars in the defense of the
Suen and Jacobs lawsuits, among others, and in connection with the ongoing and
concluded SEC and DOJ investigations referred to herein.  As a direct consequence, Sands has incurred
and will continue to incur substantial costs of defending against such
litigation and investigations and, ultimately, resolving them with Sands’ funds
despite the fact that the underlying wrongdoing was and is the responsibility
of the Individual Defendants named herein.

181.
Sands has
suffered and will continue to suffer substantial harm to an extent not yet
fully capable of determination.  Because
earnings from Macau properties account for over two-thirds of Sands’ reported
overall revenue, any adverse finding by SEC or DOJ investigations would have an
enormous impact on the Company’s future.
Indeed, the Company experienced a $4.4 billion decline in market capitalization
on March 1, 2011 when it disclosed the SEC and DOJ investigations.

182.
The wrongdoing
of each of the Individual Defendants and PWC as described herein was an
essential link in the damages caused and being caused to Sands and its
shareholders as a result thereof.  As a
direct and proximate result of such wrongdoing, Sands has expended and will
continue to expend large sums of money to comply with subpoena requests and
cooperate with the SEC, DOJ, NGCB, and FBI investigations, and to conduct any
further investigations that may be necessary.
Additionally, an adverse finding by any of the regulatory agencies
investigating Sands could result in fines, sanctions and disciplinary actions
against the Company.  Moreover, the
investigation of at least certain of the underlying claims and the manner of
the investigation purportedly being carried out by the members of the Audit
Committee, aided and abetted by O&M, has been a waste of the Company’s
assets since such investigation was not and is not for Sands’ benefit but
solely for the benefit of the Individual Defendants.

183.
For a period of
many years, Sands’ senior management and members of the Board became
knowledgeable of but nevertheless concealed definitive and material information
with respect to the Company’s FCPA violations, criminal junket business, and
other wrongful conduct as described herein.
Even now, the Individual Defendants continue to cause Sands to conceal
the most material information from its shareholders and the investing public
generally.  By such concealment, the
Individual Defendants have subjected the Company to additional investor
litigation and massive claims.

184.
Macau is the
only place in China where casinos are legal, and the Company’s properties there
provide the majority of its revenue.  While
corruption has been rampant in Macau, the central government of China
periodically has taken action to penalize companies and individuals that have
been found to engage in corrupt activities, particularly bribery of
governmental officials.  It is
inconceivable that the allegedly illegal activities of the Company and SCL are
not on the “radar screen” of China’s anti-corruption regulators and, thus, they
are vulnerable to having their legal activities curtailed or even eliminated.  Any corrupt or otherwise illegal conduct (such
as illegal foreign exchange dealings) by SCL or LVS (through their respective
executives) leaves the Company vulnerable to a material negative event.  Moreover, the Company has put its substantial
assets in Macau at risk by engaging in acts and practices (through junkets and
otherwise) designed to evade China’s limitations of money transfers for
gambling purposes, all of which evasion is acquiesced in by the Individual
Defendants.

185.
In addition to
the vulnerability of the Company’s operations in China (including Macau), more
likely, in the states of New Jersey and Nevada, based on the proven or
suspected activities described herein, Sands and its senior executives,
including Defendant Adelson, are vulnerable to being found to be unsuitable to
operate casinos in such states.  These
activities and the investigations in their wake have not only caused the
Company substantial direct and indirect expenses, but have rendered it
vulnerable to massive damages should its casino licenses be placed in further
jeopardy or lost.

X.        REQUEST FOR APPOINTMENT OF CONSERVATOR

OR SPECIAL
MASTER

186.
The Company has
been the subject of far-reaching and serious investigations with respect to the
wrongdoing alleged herein, including multi-year investigations by the SEC and
DOJ.

187.
Because the
Company’s Board suffers massive conflicts of interest due to the personal
culpability of Defendant Adelson and other members of the Board, the members of
the Board are not capable of advancing solely the Company’s interests and not
their own.  Moreover, the legal counsel
acting for them similarly have not acted exclusively in the Company’s best
interests in dealing with the foregoing investigations, in connection with
possible resolution of claims against Sands, and in seeking the dismissal of
pending shareholder derivative suits.  Based
upon the facts and circumstances described herein, it is a virtual certainty
that the members of the Sands’ Board or their legal counsel will not deal with
this litigation objectively and solely in the Company’s best interests.

188.
In order that
the Company’s interests be addressed to the exclusion of all others, Plaintiff
requests the appointment by the Court of a Conservator or Special Master to
oversee the Company’s dealings with the DOJ, the SEC and any other agencies
investigating it in connection with the wrongdoing alleged herein and in
connection with the Company’s response to this litigation in order that the
Company’s interests are put before all others and are not compromised by the
defense of the Individual Defendants and/or material conflicts of interest on
the part of their legal counsel.  Should
the Company’s interests continue to be represented as they are at present by
conflicted counsel whose principal allegiance is to Defendant Adelson and the
other Individual Defendants, Sands will be irreparably harmed.

COUNT I

(For
Violations of Section 14(a) of the Exchange Act)

189.
Plaintiff
repeats and re-alleges each and every allegation contained above as if fully
set forth herein.

190.
This claim is
asserted by Plaintiff individually against the Individual Defendants who were
members of the Company’s Board of Directors when the 2013 Proxy Statement was
issued and disseminated to Sands shareholders.  Such claims arise from their violation of
Section 14(a) of the Exchange Act and SEC Rule 14a-9 in connection with such
Proxy Statement issued for the 2013 Annual Meeting of Shareholders.

191.
Through the 2013
Proxy Statement, the Board solicited the votes of Plaintiff and the other Sands
shareholders in connection with, inter alia, the re-election of
Defendant Adelson and three other members of the Company’s Board.

192.
The Board,
through the 2013 Proxy Statement, recommended that Sands’ shareholders vote in
favor of each of the Board’s proposals and, in particular, in favor of the
re-election of each of Board members nominated for re-election.

193.
The 2013 Proxy
Statement contained untrue statements of material fact and omitted other facts
necessary to make the statements made not misleading, and failed to disclose
material facts as more fully set forth above.
In particular, the 2013 Proxy Statement failed to disclose material
information regarding the nominee directors and the conduct of Sands’ business
by them, as set forth above.

194.
In addition to the
frustration of their suffrage rights, these deceptions proximately caused Sands
and each of its shareholders direct and indirect economic and other damages
following the 2013 Annual Meeting in an amount which cannot presently be
determined.

195.
As a result of
the use by the Company’s Board of Directors of the 2013 Proxy Statement to
solicit the votes of Sands’ shareholders, which Proxy Statement failed to
disclose the material facts set forth herein, the Board’s four director
nominees, as well as the other Board proposals, were approved.  Such votes in favor of the Board’s proposals,
including the re-election of Defendant Adelson, violated Plaintiff’s suffrage
rights and caused him damage in an amount which cannot presently be determined.

196.
By utilizing
such Proxy Statements, the suffrage rights of Plaintiff and each other
shareholder of the Company have been violated, which conduct is in violation of
Section 14 (a) of the Exchange Act and SEC Rule 14a-9.

COUNT II

(For
Violations of Section 14(a) of the Exchange Act)

197.
Plaintiff
repeats and re-alleges each and every allegation contained above as if fully
set forth herein.

198.
This claim is
asserted by Plaintiff derivatively on behalf of Sands against the Individual Defendants
who were members of the Company’s Board of Directors when the 2013 Proxy
Statement was issued and disseminated to Sands shareholders.

199.
As a result of
the use by the Company’s Board of Directors of the 2013 Proxy Statement to
solicit the votes of Sands’ shareholders, which Proxy Statement failed to
disclose the material facts set forth herein, the Board’s four director
nominees, as well as the other Board proposals, were approved.  Such votes in favor of the Board’s proposals,
including the re-election of Defendant Adelson, damaged the Company in an
amount which cannot presently be determined.

COUNT III

(Breach
of Fiduciary Duty and Waste of Corporate Assets)

200.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

201.
The Individual
Defendants all owed and/or owe fiduciary duties to the Company and its
shareholders to exercise candor, good faith and loyalty.  By reason of their fiduciary relationships,
the Individual Defendants specifically owed and owe Sands the highest
obligation of good faith and loyalty in the management and administration of
the affairs of the Company, including the oversight of Sands’ compliance with
federal laws such as the FCPA, particularly in Macau where the culture does not
discourage improper payments to obtain or retain business.

202.
Moreover, the
Board had specific fiduciary duties as defined by the Company’s key corporate
governance documents and principles, and as set forth above, that, had they been
discharged in accordance with the Board’s obligations, would have necessarily
prevented the misconduct and consequent harm to the Company, as alleged herein.

203.
The Individual
Defendants consciously violated their corporate responsibilities and intentionally
breached their fiduciary duties to protect the rights and interests of Sands
and its shareholders.

204.
As a direct and
proximate result of the Individual Defendants’ conscious failure to perform
their fiduciary obligations, they have caused the Company to waste valuable
corporate assets and expend its corporate funds unnecessarily.

205.
As a result of
the misconduct alleged herein, Sands has sustained and will continue to sustain
significant damages, not only monetarily, but also to its corporate image and
goodwill.

206.
As a result of
the misconduct alleged herein, the Individual Defendants are personally liable
to the Company in an amount which cannot presently be determined.

COUNT IV

(Unjust
Enrichment)

207.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

208.
Each of the
Board members named as defendants herein, was or is being unjustly compensated
by Sands with compensation packages and otherwise despite the failure of their
stewardship of the Company and their personal implication in the wrongdoing set
forth herein.

209.
Each of the
Individual Defendants who have been unjustly enriched by the wrongdoing set
forth in this Complaint should be required to account for and repay the Company
therefor, together with their earnings thereupon.

COUNT V

(Breach
of the Duty of Candor)

210.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

211.
Each of the
sitting Sands’ directors, at the time of the issuance and dissemination of the
Company’s 2013 Proxy Statement, by reason of the fact that such proxy statement
was and is false and misleading, as described herein, breached his or her
respective duties of candor owed to Sands, Plaintiff, and the Company’s other
shareholders.

212.
For the reasons
set forth with respect to Plaintiff’s Exchange Act claims, he is entitled to
injunctive relief as set forth below and such damages as he may prove at trial.

COUNT VI

(Breach
of the Duty of Loyalty)

213.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

214.
The wrongful
conduct of the Individual Defendants breached their respective duties of
loyalty to Sands and, as such, should be held accountable to Sands for the
wrongful conduct described herein.

COUNT VII

(Breach
of Contract)

215.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

216.
This claim is
alleged against Defendant Hipwell, as a Partner of PWC, as a result of PWC’s
breach of the engagement contracts entered into with the Company including, inter alia, its failure to perform
audits of Sands’ year-end financial statements in conformity with GAAS, as PWC
was obligated to do.

217.
As a direct
consequence of its breach of its engagement contract with Sands, the Company
has been damaged in an amount which cannot presently be determined.

COUNT VIII

(Negligence)

218.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

219.
This claim is
alleged against Defendant Hipwell, as a Partner of PWC, as a result of its
negligent performance of PWC’s audits of the Company’s financial statements as
described above.

220.
As a direct
consequence of its negligence, the Company has been damaged by PWC in an amount
which cannot presently be determined.

COUNT VIII

(Unjust
Enrichment)

221.
Plaintiff
repeats and re-alleges each of the allegations set forth above as if fully set
forth herein.

222.
This claim is
alleged against Defendant Hipwell, as a Partner of PWC, as a result of PWC’s
receipt from the Company of millions of dollars in unjustly paid fees and other
compensation.

223.
As a direct
consequence of its conduct as described herein, PWC has been unjustly enriched
in an amount which cannot presently be determined. PWC through its Partner,
Defendant Hipwell, should be required to account for and repay the Company the
amount by which PWC was unjustly enriched together with its earnings thereupon.

PRAYER FOR RELIEF

WHEREFORE,
Plaintiff prays for judgment as follows:

  1. Appointing
    a Conservator or Special Master to oversee and direct (1) the Company’s
    negotiations with the DOJ and the SEC with respect to the wrongdoing alleged
    herein; and (2) to act in place of Sands’ Board in connection with the Company’s
    response to this litigation or any other pending shareholder derivative
    litigation in which one or more of the Individual Defendants herein is named as
    a defendant;
  2. Appointing
    a Chief Compliance Officer with specific responsibility for overseeing and
    enforcing Sands’ compliance with the FCPA, the Bank Secrecy Act, the Dodd-Frank
    law, the Sarbanes-Oxley Act, state and local rules and regulations applicable
    to the Company’s gaming activities (including anti-prostitution laws) and applicable
    federal securities laws;
  3. Determining
    that Sands’ 2013 Proxy Statement is false and misleading in violation of §14(a)
    of the Exchange Act and Rule 14a-9 promulgated thereunder and that the Board
    has breached its duty of candor;
  4. Declaring
    that the current and former directors of the Company named as defendants herein
    have breached their fiduciary duties and wasted Sands’ assets, as alleged
    herein, causing substantial damages to Sands;
  5. Requiring
    the Individual Defendants to pay to the Company the amounts by which it has
    been damaged or will be damaged by reason of the conduct complained of herein;
  6. Finding
    that PWC has breached the terms of its engagements by Sands causing substantial
    damages to it;
  7. Finding
    that PWC has negligently performed its audits of the Company’s year-end
    financial statements causing Sands substantial damages;
  8. Requiring
    the Defendants to repay the Company to the extent they have been unjustly
    enriched by their wrongful conduct, as described herein, together with their
    earnings upon such amounts;
  9. Ordering
    the Company to take all necessary actions to reform and improve its corporate
    governance, compliance and internal control procedures for the purpose not only
    of preventing a recurrence of the failures detailed above, but to optimize such
    procedures in light of relevant and current best practices;
  10. Awarding
    Sands restitution from Defendants;
  11. Determining
    and awarding to Sands exemplary damages in an amount necessary to punish the
    Defendants;
  12. Awarding
    Plaintiff and his counsel reasonable attorneys’ fees, expert fees and other
    reasonable costs and expenses; and
  13. Granting
    such other and further relief as this Court may deem just and proper.

JURY DEMAND

            Plaintiff demands a trial by jury on
all claims so triable.

Dated: January
22, 2014

ALBRIGHT,
STODDARD, WARNICK

AND ALBRIGHT

 

                                                           

G. Mark Albright

Nevada
Bar No. 1394

William H.
Stoddard, Jr.

Nevada Bar No.
8679

801 S Rancho Dr
D4, Las Vegas, NV 89106

(702) 384-7111

Fax: (702)
384-0605

Email:  gma@albrightstoddard.com

Email:
bstoddard@albrightstoddard.com



 

Richard D.
Greenfield

Ilene F.
Brookler

Marguerite R.
Goodman

GREENFIELD &
GOODMAN, LLC

250 Hudson
Street, 8th Floor

New York,
NY  10013

Tel:
917-495-4446

ibrookler@gmail.com

whitehatrdg@earthlink.net

twowhitehats@earthlink.net

 

Rose F. Luzon

Valerie Chang

SHEPHERD,
FINKELMAN,

MILLER &
SHAH, LLP

401 West A
Street, Suite 2350

San Diego, CA
92101

Telephone: (619)
235-2416

rluzon@sfmslaw.com

vchang@sfmslaw.com

 

Scott R.
Shepherd

SHEPHERD,FINKELMAN,
MILLER&   SHAH, LLP

35 E. State
Street

Media, PA  19063

Tel:
610-891-9880

sshepherd@sfmslaw.com

 

Counsel for Plaintiff