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Maybe before President Bush nominated his White House counsel to the Supreme Court, the staff should have vetted GTECH, the company that has had the Texas Lottery contract since before 1995 when newly-elected Gov. George Bush placed Harriet Miers on the Texas Lottery Commission. We find that GTECH has been hounded for years by charges of – and sometimes successfully prosecuted for – improper influence peddling and money laundering schemes by its consultants.

A major criminal conviction involving a GTECH consultant in the 1990s ties directly back to Ben Barnes and the cast of characters who then were at the center of the Texas Lottery scandals. All the White House had to do was go to the Internet, but then the person vetting Supreme Court candidates was none other than Harriet Miers, at least up until the point where she got the nomination.

In October 1997, GTECH’s national sales director, J. David Smith, was convicted in federal district court in New Jersey of engaging in an embezzlement and kickback scheme orchestrated to inflate state-level payments to consultants and lobbyists who could wield the political influence to get GTECH key contracts with important state lottery commissions, including Texas. Mr. Smith was hardly a minor employee of GTECH.

An analysis of GTECH published in Fortune Magazine in 1996 credited Smith as being the person who almost single-handedly responsible for building the Rhode Island-based GTECH into the world’s largest supplier of lottery products and services in the United States. GTECH’s own Public Affairs office once claimed online in 2003 that the company was involved in over 94 percent of the instant ticket sales in the United States.

Mr. Smith’s scams were serious. In U.S. District Court for the District of New Jersey, he was convicted of one count of conspiracy to defraud GTECH, three counts of interstate transport of stolen property, one count of causing unlawful interstate travel with intent to distribute stolen proceeds, and 15 counts of money laundering.

Up until he was dismissed by GTECH, Mr. Smith maintained an office at the company’s headquarters in Rhode Island, while he resided in a home and farm in Kentucky. The U.S. Court of Appeals for the Third Circuit filed an opinion on May 6, 1996, refusing to overturn Mr. Smith’s conviction. The Court of Appeals commented that the FBI began investigating Smith in June 1993, suspicious of a pattern of activity whereby Smith “would arrange for service providers in New Jersey, New York, Texas and Kentucky to be engaged by GTECH and to be paid for nonexistent or overvalued services.” In return, “these service providers would send kickbacks to third parties” as designated by Smith, hence the money laundering.

Smith’s fingerprints were all over Texas while Harriet Miers was on the Texas Lottery Commission. A Houston Chronicle article reported on Feb. 20, 1997, that J. David Smith boasted about bribing at least 10 Texas legislators to make sure the lottery bill was passed and GTECH got the contract. It was Smith who arranged to hire as a consultant Mike Moeller in New Mexico for $6,000 a month.

Smith knew that Moeller was then the boyfriend of Nora Linares who was then the executive director of the Texas Lottery, but Linares has maintained she did not know at the time that Smith had hired her boyfriend in New Mexico. Evidently, Moeller was a former agricultural commissioner in New Mexico who was under federal indictment when Smith hired him. Linares was fired in January 1997, after the questionable deal with her boyfriend became known (Linares later married Moeller). Linares sued GTECH over the loss of her $82,687 job with the Texas Lottery. In an out-of-court settlement, GTECH reportedly paid Linares $435,000 to end her lawsuit against the company, plus a reported $290,000 to Ms. Linares’ attorneys.

In Texas, Smith worked closely with Ben Barnes, the Texas Democrat who received 4 percent of GTECH’s gross lottery revenue in the state, at least until 1997, when GTECH cancelled his contract with a $23 million payoff. This is the same Barnes who gave a deposition in a separate Texas lottery firing scandal involving Larry Littwin, the lottery executive director hired to replace Linares. This was the deposition in which Barnes claimed that he was the person who used political influence to get George W. Bush into the Texas Air National Guard during the Vietnam War.

Federal prosecutors believed that Smith had run some $500 million through Barnes’ bank accounts as part of his money-laundering scheme. All formal investigations against Barnes, including any that the Texas Lottery Commission was considering, evidently stopped right after he gave that deposition. To this day, that deposition remains suppressed.

The record of the Texas Lottery is that throughout all the controversies, the three commissioners, including Harriet Miers, resolutely supported GTECH, despite competitive bids that were reportedly lower. We understand that President Bush wanted to be loyal to a trusted associate, but did the White House never imagine that nominating Harriet Miers would open up the Texas Lottery can of worms – including GTECH and the federal criminal convictions of the national sales director who engineered the Texas contract?

If Harriet Miers is not involved even today in a continuing cover-up, we invite her to come forward and answer all the questions. The confirmation hearings should be interesting if any of the senators want to make sure there was no wrongdoing committed in these murky, scandal ridden Texas Lottery days over which Commissioner Miers presided.

Who exactly was Texas Lottery Commissioner Harriet Miers protecting – the Texas public, or Gov. Bush and his National Guard secrets? Evidently even criminal prosecutions involving GTECH’s national sales director and his alleged ties to Ben Barnes were not enough for GTECH to lose the Texas Lottery contract while Ms. Miers was a commissioner. What was the rationale that saved the bacon for GTECH, despite lower bids being on the table? Maybe this is a question Ms. Miers will yet get a chance to answer.


Related commentaries:

Harriet Miers at center of investment fraud

Cover-up deep in the heart of Texas

Is Harriet Miers ‘Unfit for Judging’?

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