Suit asserts Lottery Commission, attorney general broke state laws_122004

Posted: 12/17/04

Suit asserts Lottery Commission,
attorney general broke state laws

By Ferrell Foster

Texas Baptist Communications

AUSTIN–A Texas taxpayer doesn't want state government to pay a bill to a Las Vegas lawfirm, and he's filed suit to stop it.

Russell Verney says the state has no business paying for expenses incurred through an allegedly illegal contract and verbal agreements that followed.

The suit affirms what the Baptist General Convention of Texas' Christian Life Commission staff discovered earlier this year. The contract was part of a concerted effort by the gambling industry and its political supporters to bring video slot machines to Texas, CLC staff said.

Verney asserts the state agreed to pay $100,000 to Lionel, Sawyer and Collins to–among other things–write legislation legalizing video gambling in Texas. Later, it was amended orally to more than $360,000, according to a summary of actions prepared by the CLC.

Lionel, Sawyer and Collins already has been paid $176,000, according to published reports.

Verney, director of the southwestern regional headquarters of Judicial Watch, filed suit Dec. 14 to stop further payment. The lawsuit is against Texas Lottery Commission Executive Director Reagan Greer, Texas Attorney General Greg Abbott and Comptroller Carole Keeton Strayhorn.

Strayhorn, however, twice voiced support for Verney's position during a Dec. 15 press conference, saying, “I do not want to pay that bill.”

She was named in the suit because her office is the one that pays the state's bills. The State Lottery Commission and the attorney general's office are the ones actually involved in the questioned contract.

Verney alleges the two state offices used a “convoluted two-stage contract” to do something Texas law prohibits a state agency from doing–“expending any money on lobbying.”

Also, he said, the Lottery Commission is prohibited by law from operating video gambling. By hiring the lawfirm to help bring video gambling to Texas, the commission was doing something state law prohibits it from doing, Verney said.

Verney brought the suit as a “resident taxpayer” of the state, but in his role at Judicial Watch he “oversees the monitoring of state governments for the appearance of corruption or abuse of power,” according to his biographical information.

Suzii Paynter, director of public policy for the Texas Baptist CLC, said the suit “puts the legislature and the executive branch on notice that the separation of powers is still important in this state and that checks and balances are still important.”

“This contract was an attempt to create a private piggy bank for a state agency and to pass slot machine legislation with the leadership of the governor and the administration,” she said. “There were so many special and unusual privileges that were going to be awarded to the Lottery Commission.”

The legislature rejected the proposal during the fourth special session in May despite strong backing from Gov. Rick Perry and other state leaders. If approved, the legislation would have granted the Lottery Commission exemption from state bidding and procurement procedures, created a slush fund for unlimited administrative travel, and provided exemptions from judicial oversight and an annual audit, Paynter said.

When legislators voted on the proposal, they did not know it had been written by a Las Vegas lawfirm with ties to slot machine companies and gambling interests, she said.

The Christian Life Commission staff brought the issue to the surface.

“Last spring during the special session, we were aware the governor had completely reversed his position against gambling,” Paynter said.

New gambling data surfaced during the session. “It was clear this was not information used in the past,” Paynter said. “That took us into exploring where all this new information was coming from.”

What they initially found was an eight-page report on “eight-liner” gambling machines that had been paid for by Lionel, Sawyer and Collins. The report got the CLC's attention because it quoted only four sources, one being the Baptist Standard, news journal of the Baptist General Convention of Texas. The Standard article quoted some Department of Public Safety figures.

The firm had paid $23,000 for the report, which was supposed to be confidential, Paynter said.

“We then began to collect information and began to ask for open records,” she said.

The CLC staff eventually learned of the contract between the lawfirm and the state, and they reported it to the House of Representatives Licensure and Administrative Procedures Committee, which oversees regulation of the Lottery Commission. A hearing was held June 1.

State Sen. Jane Nelson, vice chairperson of the Sunset Review Committee, called for an audit of the contract by the state auditor's office.

Comptroller Strayhorn, in a July 2 letter to the attorney general's office, questioned the “allowability and legality of using lottery account money for payment of the LSC contract,” according to the summary of actions released by Paynter.

“Many unanswered questions remain about the nature of the contract,” the summary says. The state auditor's report was “inconclusive on central questions of jurisdiction and payment and the appropriate and legal status of the Lottery to fund the contract. … The injunction filed by Judicial Watch continues the investigation of this matter.”

Paynter expects the video lottery issue to return in the upcoming session of the legislature, which begins Jan. 11. “I expect them to try to apply the money to property tax relief,” with some going to school finance, she said.

“There are more than 400 lobbyists paid to promote gambling expansion full time,” Paynter said. “We can't defeat this issue with money. We have to defeat this issue with people and the voice of constituents. A public interest lawsuit like this is another voice of the people.”