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U.S. seeks another extension for Okada payments probe

Universal Entertainment Corporation CEO Kazuo Okada poses during an interview in Hong Kong October 30, 2012. REUTERS/Bobby Yip
Universal Entertainment Corporation CEO Kazuo Okada poses during an interview in Hong Kong October 30, 2012. REUTERS/Bobby Yip

TOKYO (Reuters) - U.S. prosecutors are seeking to put a civil lawsuit between Wynn Resorts Ltd and Japanese billionaire Kazuo Okada on hold for another six months to continue a criminal investigation into Okada and his companies regarding payments in the Philippines, according to a motion filed to a Nevada court.

The motion marks the third time U.S. prosecutors have sought a six-month "stay on discovery" in the civil suit in which Wynn accused Okada of breach of fiduciary duty and other offences in relation to payments made to foreign gaming regulators.

Okada, the founder of Japanese gaming machine maker Universal Entertainment Corp <6425.T>, was a director of Wynn Resorts when the suit was launched in 2012. Okada has denied the allegations and is contesting the claims in court.

U.S. prosecutors first secured a stay on discovery in April of last year. The subsequent extension, granted by Clark County District Judge Elizabeth Gonzales in October, is due to expire on May 5.

Stopping discovery - the process by which parties obtain evidence and information from each other - prevents a suit from proceeding.

A hearing on the motion is scheduled for Friday, according to the court's website.

The U.S. government said in the motion that its criminal investigation had progressed in the past six months, but that it was still ongoing and that allowing the suit to proceed could lead to the disclosure of government witnesses.

The "disclosure of the names of government witnesses and the information they have provided would irreparably impact the government's ability to meaningfully investigate this matter," said the motion, submitted by U.S. Attorney Daniel Bogden this week.

Representatives of Universal could not be immediately reached for comment. Wynn Resorts declined to comment.

In the motion, the U.S. government said that counsel for Wynn was not against extending the existing stay but would oppose a partial stay, which would allow some exchanging of documents and evidence.

Counsel for Okada advised that they opposed extending the existing stay but "do not oppose in concept a partial stay of discovery", the motion said.

For more than two years, Okada has been locked in a legal battle with Wynn Chief Executive Steve Wynn, during which the former business partners have exchanged allegations of illegal conduct.

Wynn forcibly redeemed Okada's 20 percent stake in the U.S. casino operator in 2012 at a discount, alleging Okada had made improper payments to Philippine government officials to advance his planned $2 billion casino project there.

Okada has denied any wrongdoing and filed a counterclaim to nullify the share redemption.

The U.S. criminal investigation is focused on $40 million in payments made by Universal affiliates to a politically connected consultant in the Philippines in 2010.

The payments, which were made around the same time Universal lobbied for concessions for its casino on Manila Bay, are also being investigated by the Philippine government and the Nevada gaming regulator, according to people familiar with the matter.

Universal has filed a defamation suit against Reuters in Tokyo for its reporting on the $40 million payments. A Reuters spokesman said the news agency stands by its reporting.

(Reporting by Nathan Layne; Editing by Christopher Cushing)

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