California Lottery director steps down amid controversy, pressure from governor’s office

Hugo Lopez stepped down as director of the California Lottery on Friday, apparently forced out of the job by the governor’s office following a string of controversies.

Lopez sent employees an email Friday that cited growth of lottery revenue but did not mention the agency’s recent troubles, including a state audit in April that questioned the agency’s spending.

Lopez told employees that it was with “mixed feelings” that he was notifying them that Friday was his last day, and that his role heading the lottery during the last 3½ years had been the highlight of 31 years in public service.

Sources close to the administration of Gov. Gavin Newsom said Lopez’s resignation was requested by the governor’s office.

The Lopez email did not make clear whether he was retiring or leaving for another state job, and he did not respond to a request to comment.

“The Lottery has demonstrated record sales each year that I have been here and is on course to surpass $7 billion in revenue this fiscal year,” Lopez wrote in the email to employees. “More importantly, contributions to public education have also seen record levels during this time period, with this year’s contribution anticipated to move closer to $2 billion.”

The agency has been mired in scandal during the last year. An audit by state Controller Betty Yee alleged that there had been more than $305,000 in improper or questionable spending over the last four years that included travel, food, gifts to employees and entertainment expenses.

Among the improper expenses, the lottery agency spent $21,666 to give staff logo-branded swag such as T-shirts, backpacks, lip balm and iPad cases, labeling the purchases “learning aids” and “training tools,” the audit said.

In September, five veteran employees of the agencies complained at a public meeting of the Lottery Commission about “unfair hiring practices, cronyism, nepotism” in the agency.

Employees said last month that they were cooperating with an investigation by the state Department of Justice into allegations of hiring irregularities and other misconduct in the agency.

The Times reported last month that employee complaints included that two sons and a stepdaughter of a former director, before Lopez, had been hired in 2013.

On Friday, Lopez’s resignation was welcomed by Robert Medof, a district sales representative in the Van Nuys office.

“He’s one of the worst directors we have had,” said Medof, a union shop steward who has been with the agency since its inception in 1985. “There is a lot of micromanaging. Sales might be high, but employee morale is incredibly low.”

Lopez said in his email that he had changed the agency for the better and acted to “question the Lottery’s existing method of operation at every opportunity, tearing down some of the silos that had developed.”

He is the latest department manager to depart since Gavin Newsom took over as governor in January. The governor’s office declined to comment on the circumstances of Lopez’s departure. “An announcement on his successor is forthcoming,” said Jesse Melgar, a spokesman for the governor.

Times staff writer Taryn Luna contributed to this report.

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patrick.mcgreevy@latimes.com

Twitter: @mcgreevy99