The Connecticut Lottery Corp.'s new president and CEO, Gregory Smith, was hired this past July amid hopes of a fresh start for the agency that was hit by a million-dollar mistake in a Jan. 1 drawing, after enduring two years of turmoil following a fraud scandal that shut down the 5 Card Cash game in 2015.
But Smith has quickly been drawn into a controversy stemming from those very same problems — after writing a letter to two key state legislators in which he defended the lottery agency for actions that were taken before he arrived in Connecticut.
Smith sent a letter Tuesday to Senate Republican leader Len Fasano and Rep. Joe Verrengia, co-chairman of the General Assembly committee that oversees the lottery, telling them that a Nov. 2 report by state auditors John Geragosian and Rob Kane left out "key details" in its description of circumstances surrounding a million-dollar error in a drawing last Jan. 1.
"[W]e feel that it is important to provide some additional information so that actions can be better understood and clarity can be provided where key details are missing," Smith wrote. Among the details he mentioned were that Alfred W. DuPuis — the former lottery security chief who retired Nov. 1 rather than face potential discipline for alleged "gross neglect" in the flawed New Year's Super Draw — had indeed made "clear errors in executing his responsibilities."
"We hope these are beneficial to your understanding of the matter," Smith wrote to Fasano and Verrengia.
They weren't beneficial, Fasano said.
The Senate GOP leader — who has been an active participant in investigative hearings by Verrengia's public safety committee about the lottery since 2017 — said he wondered why the newly arrived Smith would think it's a good idea to carry such an amount of water for those who preceded him; he was head of the Illinois lottery at the time of the problems the Connecticut auditors wrote about.
"The auditors did a report. They are a nonpartisan staff that does excellent work, and the Lottery Corporation has to accept this report and take their criticism and make changes. I am not interested in excuses," Fasano told Government Watch in a phone interview Wednesday.
Fasano noted that he and Verrengia had asked the auditors to investigate the Jan. 1 drawing disaster, as well as DuPuis' claim that he was being singled out for retaliation over his reporting of problems in the 5 Card Cash game that had to be shut down because of retailer fraud in 2015. And he called it "insulting" that Smith wrote a letter on behalf of his agency to "rebuke" the auditors' findings.
"I am going to ignore that letter in its entirety as sort of a failed attempt to sway me away from the real facts and independent investigation. And I thought [the auditors] went lenient on them, frankly. They punted the ball [on the question of retaliation against DuPuis] to the Commission on Human Rights and Opportunities."
'Whispering in his ear'
"They let them off, I think, lightly," Fasano said. "And now this new guy has inserted himself in facts that he has no firsthand knowledge of. It's facts he's learning about from the insiders who were involved.... He could say, 'It's a new legislature and a new governor, and let's move on,' but instead, he inserts himself in facts he has no knowledge about, probably from people whispering in his ear."
Verrengia, for his part, said: "The auditors' report and [the lottery's] response are not the end-all to our inquiry. I am confident that additional public hearings will be held in the near future." He said the hearings probably would be early next year, adding: "It's on the front burner."
And so welcome to Connecticut, Greg Smith — who learned a day after sending his letter, if he didn't know already, what a high-voltage wire he had touched. Told of the lawmakers' comments,Tara Chozet, the lottery's director of public relations and social media, said only: "We provided information that we did not see included in the [auditors'] November 2 report."
Smith was not the only letter writer among current lottery officials with regard to the auditors' report to Verrengia and Fasano. Don DeFronzo, the chairman of the lottery's board of directors, wrote to Geragosian and Kane on Nov. 8, stating that although they suggested there was "no basis for the finding of neglect" against DuPuis, "In fact, I believe the detailed... internal report [by the lottery's administration earlier this year] constitutes a factual basis and rationale for the findings of negligence."
DeFronzo also reiterated to the auditors his public statements that DuPuis hasn't been the victim of retaliation for having told the previous lottery CEO, Anne Noble, in 2015 of the 5 Card Cash game's vulnerability to fraud by people in retail lottery outlets. (People in such Connecticut outlets figured out how to compromise the game, which ultimately resulted in 15 arrests).
"When you reach the unsubstantiated conclusion that a charge of gross neglect 'could have' resulted from arbitrary or retaliatory motives, I would contend that the facts and record... just as likely lead to a conclusion that these actions may not have been the result of retaliation, but rather from the specified performance concerns," DeFronzo wrote.
As for Smith's letter to the two legislators Tuesday, he downplayed the significance of what DuPuis had said about 5 Card Cash's vulnerability to compromise.
"The actual problems... encountered with 5 Card Cash that ultimately led to the criminal conviction of certain retailers were not related to the concerns raised by Mr. DuPuis to Ms. Noble prior to the launch of the game," Smith wrote. "Fred DuPuis did raise a well-known concern about the 5 Card Cash game while it was being evaluated as a product before it was sold in Connecticut. The vulnerabilities he pointed out concerned the potential for retailers to quickly read the tickets before handing them to customers and making the decision to keep the ticket for themselves — referred to as 'palming.'"
'Not novel or new'
But Smith said that DuPuis' "comments about 'palming' were not novel or new," and that "every lottery considers this and takes some action to address it."
The 5 Card Cash game was compromised in Connecticut when employees at lottery retail outlets figured out a way to print out winning tickets for themselves by slowing down the gaming terminal's printing with repeated commands — to the point where a display on the machine told them which numbers would be on the next tickets printed.
Smith then turned to the Jan. 1 disaster — in which a five-member team that ran the computerized number selection used a brief "checklist" instead of a full set of illustrated instructions, and entered a range of ticket numbers that omitted 100,000 tickets from the range of potential winners.
"Mr. DuPuis' support and participation in the development and use of an unapproved checklist for the CT Super Draw were clear errors in executing his responsibilities," Smith wrote. "The checklist that he and his staff prepared was missing critical content that was the basis for the error that occurred. His clearly documented development and approval of the checklist and instructions for its use were directly responsible for the error that occurred."
Neither DuPuis nor the lottery's acting CEO at the time, Chelsea Turner, were present — nor were they required to be — at the Jan. 1 drawing that was run by subordinates of DuPuis and representatives of the state Department of Consumer Protection, which oversees regulation of state lottery games. Turner, originally hired by CEO Noble in 2010, is now top deputy to Smith at the lottery.
As a result of the Jan. 1 problem, a do-over drawing had to be held in mid-January. There was a $1 million loss to the state, as well as disciplinary actions including unpaid suspensions against lower-ranking employees of both the lottery and consumer protection department who mishandled the drawing.
The big, lingering result of the Jan. 1 problem is a pending "whistleblower complaint" by DuPuis to the Commission on Human Rights and Opportunities that lottery officials' allegation against him of "gross neglect" stemmed from a vendetta over his role three years ago in exposing the fraud in the 5 Card Cash game.
Present and former lottery officials have denied the claims that DuPuis makes in the complaint he filed in May with the CHRO — which has scheduled a hearing/trial in April.