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DC lottery contract is the subject of a federal probe with numerous officials under scrutiny

Washington, D.C. LotteryWashington, D.C. Lottery: DC lottery contract is the subject of a federal probe with numerous officials under scrutiny
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WASHINGTON, D.C. — A federal grand jury is investigating the awarding of the $38 million contract to run the District of Columbia lottery, a process that raises further questions about corruption in a city government already beleaguered by criminal prosecutions.

Although no one has yet been charged in the lottery probe, authorities are looking for evidence of crimes including bribery and illegal steering of contracts, and numerous officials are under scrutiny, according to several people familiar with the probe. They spoke on condition of anonymity because they've been instructed not to impede the ongoing investigation.

Regardless of the outcome of the probe, the awarding of the lottery contract — which went to Greek gaming company Intralot in 2009 — illustrates systemic problems that open the door for elected officials to play politics with the contracting process and influence who wins.

The lottery investigation increases the scrutiny on a city government already reeling from unrelated prosecutions that targeted several of the district's elected officials and their aides. Three aides to Mayor Vincent Gray's 2010 campaign have pleaded guilty to federal crimes, and the mayor's campaign remains under investigation. Meanwhile, two councilmembers have resigned in the past year after pleading guilty to felonies — one of which involved stealing city money earmarked for youth sports.

The lottery probe has the potential to be the most sweeping of them all because of the number of people being investigated. The awarding of the contract was a bruising, years-long fight that left no one completely satisfied — including the winning bidders.

Key stumbling blocks with the district's contracting system include the include the ability of the D.C. Council to block contracts worth more than $1 million and the de facto requirement that major contractors have a local partner, even if that partner has no expertise in the service being provided.

"This is one of the worst processes, if not the worst, that I've seen in 45 years of government service, both federal and local," said Doug Patton, a lobbyist and former deputy mayor who was involved in a losing bid for the lottery. "The quicker they get to the bottom of this, the better."

The process began in 2007, when the district's Office of the Chief Financial Officer solicited bids for a new lottery operator. By the end, significant questions were raised about why one seemingly surefire bid was rejected by the council, the qualifications of local partner eventually included in the contract and the unusual circumstances surrounding the authorization of online gambling. These are among the issues federal authorities are investigating.

Only a handful of large firms have the technology to operate state-level lottery systems. But district contracting rules make it all but impossible to win a major contract without a local partner that's been certified as a disadvantaged local business. The program grew out of minority set-asides implemented under former Mayor Marion Barry.

Intralot partnered with real estate developer Warren Williams Jr. to submit the winning bid. The CFO's office informed the council that the new partnership would provide better technology than the previous lottery vendor and save the city about $5 million a year. Yet the council was cool to the prospect of approving the contract, in part because of Williams' political connections. He was a friend and supporter of then-mayor Adrian Fenty.

For months, Gray — who would later run against Fenty and accuse the mayor of giving contracts to his cronies — refused to bring the contract up for a vote. Behind the scenes, according to court papers filed in a civil lawsuit, Gray was pressuring Chief Financial Officer Natwar Gandhi to get rid of Williams. The chief contracting officer for the CFO's office alleges in the lawsuit that he was pressured to rebid the contract, and when he refused — insisting it would be illegal — he was demoted and fired.

Investigators have been asking about the motivation behind Gray's and Gandhi's actions during this period, according to people familiar with the probe. Gray's attorney, Robert Bennett, declined to comment on the investigation. Gandhi declined to be interviewed. His spokesman, David Umansky, said Gandhi "never lobbied for or against any bidder."

Meanwhile, councilman Jim Graham inserted himself into the process. During a meeting with Williams and his partners, Graham made an offer: He would support Williams' lottery bid if Williams withdrew from a development deal around a Metro subway station, according to emails between participants in the meeting. Graham also served on the Metro board at the time, and Williams and his attorney refused, describing it as potentially illegal meddling in the contracting process.

The FBI and U.S. Attorney's Office have been asking about Graham's actions, according to people with knowledge of the probe. An investigation conducted by a law firm for Metro determined that Graham acted improperly but was not motivated by any financial interest. Graham does not deny making the offer but insists he has committed no crimes.

Councilwoman Yvette Alexander has also been tied to a questionable offer to Williams, according to people familiar with the investigation. Two staffers for Alexander asked Williams for money to prove his loyalty to the councilmember, with one putting the price tag at $20,000, according to people familiar with the probe. Investigators are aware of the request and have asked about it, according to a person they have interviewed. Alexander told AP she made no such offer and that she doesn't take the allegations seriously.

In December 2008, the council voted 8-5 to reject the Williams-Intralot partnership.

The CFO's office solicited new bids, and Intralot won again, this time without a local partner. But its representatives and lobbyists became convinced they could not gain the council's support without one.

Enter local businessman Emmanuel Bailey. A friend of Intralot lobbyist and former councilmember Kevin Chavous — who had introduced him to Gray during the first round of bidding — Bailey was brought on as a subcontractor with a 51 percent stake. Because he entered the contract after the procurement process, he didn't get the same level of scrutiny from the CFO's office before the council voted to approve the contract.

Bailey's company operated out of his mother's home. When city inspectors visited it, they found two desks, two computers and a printer in a family room. They found no company letterhead or business cards. Inspectors wrote in their report that the company should find a suitable office space before being considered for certification as a legitimate local business.

Two days later, Bailey's company was certified, an action the city's inspector general later found was improper. A local firm involved in a competing bid was denied certification — and the inspector general said that move was improper as well. The inspector general's report gave ammunition to critics of the lottery deal, but the office has no enforcement authority.

The contract awarded to Intralot and Bailey included a potentially lucrative option to operate an online gambling system if online gambling were legalized in the district. Councilmember Michael A. Brown worked to make that happen — but not by introducing a standalone bill. Instead, he inserted language into a budget bill that was initially circulated at 2:17 a.m.

Several of Brown's colleagues have said they did not realize they were voting to authorize online gambling — which Brown disputes. But the council ultimately voted to repeal it amid criticism about lack of transparency.

The effort took its toll on Brown, who lost his bid for re-election. Federal investigators are examining his actions and his employment with a lobbying firm that has a gaming practice, according to the people familiar with the probe. Brown no longer works for the firm and says there was no conflict of interest.

Brown says he has not been contacted by investigators and has no reason to believe he is a target of the probe. He is also friends with Bailey, who has made campaign contributions to the outgoing councilmember.

The defeat of online gambling was a financial blow to Intralot and Bailey, but they continue to hold the lottery contract, and the CFO's office has not reported any problems with their performance.

AP

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14 comments. Last comment 1 year ago by jarasan.
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rdgrnr's avatar - walt
-Ridge Runner- Oracle of the Appalachians
Way back up in them dadgum hills, son!
United States
Member #73904
April 28, 2009
14695 Posts
Online
Posted: December 12, 2012, 9:51 am - IP Logged

Corruption in Washinton DC?

Fouling the pristine legacy handed down by legendary leaders like Marion Berry?

I can not believe it!

I will not believe it!

I am shocked and appalled!

    Avatar
    St. Pete Beach, Fl
    United States
    Member #131704
    August 16, 2012
    40 Posts
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    Posted: December 12, 2012, 10:23 am - IP Logged

    LOL!!  The b*tch set me up!!   LOL


      United States
      Member #116272
      September 7, 2011
      20244 Posts
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      Posted: December 12, 2012, 10:57 am - IP Logged

      No tampering with winning numbers????? I guess there's not much money in that????? LOL


        United States
        Member #116272
        September 7, 2011
        20244 Posts
        Offline
        Posted: December 12, 2012, 11:00 am - IP Logged

        I suppose taking money from the lottery, is much easier than winning money in the lottery......What?


          United States
          Member #116272
          September 7, 2011
          20244 Posts
          Offline
          Posted: December 12, 2012, 11:08 am - IP Logged

          Corruption in Washinton DC?

          Fouling the pristine legacy handed down by legendary leaders like Marion Berry?

          I can not believe it!

          I will not believe it!

          I am shocked and appalled!

          I Agree! Shocking...........Green laugh

            MADDOG10's avatar - smoke
            North Jersey
            United States
            Member #5709
            July 18, 2004
            17121 Posts
            Online
            Posted: December 12, 2012, 11:17 am - IP Logged

            Geez, A Federal Grand Jury Investigates potential wrong doings in D.C., what is one to think of this?

            Now if the votes had been tabulated on the same machines that were used during the Elections, they wouldn't be having this problem don't you know..!

                          You have not lived Today, until YOU can do something for someone

                                                     who can never repay you.

              Original Bey's avatar - Lottery-022.jpg

              Bahamas
              Member #133467
              September 30, 2012
              4916 Posts
              Offline
              Posted: December 12, 2012, 12:23 pm - IP Logged

              Geez, A Federal Grand Jury Investigates potential wrong doings in D.C., what is one to think of this?

              Now if the votes had been tabulated on the same machines that were used during the Elections, they wouldn't be having this problem don't you know..!

              Green laugh

               

              Hindsight is 20/20!

              "Everything works  ONCE!"

                dallascowboyfan's avatar - tiana the-princess-and-the-frog.jpg
                Oklahoma
                United States
                Member #82391
                November 12, 2009
                4889 Posts
                Offline
                Posted: December 12, 2012, 1:00 pm - IP Logged

                Corruption in Washinton DC?

                Fouling the pristine legacy handed down by legendary leaders like Marion Berry?

                I can not believe it!

                I will not believe it!

                I am shocked and appalled!

                I am SHOCKED.... Thud

                Win BIG everyone....White Bounce

                I Love Pink & Green 1908

                  Piaceri's avatar - sarsony1
                  Wannabe Won Percenter
                  Republic of Texas
                  United States
                  Member #57557
                  January 9, 2008
                  954 Posts
                  Offline
                  Posted: December 12, 2012, 1:57 pm - IP Logged

                  DC... Detroit... DC... Detroit...

                  Just trying to figure which city is more corrupt....

                   

                  Boxing

                  face

                  singlewinnersinglewinnersinglewinner   

                    sully16's avatar - sharan
                    Listens to the wind

                    United States
                    Member #81740
                    October 28, 2009
                    17747 Posts
                    Offline
                    Posted: December 12, 2012, 8:20 pm - IP Logged

                    Corruption in Washinton DC?

                    Fouling the pristine legacy handed down by legendary leaders like Marion Berry?

                    I can not believe it!

                    I will not believe it!

                    I am shocked and appalled!

                    I know, how will I sleep with such accusations, make them stop saying that.

                    There's only one US Flag

                      haymaker's avatar - Lottery-012.jpg
                      egg harbor twp.south jersey shore
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                      Member #112972
                      June 29, 2011
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                      Posted: December 12, 2012, 8:32 pm - IP Logged

                      DC... Detroit... DC... Detroit...

                      Just trying to figure which city is more corrupt....

                       

                      Boxing

                      Not sure, but somehow I still hold out hope for Detroit, to be the lesser.

                      Extraordinary Popular Delusions & the Madness of Crowds    -- Charles Mackay  LL.D.

                        sully16's avatar - sharan
                        Listens to the wind

                        United States
                        Member #81740
                        October 28, 2009
                        17747 Posts
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                        Posted: December 12, 2012, 8:36 pm - IP Logged

                        Not sure, but somehow I still hold out hope for Detroit, to be the lesser.

                        No hope for Detroit, I grew up there, it gets worse by the minute.

                        There's only one US Flag

                          Avatar
                          Texas
                          United States
                          Member #132460
                          September 4, 2012
                          483 Posts
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                          Posted: December 13, 2012, 5:51 am - IP Logged

                          DC is one of the states I adore so much...a model state for me...if corruption is the topic, DC is exempted from it.  So, how could this thing happen?  There must be some mistake...should have a deeper investigation on this matter.

                            jarasan's avatar - new patrick.gif
                            Viva La Chance!
                            Rockville, MD.
                            United States
                            Member #44103
                            July 30, 2006
                            4700 Posts
                            Online
                            Posted: December 13, 2012, 11:07 am - IP Logged

                            Surprise! DUh!  Everything these crooks get their hands on becomes dirty.

                            Puke