• Text smaller
  • Text bigger

At Wednesday’s White House press briefing, Scott McClellan, the president’s press secretary, said in response to a question from WND regarding the Texas Lottery scandals that he would encourage the newssite “to go back and look at the records” and comments that were made at the time.

WND has now obtained several hundred newspaper articles from Texas in 1997-1998, when Harriet Miers was chairwoman of the three-member Texas Lottery Commission. Contrary to what McClellan might like us to believe, the public record is that the Texas Lottery was in nearly constant scandal from the time Harriet Miers was appointed as chairwoman by then-Gov. George W. Bush in 1995, until she unexpectedly resigned in March 2000, trying to step out of the way of new scandals before she completely ruined her chance to get into the White House should then-presidential candidate Bush win the election.

In January 1997, a political influence-buying and kickback scandal rocked the Texas Lottery Commission. Federal prosecutors in New Jersey had just successfully prosecuted GTECH’s national sales manager, J. David Smith, for the illegal approach he took building the company into a lottery powerhouse nationwide. GTECH was the prime contractor of the Texas Lottery. U.S. Attorney Faith Hochberg of Newark pointed a finger at GTECH’s Texas lobbyist, former Democratic Lt. Gov. Ben Barnes. The federal prosecutors charged that Barnes made more than $500,000 in kickback payments to Smith, laundering the money through accounts and corporations that Barnes controlled, so as to hide the transactions.

On Jan. 16, 1997, the Austin American-Statesman quoted Barnes’ spokesperson, Lisa LeMaster, as saying, “The payments were open and honest and by check. Ben Barnes would have it no other way. It’s not how he does business.”

Here’s how Barnes set up the scheme. Under his lobbying contract, GTECH paid Entrecorp, the firm set up by Barnes and his partner, Austin lobbyist Ricky Knox, 4 percent of GTECH’s gross revenue in Texas, a sum amounting to about $3 million a year. Barnes put a third of the income from GTECH into a bank account under his name, which in turn sent over $500,000 in checks to International Marketing Co., a Kentucky company owned by Smith’s wife, Karen. The pre-sentencing report presented to the court by federal prosecutors also included checks totaling $7,039 from Barnes’ bank account to a plumber, a carpenter and a lumber man who did work on Smith’s Kentucky farm.

The federal prosecutors left no doubt of their conclusions: “The Texas monies are kickbacks and should be considered relevant conduct for the purpose of calculating Smith’s sentence.”

What did Harriet Miers do when presented evidence of the scam? The record shows she did virtually nothing. The Austin American-Statesman questioned Miers, who said the Texas Lottery Commission had been questioning Barnes’ deal with GTECH. Miers promised the Commission would review the documents presented by the federal prosecutors, saying, “We will obviously be in the process of determining what significance it has for the Texas Lottery.”

The only discernable consequence seems to be that the Commission decided to fire Executive Director Nora Linares. Knowing that the federal prosecutors had used the Barnes scam as a “blueprint” for the Smith influence-buying, nothing ever emerged from the Commission’s supposed review of the charges made against Barnes. Yet, when Linares was shown the door on Jan. 8, 1997, the Commission claimed that the reason she was fired was linked to her own questionable involvement with GTECH. It turns out J. David Smith had hired Linares’ boyfriend in New Mexico, Mike Moeller, who was receiving $6,000 a month to serve as a “consultant” for GTECH. Linares and Moeller met in the 1980s at the Texas Agriculture Department where Moeller had been a top aide to former Agriculture Commissioner Jim Hightower.

Linares claimed her firing was politically motivated, alleging Harriet Miers was determined to root out Democratic Party influences in the lottery. Miers responded indignantly.

“Give me a break,” she told the Dallas Morning News. “This is an issue that was acted on in the best interest of Texas.”

Evidently, prosecuting Barnes was not in the best interests of Texas. He had kicked back a half million dollars to now-convicted felon J. David Smith. How could a $6,000 payment to Linares’ boyfriend in New Mexico have been so much worse? Linares was fired. Nothing happened to Barnes.

Yes, GTECH did cancel Barnes’ lobbying contract, but the company softened the blow with a $23 million “good-bye” payment to Barnes and his partner. Harriet Miers did not even demand that Barnes’ settlement be public. It took the Austin American-Statesman and other news organizations to press for the terms of the Barnes’ payoff to be released to the public. Finally, on June 19, 1997, some six months after Linares was fired, Attorney Generals Dan Morales finally ruled in favor of the news agencies and demanded the Texas Lottery Commission stop keeping the Barnes pay-off details from the public.

Why was the Texas Lottery Commission protecting Barnes? What did Barnes have over the Texas Lottery Commission? Harriet Miers was well aware of Barnes’ claim that the Bush family had approached him through mutual friend Sidney Adgar, urging Barnes to use his political influence to get George Bush into the National Guard during the Vietnam War. She had been hired and paid $19,000 when Bush was a candidate for governor to “investigate” the National Guard story Barnes was telling around the state. If a Republican governor did win in 1995, Barnes had to make sure his GTECH contract was still secure. The record shows that under Miers’ watch, Barnes was never disciplined or prosecuted by the Texas Lottery Commission.

Moreover, GTECH kept the Texas contract despite strong challenges from lower-bidding competitors. On Feb. 19, 2000, lottery Executive Director Linda Cloud announced the decision of the commissioners. According to the Dallas Morning News, Cloud simply said that “it is in the best interest of the state to terminate the procurement” and stick with GTECH.

Chuck Brook, vice president of Automated Wagering, a GTECH competitor, begged to differ: “Our bid saved the state over $92 million over five years, plus provided a new computer system.”

Why wouldn’t the Texas Lottery Commission take the better deal? If the commissioners were going to stay with GTECH, why wasn’t the company pounded to make concessions and give the state a better deal? There were alternative competitors who had come forward until the bidding process was abruptly terminated.

The way the pieces fit together, Miers’ purpose on the Texas Lottery Commission all the time may have been to make sure the lid never came off the Ben Barnes story about the National Guard. If Ben Barnes got prosecuted for what federal prosecutors clearly described as a kickback scheme with convicted GTECH national sales manager J. David Smith, Barnes might well have told the world what he did to pull favors so George Bush could stay out of Vietnam. If Smith went to federal prison for his involvement in the kickback scheme, how did Barnes stay out?

Bush’s National Guard story is an old story that is going to get new energy if the president persists with Harriet Miers’ nomination to the Supreme Court. Dan Rather and CBS were foolishly driven by Bush hatred to the point where they forged documents. Nothing needed to be forged. Looked at through the lens of the Harriet Miers cover-up, what may always have been the George Bush lie starts to come into focus.

In 1991-1992, Barnes got himself into a lucrative contract with GTECH because as a Democrat he could influence Democratic Gov. Ann Richards to award GTECH the contract, as the lottery was just starting up in the state. When Bush became governor in 1995, it looks like Barnes skillfully leveraged his inside role in the National Guard story to make sure GTECH kept the contract. In the process, Barnes became a multi-millionaire, never prosecuted, never indicted – not even after federal prosecutors had the evidence to prove his involvement in influence peddling and money laundering schemes for which Smith was convicted. If playing along with the National Guard cover-up wasn’t Barnes’ magic, what was?

Previous columns:

Did payment to Miers’ firm violate law?

Ronnie Earle linked to Miers-run lottery

Were winners cheated on Miers’ watch?

Harriet Miers enabled abusive tax shelters?

Harriet Miers contributed to Hillary’s election in 2000

Was Harriet Miers asleep at the helm?

How Miers’ law firm helped defraud investors

Federal crimes, GTECH and influence peddling

Harriet Miers at center of investment fraud

Cover-up deep in the heart of Texas

Is Harriet Miers ‘Unfit for Judging’?

  • Text smaller
  • Text bigger
Note: Read our discussion guidelines before commenting.