Jerry Cooper, the man who helped bring legalized gambling and the lottery to the District nearly 30 years ago, called local businessman Warren C. Williams Sr. with a suggestion last year.
The District's contract with Lottery Technology Enterprises, the firm that has run the city's online gaming for about 25 years, was going to expire by 2009. Would Williams be interested in bidding against LTE for the lucrative contract?
No, but maybe his son and daughter-in-law would.
So Alaka Williams, the daughter-in-law, decided to take on LTE. And therein are the roots of what has been a nasty and aggressive battle over a city contract, a contest complete with accusations of bias and incompetence.
Alaka Williams tells her story from a plush, white chair in the Eastern Market headquarters of W2I Ventures, the joint enterprise that her 10-month-old company, W2Tech, formed with Intralot, the world's second-largest gaming services provider. W2I Ventures has gone head-to-head against LTE, a joint venture between locally owned New Tech Games and the world's top lottery powerhouse, GTech.
The spoils: a contract, if extended over 10 years, worth more than $120 million. The lottery has more than $250 million in annual sales, city officials say, and generates $68 million to $72 million a year in revenue for the District. W2I won the bid — or so it thought.
The coup has stirred up controversy, pitting Alaka Williams's company and her friends against LTE and its friends. There are fathers and their children, husbands and wives, fraternity brothers and former co-workers, and plain old good buddies mixed up in what has become an operatic scene of charges and countercharges. LTE has filed a complaint with the Contract Appeals Board, which is to review the grievance tomorrow.
The lottery, it turns out, is a messy, incestuous business.
Intralot, GTech and a third firm, Scientific Games, are the only competitors for contracts in 41 states and the District. They trade employees like the plastic pieces on a Monopoly board. "It's a very small industry. When somebody hires somebody or lets someone go, they give their résumé to the other company," said Tom Little, president and chief executive of Atlanta-based Intralot USA and a former employee of Scientific Games.
"Sometimes, it gets a little too focused on who knows who," said Robert K. Vincent, a senior vice president of Providence, R.I.-based GTech.
The industry might be small, but it has little on the District's intimate business and political circles, where everyone knows everyone and the degrees of separation can be razor thin.
Last week, the D.C. Council, with several members who thought the contract was radioactive, voted 11 to 1 to table it, a move that would have essentially killed the deal and left LTE in place by default. Except that Mayor Adrian M. Fenty (D) immediately resubmitted it, supporting the recommendation of Chief Financial Officer Natwar M. Gandhi.
Gandhi and his staff have said W2I had the best offer — a taxpayer savings of $5 million a year — and newer technology. They also noted that LTE has run into problems, including the printing of $70,000 in phony tickets after a security breach in 2006 and being assessed $336,124 in fines for operational glitches last year.
But LTE said Gandhi's office just wanted to make room for a new local company with no experience to take over.
LTE says the city moved the submission date for contract proposals from Sept. 13 to Sept. 20 to give W2I more time to get its joint venture certified, which occurred Sept. 17. "Are we supposed to believe that was just a coincidence?" asked LTE spokeswoman Ann Walker Marchant, daughter of George Walker of LTE.
Yes, said Eric Payne, Gandhi's director of contracting. The date was moved because, Payne said, some language on local minority businesses had to be clarified. (Both local companies bidding for the contract are minority owned.)
That explanation and answers to other questions raised by council members about W2I and the history of its owners were in a package given to council members.
Warren C. Williams Jr. has been under fire, suspected of trying to force tenants out of an apartment building. Also, he and the senior Williams were the owners of Club U, a former nightspot in the Frank D. Reeves Municipal Center where a patron was fatally stabbed.
Some council members say the documents provided by Gandhi's office leave unanswered questions.
But acting Attorney General Peter Nickles said he has looked into allegations of bias in the selection process and found none.
For him, and the city, the answer is clear. "Don't know a single individual," he said. "Do see a significant savings."
A look at the District circles on either side of the fight offer some understanding.
Alaka Williams has enlisted the help of lawyer A. Scott Bolden, former president of the D.C. Chamber of Commerce and former chairman of the D.C. Democratic Party. Former council member Kevin P. Chavous, Fenty's mentor and his first government boss when the mayor was a council aide, represented Intralot in its joint venture agreement with W2Tech. Sinclair Skinner, a campaign coordinator in Fenty's mayoral bid, did community outreach work for Banneker Ventures, a development firm in which Williams Jr. is a principal.
Fenty, Chavous, Bolden, Skinner, Payne and Jeffrey "Jay" Young, current chief operating officer of the D.C. Lottery, are members of Kappa Alpha Psi fraternity. For some, such connections are a lifelong commitment and a networking tool.
On the other side, LTE — with longtime businessmen P. Leonard Manning and George Walker in charge — have lawyer Frederick D. Cooke Jr., who has represented council member Marion Barry (D-Ward 8). They also have Brett Greene, campaign finance chairman for Council Chairman Vincent C. Gray (D). And Marc Barnes, a family friend and owner of popular D.C. nightclubs, has served as an unpaid supporter.
Claudia Booker, former contracting director for Gandhi, is a consultant on LTE's pending contract. She said she was asked to recuse herself when she was working for the city because of an allegation over a conflict involving her stepmother's relatives. "You may as well ask me who my dog's cat's best friend's brother is," an incensed Booker said.
What is getting lost in the battle is which company can do the best job, said Alaka Williams, a 36-year-old former human resources director. W2Tech and its joint enterprise are the first businesses in which she has participated.
"This is my company, and I'm running it," said Williams, who added that she has spent the past year traveling to jurisdictions with Intralot contracts and wants local lottery retailers to get an idea of what the District might be missing.
Intralot, which has been in the United States since 2001, is trying to offer jurisdictions a lottery product cheaper and less likely to break down than GTech's, she said.
But Vincent said he is tired of hearing about LTE's outdated equipment, particularly since the company would update its machines as part of a new contract. "I think that's a phony argument," he said.
Of Intralot, he said, "We often don't run into them [when competing], because they are not qualified to run the larger systems." GTech has contracts in 25 states and the District, he said.
Intralot has contracts with South Dakota, Louisiana, Maine, New Hampshire and Vermont. It recently beat out GTech in Ohio. GTech has demanded to review the bid scores.
Years ago, when LTE won its first contract, Manning filed a lawsuit claiming that aides of Barry, then mayor, had tried to interfere with the deal. Back then, LTE was not as politically connected as other minority-owned firms trying to get into the industry. LTE has had years to successfully change that.
The D.C. Council has a little less than 45 days to vote again. Some have said the city should just start over.
Gandhi's office would not disclose the members of the panel that picked W2I because LTE's appeal is pending. Nickles said that "there are commercial secrets" in the process. (Young has said he was the chief panelist.)
"There is a consistent theme," Marchant said, "which is, one, a lack of transparency; two, the betrayal of the facts."
One résumé in W2I's list of potential employees is for its chief operating officer. Julie Chase, spokeswoman for the company, would not reveal the identity. The credentials and accomplishments point to one person: Anthony Cooper.
He is the chief operating officer of the Education Lottery in South Carolina, where Intralot recently won the state gaming contract.
He is former executive director of the D.C. Lottery.
And he is Jerry Cooper's son.
It always surprises me when I see a good story like this one not getting a lot of feedback.
When you're complaining about having computerized drawings, or the wrong games in your state, or the employee bonuses are too large, this kind of thing is where it all originates!
It is very important to understand about who is running the lottery, what their motivations are, what company is operating the games, what they will try to push on the lottery, etc. If there is corruption in the lottery, people should be up in arms about it right then. If the wrong people are hired or contracted, then many times it is too late at that point to try to change something.
If more players felt the need to participate and provide input at this stage -- in the contracts and organization of the lottery itself -- I think many of the issues we all complain about could be headed off at the pass.
It is not politically correct, or compassionate to state the truth. Washington, D.C. is the supreme example what America should N-O-T be like. A city that is run by the most crooked of the crooked. A city, whose majority, repeatidly votes dug addicts into high political offices. A city who belives race is all that counts. A city who took their majority population and sent them into the most corrupt school system in America, with one of the lowest achievement rates, and the highest expenses. When you create a city that is responsible to no one, that is totally supported by federal politicans who only want to ensure nothing happens to expose the corruptness, you get a useless society. Welcome to Washington, DC. The city where a carrying person is beat down and ridiculed and a person who causes harm is elevated.
I lived in DC for a few years. I spent the whole time saving for the exit. It was a city dangerous in the sun light, and a no mans land when the sun went down. Only Philadelphia has a more corrupt and unfriendly police force.
Wow, I had the same experience as you! I lived right outside D.C. at the time Marion Barry got busted for smoking crack in a hotel room, and that was about the time that I had enough. I am so glad I didn't have to be there when he was elected back into office after he did jail time.
It is such a crying shame, because it is such a beautiful city, I think the most beautiful of any in America. It has a wonderful metro system, and is a great college town to boot.
Not only the political correctness, but the permissiveness — the indifference —toward criminal behavior I found appalling and unbearable.
It all starts at the top, and the people who kept getting elected to the City Council and to Mayor were the ones responsible for it.
I have no idea what it's like today because it's been many years since I lived there, but this article doesn't paint an optimistic picture.
Your statement "It all starts at the top, and the people who kept getting elected to the City Council and to Mayor were the ones responsible for it." says it all. The people "at the top" do not magically appear at the top. The bousterous majority put them there. Apathy of the intimidated keep them there. Many times, fear keeps them there. People are afraid to voice their real opinion, and the vocal win - if they don't win, they riot and intimidate real thinkers. When guns are banned, and the corrupt go after guns, making criminals of those who only want to protect themselves, not shoot the brother across the street, you get DC. A chance to corrupt the lottery is just a natural flow in their mentality. They are the deserving, thus you cannot speak out against them. If you do, they become uncontrollably emotional, call you a racist, and threathen your existance. As with Hitlers dominance, you must be silent or you must be silenced. It worked in 1936 and it worked in 2006. It flurishes in 2008! The list you cannot mention outway the list of freedoms.
The rights to operate the D.C. Lottery are a license to print $$$.
Someone decided Leonard Manning (LTE) & Co. had been doing it long enough and tried to horn in on them. I'd like to see an investigation of $$$ paid, to whom, for what (access, etc.).
So, in D.C., if you are of the right ethnic "persuasion" you can just decide "I think I'd like to go run the lottery". What experience (or expertise, for that matter) do these folks have? Criminal history? Demonstrated business acumen outside the confines of D.C.? The Greeks (Intralot is Greek-owned and subsidized) needed a partner.
DC is a different place now not like it was 20/30 years ago the blighted neighborhoods are being revitalized. Mind you there are still many bad sections but the area closest to the heart of DC has been transformed. And that transformation is spreading outward.
Almost all the landmarks have been reconditioned in some form or fashion.
The land marks were always a pleasure to see. Especially if you love America. The US Congress never has a problem spending money on a federal site. It makes them look good to stand in front of them when their picture is taken.
But today, some one was shot in the black area of the city. Some one was shot yesterday in the black area of DC. Every time you turn around some one is shot. Yet, the officials spend 98% of their time trying to conficate guns from citizens who don't walk the street killing people, but do want to protect their wifes and daughters from massive rape. The officials want otherwise honest citizens to allow the police to seach every single inch of their house without a search warrant. They even put out a document they will not prosecute, unless they find a criminal ofsense has happened. D-U-H ! Here I can come look in every crannie and see if you can get me. That is a blantant violation of the Constitution. Do they care? Nope, they still maintain the power, and I-D-I-O-T-S continue to keep them in office. As long as they get their welare check, they are happy.
Within the last year, the DC education system made the news about all the corruption and waste of money. Over $20K a student, and still the system is near the bottom of top cities in the country. The article made a point that the schools could not afford toilet paper, but could pay the principal six figures a year.
You can put a gallon of paint on a trash can it is looks good. Underneath, it is still a trash can.
Here is some recent news of another scandal Gandhi has been tainted by.
http://www.washingtonpost.com/wp-dyn/content/article/2007/11/14/AR2007111401196.html
Gandhi, Roiled by Tax Scandal, Still Has Fenty's Support
City CFO Asks for Independent Probe
Wednesday, November 14, 2007; 3:41 PM
D.C. Mayor Adrian M. Fenty continued to stand by embattled Chief Financial Officer Natwar M. Gandhi this morning, even as Gandhi has asked the city's inspector general to conduct an independent investigation into a tax office fraud case that could reach more than $30 million in stolen public funds. The D.C. Council also announced today that it plans to create a special council committee to investigate the tax and revenue office.
Gandhi said he has removed 10 tax office employees in the wake of the scandal, in which two mid-level employees, Harriette Walters and Diane Gustus, have been charged with preparing false property tax refunds beginning at least as far back as 2001 and delivering them to relatives and friends. Federal prosecutors have said the two, along with several accomplices, stole more than $20 million, and a Washington Post review of tax records suggests the figure could reach $31.7 million.
"I'm not a quitter," Gandhi said during a combative news conference at the John A. Wilson Building. "I will not end my professional career with this blot on my record."
Gandhi announced that several top deputies will assist Ben Lorigo, whom he appointed last week as interim tax office chief. Lorigo had headed Gandhi's internal investigative unit for five years. In addition, Gandhi said, he has asked Judge Stanley Sporkin, formerly director of the enforcement division at the Securities and Exchange Commission, to be Gandhi's personal adviser as the investigation continues.
Fenty (D) called the case a breach of the public's trust, but he said that Gandhi should be judged on his decade of work in the city's financial office, including the last seven as CFO. During that time, Fenty said, the city, once near bankruptcy, has restored its fiscal health, and it now has an "extremely strong" financial outlook.
"I continue to stand right beside Natwar Gandhi," Fenty said.
Gandhi has cleaned house in the tax office, removing the top four managers, including director Sherryl Hobbs Newman. He has called the fraud case a "major management failure" and said that every tax refund check of more than $10,000 will now require Lorigo's approval. The office will conduct "spot checks" on refunds of lower denominations, Gandhi said.
D.C. Council member Jack Evans (D-Ward 2), chairman of the Committee on Tax and Revenue, who also attended the news conference, called the case a "terrible, terrible breach of trust for the government. We need to understand how it happened."
At a separate news conference, Evans and Council Chairman Vincent C. Gray (D) said they will create a special council committee to investigate the tax and revenue office. The committee will have the power to issue subpoenas and hire outside counsel and a financial auditing firm. The committee will be created through a resolution on which the council will vote Tuesday, they said.
Gray and Evans also offered reporters a preview of tomorrow's council oversight hearing of Gandhi's office.
"The purpose of the council hearing is to conduct an investigation into the management, procedures, control systems and structures . . . that permitted millions of dollars to be stolen and to determine the steps necessary to prevent a recurrence of these illicit activities," Gray said.
Gray and Evans said the hearing is only the beginning of the council's probe because they do not expect many of their questions to be answered tomorrow or while the criminal investigation continues.
Nine council members attended the news conference, but Gray and Evans did most of the talking.
Some council members are questioning Gandhi's management of the office.
"I'm not calling for his resignation now," David A. Catania (I-At Large), who has been a vocal critic of Gandhi in recent years, said in an interview. "If these leadership issues and management failures are true . . . it certainly calls into question whether Mr. Gandhi can continue in his capacity."
Kwame R. Brown (D-At Large) said he, too, is not asking for an immediate resignation, but "when you tell 600 employees that they have to be held responsible . . . is he prepared to step down?"
"Is he prepared to take the same punishment that he has given to other people?" Brown asked, referring to the forced resignations and removals of employees.
You can put a gallon of paint on a trash can it is looks good. Underneath, it is still a trash can.