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U.S. attorney looks into D.C. lottery contract award

By Editorial Board,June 05, 2012

IT’S GOOD NEWS that federal prosecutors are seeking information related to the District’s efforts to award a lottery contract. New scrutiny may answer lingering questions about how the public’s business was conducted in this still-mysterious episode.

The U.S. Attorney’s Office has subpoenaed documents pertaining to the contract from Eric W. Payne, a former contracting officer who is suing the District; he alleges he was wrongfully fired for resisting unlawful attempts to influence the procurement process. Mr. Payne, who was interviewed by federal authorities, wants to cooperate with federal officials, but some of the documents sought are under a court order as part of his termination case, his attorney, Brian K. McDaniel, told a U.S. District Court magistrate last week.

The disclosure, which took city officials by surprise, was the first indication that U.S. Attorney Ronald C. Machen Jr.’s probe into possible D.C. government corruption may be looking at the events surrounding the city’s controversial efforts to find a new vendor for its lucrative lottery business.

The exact nature of the government’s interest is unclear; a spokesman for Mr. Machen said there would be no comment. But Mr. McDaniel told the court that that some of the records sought by a grand jury involve Mayor Vincent C. Gray (D) and D.C. Council member Jim Graham (D-Ward 1). Mr. Gray and Mr. Graham have denied any wrongdoing; both have been ordered to give depositions in Mr. Payne’s case.

Mr. Gray was chairman of the council in 2008, when, after months of unexplained obstructions, it refused to award a multimillion-dollar lottery contract to the firm that had won the open bidding process supervised by Mr. Payne. Mr. Graham opposed the contract, and his actions — bringing an ethics complaint (later found to be baseless) against Mr. Payne and allegedly offering to drop his opposition if one of the lottery principals would withdraw from a separate land deal involving Metro (on whose board Mr. Graham sat) — have been called into question.

A Jan. 20 report by D.C. Inspector General Charles Willoughby, which examined the city’s multi-year saga to award a lottery contract and its decision, since reversed, to authorize online gaming, found insufficient evidence that Mr. Graham had acted improperly. (The Metro board recently retained an outside law firm to take its own look at issues that might impact the transit authority.)

Mr. Willoughby’s investigation left many issues unresolved, which is why, as we urged at the time, it was important for the U.S. Attorney’s Office to conduct its own review. At stake is public confidence in how officials conduct themselves in handling large sums of taxpayer money.