State Controller, Lottery at Odds Over Probe of Key Lotto Contractor

The state controller and the California lottery are at odds over what began as a joint investigation into accusations of wrongdoing by the lottery’s main contractor in the Lotto numbers game.

The controller’s office, distancing itself from the lottery’s finding that all is well with the Lotto contractor, GTECH Corp., is launching a separate, broader audit of the lottery, said Edd H. Fong, spokesman for Controller Gray Davis.

As a result of the dispute, the report on the investigation by the lottery and controller, scheduled for release a month ago, will not come out at least until this week, and the controller will issue a separate statement when the report is issued, officials said.

Fong said the controller’s office agreed with the lottery that the audit produced no evidence of wrongdoing by GTECH, which has a $100-million-plus contract to run California’s Lotto 6/49 game. But the controller contends that there may be insufficient oversight by the lottery of the Providence, R.I., company.

Report’s Conclusions

As the report is now written, there is no mention of a need for more monitoring of GTECH, said Roland Bowns, the lottery’s chief counsel.

Fong said the controller would not endorse a December draft of the report because “the lottery wanted to put in some (inappropriate) personnel information regarding two employees who made the allegations.”

“When it got to the point where the lottery people wanted to include some information that we felt was inappropriate, we were no longer involved in the drafting of the report,” Fong said.

Adding to an already touchy situation, Randy Troxel and Emmitt A. Allison, the lottery computer technicians who raised questions that led to the GTECH investigation, have sued the lottery, contending that they have suffered on-the-job retribution for coming forth.

On Nov. 28, lottery officials proclaimed that a joint investigation by the controller and the lottery showed that accusations against GTECH were unfounded and said the report would be released during the first week of December. Lottery officials now say the report will not be released at least until this week.

“I don’t know that the controller needs to sign off on the report,” Bowns said. “It was an investigation requested by the director of the lottery. Certainly, the controller’s input and presence is nice, for lack of a better word. But it is a report to the director of the lottery.”

Controller’s Jurisdiction

Lottery spokesman John Schade said the lottery invited the controller to join the audit to add to its credibility and because the office has jurisdiction over allegations of “loss of funds.”

The state attorney general’s office reviewed the report last month and called for changes to “avoid litigation,” Bowns said. The lottery’s lawyer said a deputy attorney general expressed concern that the report as written may have violated “the rights of the informants,” prompting the lottery to excise some language about Allison and Troxel.

Allison and Troxel were hired as computer technicians in October, 1986, with an assignment to help monitor GTECH. They found what they thought was evidence that GTECH was routinely under-reporting the amount of time that Lotto computer terminals were working improperly.

Under GTECH’s contract with the lottery, the company must pay up to $4,000 a minute for each minute that the Lotto 6/49 computer system is not working and lesser amounts when individual terminals are not working.

‘Whistle-Blowers’ Suit’

In a suit filed in Los Angeles Superior Court, Allison and Troxel say they reported their discovery to the lottery but were pressured to ignore it, prompting them to go to the controller’s office.

Troxel and Allison alleged that when their superiors at the lottery learned that they had gone to the controller, they were placed on unpaid leave. They have since returned to work but have little responsibility, the suit says.

In a telephone interview, Allison said that through its action against Troxel and himself, the lottery is telling its workers to “shut your mouth, close your eyes and draw your paycheck.”

GTECH, meanwhile, is pressuring the lottery to release the report. Pete Morrissey, senior GTECH vice president in charge of its California contract, said he wrote to the lottery in November asking that it intercede and get “the two Lotto boys to stop making the allegations.” The lottery responded that it could not prevent them from speaking out.

“I realize you can’t stop people who feature themselves as whistle-blowers, but I think they should limit it (what they say) to the proper authorities,” Morrissey said.

Morrissey said that although the charges are “farfetched,” contracts that GTECH won in Michigan and Illinois were delayed partly because of the investigation.

“It certainly doesn’t help the company’s image to have this kind of thing go on and be protracted,” Morrissey said.