Controller Sues to Get Access to Lottery Records

The rancor between the Wilson administration’s lottery director and the state’s controller spilled into the courts Wednesday with the filing of a lawsuit over access to financial records.

In an unprecedented action, Controller Kathleen Connell sued the lottery, charging that a decision to deny her auditors access to records has prevented them from performing their constitutional duty to oversee the agency’s financial activities.

“The public has a right to expect the lottery to be open to scrutiny and to freely share information with those appointed to audit them,” Connell said at a Capitol news conference. “Otherwise, it [raises] questions about what is being hidden.” Interim lottery Director Mary Anne Gilliard acknowledged that the auditors had not been given complete freedom to “roam the hallways” of the lottery. But she said that was because Connell had refused to allow them to submit to fingerprinting and criminal background checks by the lottery.

She said it was “sad, very, very sad” that Connell had decided to use the courts to settle a matter that should have been easily resolved by the two agencies. She accused Connell of filing the lawsuit as a publicity gimmick to get media attention.

“I believe it’s more important to her to grab a headline than it is to grab hold of the truth,” Gilliard said.

Connell said her office had conducted extensive background checks of its employees and to have that duplicated by the lottery would give the agency the power to reject auditors it didn’t like.

Connell’s lawsuit has intensified what was already an acrimonious relationship between the controller, who is considered a potential candidate for the Democratic nomination for governor in 1998, and Gilliard, a former prosecutor who is Republican Gov. Pete Wilson’s handpicked lottery director.

A month ago, the two officials clashed over a controller’s audit that criticized the lottery for failing to properly monitor its biggest contractor, GTECH Corp. Gilliard, who has held her job for six months, called Connell’s findings inaccurate and designed to “grab headlines.”

Under the 1984 Lottery Act, the controller is required to periodically audit the operation of the state’s games of chance.

For her part, Gilliard has demanded repayment from the controller for what she called a pattern of overcharging the lottery for audits. The controller is allowed to charge the lottery whatever amount she believes is necessary to cover her auditing costs.

Connell, who became controller in 1995, determined that the lottery had been overcharged for audits during her tenure and voluntarily reimbursed the agency. But she has refused Gilliard’s request for reimbursement for previous years, saying that there were no records documenting the amount overcharged.

On Wednesday, Connell denied that the lawsuit was an outgrowth of any personal differences she had with Gilliard. At stake, she said, was the independence of her auditors.

“The security issue appears to be a smoke screen,” she said, adding that she believed the lottery’s real motive was to stop aggressive auditing.

Gilliard said she had a legal responsibility to ensure that no one with a criminal background would have access to lottery records. She said she could not rely on the controller’s background checks.

The controller’s auditors, she said, had been given access to records they requested, but had to view them under the supervision of lottery staff.

“I can’t tell you that last year we didn’t have state controller personnel with criminal felony convictions having access to the lottery,” she said. “I can’t answer that question . . . because last year we never insisted” on having background checks.

The controller’s lawsuit asks the Sacramento County Superior Court for a finding that the lottery has exceeded its authority by limiting the access of the auditors.