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Larry Litwin was fired in 1997 as executive director of the Texas Lottery Commission because then-Governor George Bush wanted an investigation into possible criminal political-influence buying squashed, and then-commissioner Harriet Miers, a Bush appointee, complied with his wishes and terminated him – that is the story Litwin is prepared to tell the Senate Judiciary Committee.

Litwin’s concerns over corruption in the agency he directed involved GTECH, the Rhode Island company that operated the lottery, prominent Texas lobbyists on GTECH’s payroll, and a laundry list of Texas politicians – Democrat and Republican. Those details and the facts surrounding his firing will be offered to the Senate Judiciary Committee as soon as GTECH delivers a letter to committee staff releasing him from a 1998 gag order negotiated to end his wrongful termination federal lawsuit against GTECH.

WND has learned Littwin’s testimony will disclose bi-partisan corruption, with money changing hands in a political influence buying scheme that spread Texas lottery money around widely, to Democrats and Republicans alike. Sources say Littwin’s testimony will put new light on the over $160,000 in payments the Bush gubernatorial campaigns made to Harriet Miers’ Locke Liddell law firm, including the $19,000 she was paid in 1995 to act as Bush’s personal emissary in a mission to make sure Ben Barnes kept the lid on George Bush’s explanation of preferential treatment he received when getting into the Texas Air National Guard ahead of a long list of other applicants.

New York resident Larry Littwin’s story begins on June 9, 1997, when he was hired by the Texas Lottery Commission, largely due to his extensive career with Control Data and its then-subsidiary Automated Wagering International. The honeymoon was short-lived, however. Littwin’s problems with the Lottery Commission began in earnest three months later, when in September he wrote three memos ordering a thorough search for political campaign contributions that may have been made by GTECH to a comprehensive list of Texas legislators and state officials. His search stretched back to 1989, two years before the Texas Legislature voted in the lottery.

Littwin had reason to be suspicious. In January 1997, federal prosecutors in New Jersey had released a pre-sentencing report in the criminal conviction of J. David Smith, GTECH’s national sales manager, which mentioned former Texas Lt. Governor and GTECH lobbyist Ben Barnes as having been involved in a criminal kickback scheme that involved paying over $500,000 to a Kentucky company owned by Smith’s wife. In September 1997, Littwin wanted to investigate those charges and determine how deeply the corruption reached into Texas politics. Prior to his indictment in New Jersey, J. David Smith bragged he had bribed some ten Texas legislators to secure their votes when the lottery bill was before the Legislature. Lottery Commission chairperson Miers assured the Austin American-Statesman these charges against Barnes would be investigated. WND can find no record of any investigation actually undertaken, despite the accusations of criminal activity.

On June 18, 1997, just days after Littwin was hired, Texas Attorney General Dan Morales ruled that the Texas Lottery Commission could no longer keep secret the details of a $23 million severance agreement Barnes had with GTECH. Barnes’ contract had been terminated by an embarrassed GTECH following release of the federal prosecutor’s pre-sentencing report linking Barnes to Smith’s criminal schemes.

Barnes’ pay-out rocked Texas. The newest member of the Lottery Commission, former Texas Supreme Court Justice John Hill told the Austin American-Statesman he was jolted by the amount: “When I was first given an approximate calculation of the amounts being paid to buy up this contract, I was shocked. And I’m still shocked. If they can afford to pay out millions of dollars for services they are not going to receive, it raises the question of whether they have other situations where they are not being prudent with their money.”

Once more, Harriet Miers promised an investigation, telling the newspaper, “We found the amount a highly significant number, and it’s one of the matters that continues to be under inquiry by the commission.” Again, WND can find no record of any such investigation being undertaken by the Texas Lottery Commission, or by any Texas law enforcement unit.

This was not the first time Hill and Miers spoke with one voice. In 1999, Miers’ Dallas law firm, Locke, Purnell, Rain & Harrell, merged with Judge John Hill’s Houston firm, Liddell, Sapp, Zivley, Hill & LaBoon, to form Locke, Liddell & Sapp. Judge Hill appeared in Washington last week as one of the Texas former Supreme Court Justices brought to the Capitol to buttress Harriet Miers’ troubled nomination.

Commissioners Hill and Miers were desperate to calm the public uproar.

Littwin had applied for the Texas lottery job on a whim. He and his wife were vacationing in California when they saw the Texas Lottery Commission’s quarter-page job notice in USA Today. On his wife’s encouragement, Littwin applied, rethinking his decision to retire. The Lottery Commission contacted him immediately, arranging to fly him to Texas as soon as possible. After meeting with him at a hotel, the three Texas Lottery Commissioners voted on the spot, hiring him the same day, even though there were nearly 700 applicants for the position.

Littwin had made clear he worked for a GTECH competitor and the first thing he planned to do was open the GTECH contract to competitive bid. Having competed against GTECH, Littwin knew the firm threw money around to buy political influence, often with little regard for legal niceties. Littwin was offered an annual salary of $100,000. Asked to start immediately, he moved his residence into a hotel. As it turned out, his five month stay as Texas Lottery executive director was so short he never had time to buy a permanent home and move his wife to Texas to join him.

When Littwin first assumed his director duties, Lottery chairperson Miers was publicly supportive of his efforts, including decision to conduct a broad investigation to determine how many more Texas politicians had been swayed by GTECH money. On September 18, 1997, three months after Litwin began, the Dallas Morning News reported Miers saying she believed “he [Littwin] is doing the right thing for the right reason.” She confirmed to the newspaper that lottery security officials had been dispatched to investigate some 30 current and former state officials, including former Democratic Governor Ann Richards and Comptroller John Sharp, who was planning to run in the next gubernatorial election.

The next day, September 19, 1997, everything changed. The Morning News reported a political landscape in turmoil over Littwin’s investigations. Even Governor Bush weighed in with vociferous objections, calling Littwin’s investigation “overzealous.” Karen Hughes, the governor’s spokesperson, argued the New Yorker just did not understand how things were done in Texas.

“He [Governor Bush] hopes that this was a situation of someone who was new to Texas being overzealous in trying to inform himself about the history of the lottery,” Ms. Hughes told the newspaper. “If it was an attempt in any way to embarrass or intimidate key members of the Legislature or the executive branch, then Governor Bush strongly objects.”

Commissioners Hill and Miers were soon on the same page with Governor Bush, determined to stop Littwin. The Morning News reported Hill had only learned about Littwin’s investigation in an executive session where the three commissioners ordered Littwin to stop. “The truth is none of us knew anything about this until it was reported to us in executive session,” Judge Hill told the newspaper. “We made our position clear. I’m sure [the investigation's findings] won’t be reported.”

Two days later, on September 21, 1997, the Morning News, still pursuing the story, quoted an increasingly agitated Governor Bush. “I don’t think any of us understand what [Littwin] was doing,” Bush told the paper. “If in fact he was gathering data to try to embarrass a member of the House or Senate or the executive branch, it’s inappropriate behavior. I just don’t understand what was going on there, and I don’t think anybody does yet. I think that will be clarified by the commission.”

On October 2, 1997, Lottery Commissioners Miers and Hill told the Dallas paper they had not approved the records search Mr. Littwin had undertaken. In the same article, Littwin defended himself: “Specifically, in the exercise of due diligence with provisions of our vendor contracts, I felt this research and review was important in order to determine if any financial contributions had been made by GTECH.”

On Wednesday, October 29, 1997, the Lottery Commission met and ended the controversy, voting to fire Littwin, less than five months after his sudden hiring. On February 20, 1998, the Morning News reported Linda Cloud, Littwin’s replacement, had decided to end competitive bidding for the GTECH contract, even though lower priced bids were then on the table.

A WND search of Texas Lottery Commission documents has failed to find the internal memos Littwin wrote in September 1997 to launch his investigation of political influence buying. The Senate Judiciary Committee, armed with subpoena powers, may have better success surfacing those documents, as well as any additional internal records which surround the controversy.

Federal Election Committee records show Ben Barnes is a generous contributor to many Democratic Party campaigns, with recent contributions to Judiciary Committee members Kennedy, Leahy, and Schumer, as well as to Democratic presidential hopefuls, Senators Kerry and Clinton. A full investigation into Miers’ record as lottery commissioner will most likely require the Senate Judiciary Committee to issue a subpoena to Barnes as well as to Littwin.

WND has been told Senate Judiciary Committee attorneys have held discussions with Littwin, as well as with GTECH, and are making plans for Littwin to appear before staff in preparation for public testimony. A subpoena for Litwin to appear before staff could be issued as soon as Thursday this week. WND has also been told Littwin’s testimony offers the possibility of opening new investigations and generating new indictments.

An examination of the record gives lie to the claim Miers “cleaned up the Texas lottery scandals.” In 1995, when Governor Bush first appointed Miers as chairperson of the Lottery Commission, J. David Smith and Ben Barnes were busy buying influence in Texas for GTECH below the radar screen. The “scandal” blew up when the federal prosecutors in New Jersey published pre-sentencing recommendations in J. David Smith’s criminal conviction, a report that openly pointed an accusing finger at Ben Barnes. When Harriet Miers left the commission in 2000, anticipating she would be awarded a position in the White House should George Bush win the presidency, GTECH still had the Texas contract and all investigations of political-influence buying in GTECH’s Texas lottery contract had been effectively squashed. That may all change once Larry Littwin begins testifying. As cautioned before, Larry Littwin may turn out to be George Bush’s John Dean.

In Watergate, it took one “third-rate burglary” to open the investigation that brought down Nixon as his second term was beginning and Vietnam was playing to defeat. George W. Bush’s second term is still in its first year and we are yet struggling in Iraq. The comparison is painful.

In nominating Harriet Miers, President Bush has managed to re-open, on a national stage, the Texas lottery scandals and the National Guard controversy. Before it is finished, we may be examining how lotteries buy political influence in America today, as well as replaying the debate over Vietnam that characterized much of the 2004 presidential campaign.

It’s time for the President to withdraw this dreadful nomination or, if politics dictate, Harriet Miers to withdraw herself from consideration, so we might avoid another long, painful, and needless examination of old matters that probably would be better off never exhumed.

Previous columns:

‘A tale of bipartisan corruption – Texas size

‘Miers fix’ is on in Texas

Charges against Miers firm next shoe to fall?

Miers meant to ‘keep lid’ on lottery scandals

Is Miers firm under criminal investigation?

Larry Littwin: George Bush’s John Dean

Miers protected money launderer?

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’?


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