The Connecticut Lottery Corp. reversed itself Thursday and approved a legal settlement that it had spurned last month with one of its former top officials, who had claimed in a long-running human rights complaint and a lawsuit that he'd suffered retaliation for blowing the whistle on problems at the CLC dating back five years.
In voting 8-2 to pay $205,000 to former lottery security chief Alfred DuPuis, the CLC's board of directors closed the book on one of several lingering legal disputes that have hindered the high-profile agency from moving beyond bitter internal enmities rooted in the past.
"Now is the time to put whatever negative storylines that have existed aside, clean up any past issues as quickly and as fairly as we can and to focus on the work of generating revenue for the taxpayers of the state at a time that this is definitely needed," said Rob Simmelkjaer, Gov. Ned Lamont's new appointee as board chairman.
"This corporation has a great track record of delivering financial returns to the state, something that isn't really discussed enough, quite frankly," Simmelkjaer said. The quasi-public lottery agency raised raised $370 million in state revenue last year on $1.3 billion in ticket sales.
"Fred DuPuis is a courageous and honorable man. This resolution ends a difficult journey for Fred and the agreement speaks for itself," said the ex-security director's lawyer, Eric Brown. "Because of Fred's commitment to see this through to the end we are hopeful that the lottery is on a course that will enable it to serve Connecticut and its residents as it is intended to do."
The board approved a resolution authorizing lottery corporation CEO Greg Smith to enter a a formal settlement agreement consistent with terms that were agreed to March 10 by lawyers for both DuPuis and the CLC during a session with an arbitrator. The main points, as recorded on a sheet of paper the day of the arbitration, are the payment of $205,000 to DuPuis in exchange for his dropping all current and future legal claims.
Thursday's vote represented a 180-degree turnabout from last month's heavily criticized decision by the CLC to reject the same settlement, without the governing board ever taking a vote on it.
Coming out of the March 10 arbitration session, the sheet outlining the settlement terms had been signed both by DuPuis and Smith, who inherited the problem when he was hired in mid-2018 after the occurrence of the internal troubles that led to the litigation.
But the lottery's governing board, under the leadership of its longtime vice chairman, Patrick Birney, never brought it to a vote — and finally on May 20, Jim Shea, the CLC-retained lawyer from the firm Jackson Lewis, called Brown to tell him the board rejected the settlement.
That led state Treasurer Shawn Wooden, who has a seat on the lottery board, to say he was "shocked and appalled" that an agreement beneficial to taxpayers had been turned down without Birney putting it to a vote, and he called on Birney to resign.
Simmelkjaer immediately agreed that the matter needed to be voted on and made sure that happened at Thursday's meeting, the first at which he has presided as new chairman.
When the time came to vote Thursday after a 38-minute closed session (during which the audio feed was shut down to the public from the telephonic meeting), board member Wilfred Blanchette Jr. came to Birney's defense although he mentioned no names.
Blanchette said that last month, "certain people were criticized unfairly for delaying or postponing the vote [on the proposed settlement]" and "my recollection of the discussions at the time indicted that a consensus was reached to delay a vote based on a reasonable belief that further opportunities existed to improve our position on collateral issues. So, again, any criticism of an individual for delaying or postpoining the vote is unfair and misdirected."
Board member Margaret Morton agreed with Blanchette.
"I think this is a difficult vote for a lot of us, but we want to do the right thing for the corporation and our new chair," said board member Meghan Culmo.
The two "no" votes on the settlement came from Birney and board member Michael Thompson.
The lottery corporation's insurance carrier, Chubb, "strongly recommended that the board agree to the settlement," said Tara Chozet, director of public relations and social media for the CLC. "The settlement is [100 percent] covered by our insurance policy."
Wooden said later Thursday he was "pleased with the Connecticut Lottery Corporation board's decision to settle this legal matter, and that board members were given the opportunity to vote" to avoid "hundreds of thousands of dollars in additional costs. The Lottery has a long history of missteps and it's time to set a new course. I look forward to working with... Rob Simmelkjaer, to restore the public's trust in the Lottery."
Tangled legal issues
The litigation with DuPuis, now resolved except for the legal paperwork, is only part of a tangle of legal issues that in recent years have beset the lottery agency.
Making the most noise publicly were hearings throughout 2019 in DuPuis' whistleblower case, presided over by Michele Mount, chief referee in the state Commission on Human Rights and Opportunities' Office of Public Hearings.
DuPuis claimed he should be compensated financially because of what he said was retaliation against him by the CLC for blowing the whistle on irregularities and improprieties in the 5 Card Cash game, which had to be shut down in 2015 because of fraud by lottery retailers, a number of whom were arrested.
He says the retaliation showed itself in early 2018, when he was informed that he faced potential discipline for alleged "gross neglect" over a million-dollar error made by his subordinates in the New Year's Super Draw on Jan. 1 that year. He was put on a paid leave briefly, but then took time he had coming and never returned to work, retiring late that year. He claimed it was his role in reporting problems with 5 Card Cash, not the Super Draw, that brought on his problems.
Meanwhile, DuPuis sued the CLC and two of its former high-ranking officials, ex-Vice President Chelsea Turner and ex-human resources director Jane Rooney, seeking unspecified damages for the "false and defamatory statement" that DuPuis had "acted with gross neglect in the execution of [his] duties."
Under the settlement approved by the board Thursday, DuPuis agreed to drop both that lawsuit and the whistleblower case.
The DuPuis case spawned other problems for the lottery. For one thing, during the hearings on his whistleblower case last year, Turner, then still working as lottery vice president, testified in July 2019 that she had contacted the FBI around 2014 with suspicions of wrongdoing by Frank Farricker, chairman of the lottery board at the time.
FBI agents initiated an investigation during which Anne Noble, the lottery's president/CEO at the time, secretly recorded at least one conversation with Farricker, using a listening device concealed in an eyeglass case, Turner testified.
The FBI investigation was quickly shut down for lack of evidence. But Turner's revelation of that federal probe prompted the lottery's current CEO, Smith, to suspend her with pay later in July 2019 from her $190,000-a-year job.
Turner never returned to work, using up leave time until she resigned earlier this year to take a job in Massachusetts for less pay. She now has a lawsuit pending against Smith and the lottery corporation claiming she was defamed, damaged and unjustly treated.
Meanwhile, Farricker filed a state Superior Court lawsuit last December against three past lottery officials, including Turner and Noble, claiming defamation and intentional infliction of emotional distress by making false allegations that he had corruptly benefited, or attempted to do that, while at the lottery.
Meanwhile, there there was much discussion at Thursday's session of the effect of the coronavirus pandemic on lottery sales. During the first few weeks, lottery sales dropped sharply, but in the past month they have rebounded strongly, Smith said.
"The most recent four weeks, it has been been almost unimaginable" how much sales have recovered, Smith said. "For total daily sales, we are 6% ahead of where we were prior to the pandemic — and we were in a great place prior to the pandemic. And so the idea that we are 6% ahead of that is beyond remarkable."