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Suit Alleges Panel Gaming Expert Has Conflict of Interest

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TIMES STAFF WRITER

The seldom controversial Little Hoover Commission has been slapped with a lawsuit that charges the state watchdog panel with hiring an outside consultant on gambling with a clear conflict of interest: He has worked for the gaming industry.

The lawsuit filed in Sacramento County Superior Court was brought by former state Sen. Barry Keene and taxpayer advocate Bruce Henderson, a former San Diego city councilman. They allege that the state has misspent taxpayer funds.

For the record:

12:00 a.m. May 1, 1997 For the Record
Los Angeles Times Thursday May 1, 1997 Home Edition Part A Page 3 Metro Desk 2 inches; 46 words Type of Material: Correction
Gaming consultant--A Times story Wednesday about a lawsuit against the Little Hoover Commission erred in saying the commission was unaware of gambling consultant I. Nelson Rose’s connections to the gaming industry. Rose submitted to the commission a list of his gaming industry clients before it hired him to do a gambling study.

They argue that the commission hired a consultant who has represented the gambling industry and failed to report his financial interests to the Fair Political Practices Commission as required by state law.

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The consultant is I. Nelson Rose, a Whittier College law professor and gaming issues expert who has worked for Nevada casinos, other gambling interests and government agencies.

Rose, also named in the suit, called it “frivolous” and likely to be thrown out because his case is also before the FPPC.

Keene and Henderson demanded restitution to the state treasury of $85,000 that Rose was to be paid for his six-month study. Additionally, Keene’s lawyer, Lowell Finley, said that unless the FPPC seeks further damages, Keene will sue Rose for another $255,000 in punitive damages.

The commission hired Rose after deciding that it wanted a comprehensive study of legalized gambling in California, from Indian gaming and horse racing to card rooms. Rose began his work four months ago. He was hired based on his expert knowledge of the gaming industry.

The 13-member commission apparently was unaware of his ties to the industry as a consultant and Rose apparently did not tell it.

Rose said Tuesday that he realized that those connected with the commission were required to report all financial interests to the FPPC, but thought that outside consultants could be excluded by obtaining a waiver from the commission’s executive director.

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However, the commission’s executive director, Jeannine English, herself had a conflict, Rose said, and could not rule on his request. English’s husband, a lawyer, has dealings with gaming interests.

On April 13, Rose appealed to the FPPC, seeking a waiver.

A public hearing on the commission study is scheduled today in Sacramento.

Another commission member, Assemblywoman Diane Martinez (D-Monterey Park), said she agrees that it was improper to hire Rose--an action taken before she was appointed.

Martinez urged Richard Terzian, the commission’s chairman, to terminate Rose’s contract and cancel the study.

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