O.C.’s Popejoy Named to Run State Lottery

William J. Popejoy, the blunt trouble-shooter who helped guide Orange County through its bankruptcy, has been selected by Gov. Pete Wilson to become the new director of California’s lottery, The Times has learned.

Popejoy, who begins work on Monday, succeeds Mary Anne Gilliard, the former prosecutor who has served as the lottery’s interim director since July.

The governor’s office declined to confirm or deny Popejoy’s appointment, but Gilliard acknowledged that she has stepped down to take a still-to-be-named position in law enforcement in the Wilson administration. Popejoy could not be reached for comment.

“This was always an interim assignment, and it has never been something that I aspired to or wanted to stay in,” Gilliard said.

In selecting Popejoy, 59, Wilson again decided not to draw from the ranks of lottery professionals but to choose as his fifth director someone with strong business credentials.

Popejoy is the chief executive officer and president of Pac Pro Manufacturing, a company he has worked for since 1990 except for a tumultuous stint in 1995 as Orange County’s chief executive.

Popejoy, a millionaire, was brought in by the Board of Supervisors to take over the administration of Orange County’s government at the most sensitive point in its history--after $1.64 billion in losses on risky investments had forced it in 1994 to take the unusual step of declaring bankruptcy.

Refusing to accept a salary, the strong-willed Popejoy plunged into the job with enthusiasm but quickly found himself enmeshed in controversy as his blunt style clashed with those of the elected supervisors.

Five months after accepting his first public office, Popejoy abruptly resigned, saying that his bosses had become too meddlesome. While he was never able to pull the county out of bankruptcy, he was credited with cutting budgets, helping in the passage of bankruptcy recovery legislation in Sacramento and revamping some parts of county government.

On taking the reigns of the chief executive officer’s post, Popejoy sized up the Board of Supervisors and offered his assessment: “A dinosaur organization which lends itself to a lack of responsibility.”

He then laid off about 1,040 county workers and red-lined 563 vacant jobs.

He also spearheaded the campaign for Measure R, a half-cent sales tax designed to put the county back on firmer financial ground.

“For those of you who want this county to sink into Third World status, go ahead and vote against the tax,” Popejoy said.

Measure R failed by a wide margin, and Popejoy left shortly thereafter.

One of his controversial moments came when he asked the Orange County Grand Jury to investigate and remove Supervisor Roger R. Stanton for suggesting a possible settlement figure in the county’s $2.4-billion lawsuit against Merrill Lynch & Co. for its alleged role in the bankruptcy.

“What he has done is nothing short of criminal,” Popejoy said of Stanton.

Stanton denied any wrongdoing.

Popejoy, a former union shop steward, had never worked in the public sector before taking over as county administrator. For four years, he ran American Savings & Loan, where he rode out a series of crises during the depths of the nationwide S&L; meltdown.

Before that, he was the first president of the Federal Home Loan Mortgage Corp., the quasi-governmental agency that assists home buyers.

During his tenure, sources said, Popejoy worked closely with the governor’s office and caught Wilson’s attention as a potential appointee.

When he left his government job, Popejoy said he was not looking for another. His greatest ambition, he said, was to spend time with his young grandson.

“I don’t have any local office I’m interested in,” he said. “And I certainly don’t want to commute to Sacramento.”

Until the last year, the lottery has been a trouble spot for the Wilson administration, first because of a sharp drop in sales and then because it approved a multimillion-dollar contract with GTECH Corp. of Rhode Island without competitive bids.

Assemblywoman Debra Bowen (D-Marina del Rey), considered to be one of the legislators most knowledgeable about the lottery, said Popejoy’s challenge will be to provide direction to a sometimes balky five-member Lottery Commission, which is appointed by the governor.

“My recollection is no one listened to him in Orange County and from what I’ve seen of the Lottery Commission, nobody listens to the director either, so I wish him luck,” she said.

The agency is being audited by the state auditor’s office for a decision by former director Sharon Sharp to cancel a contract that the lottery was later forced to reinstate at a cost of nearly $100 million to the state.

Gilliard, 36, a lawyer who had spent her career in law enforcement and never hid her distaste for government-sponsored gambling, was brought in to restore credibility to the agency.

“Never in my wildest imagination did I ever think that Mary Anne Gilliard would be directing a gambling operation,” she said Monday. “But I think I set the tone a little bit differently here. I think I brought a law enforcement perspective to the lottery when it was needed.”

The second week that Gilliard was on the job, the California Supreme Court forced the cancellation of the Keno game by declaring it unconstitutional. A week later, the attorney general advised the agency to remove vending machines used to sell Scratcher tickets. The two actions cost the lottery $600 million in annual sales.

But by the end of this fiscal year, Gilliard said sales will have rebounded enough to reach a yearly total of $2 billion and to provide $800 million for education.

In January, however, the commission overlooked her suggestion that it seek competitive bids and voted instead to renew GTECH’s contract, a move that drew criticism from lawmakers such as Bowen.