Federal Charges Against Gtech Lottery Firm Thrown Out The Payments, Though Odd, Weren't Illegal, A Judge Said. One Defendant Had Been Indicted In N.j., Too.

Posted: January 14, 1995

BOWLING GREEN, Ky. — Calling some GTECH Corp. payments "an unusual way of doing business, to say the least," a federal judge threw out fraud charges against a former top

Kentucky official and a former executive with the lottery company.

Federal prosecutors had painted an elaborate scheme between James David Smith, a former GTECH national sales manager, and L. Rogers Wells, former secretary of the Kentucky finance and executive cabinet departments.

They said the pair had conspired to siphon brokerage payments to a shell corporation, then split the money.

Part of the proof, Assistant U.S. Attorney Steve Pence told jurors, was the $70,631 that the shell corporation received from GTECH without performing any services.

GTECH, based in West Greenwich, R.I., provides computer and other services to most of the country's state lotteries, including those in California, New York, Georgia, Illinois, Indiana and Kentucky.

The company recently lost its bid to continue operating New Jersey's lottery.

Smith also was indicted in New Jersey last year on bribery and kickback charges in connection with GTECH's efforts to win a new state lottery contract there. Also charged were two New Jersey political operatives: Republican Steven Dandrea of Longport and Democrat Joseph LaPorta, former Gloucester County roads superintendent. That trial was scheduled to take place this spring.

In the Kentucky matter, juror Evan Rudolph said: "It appeared an open and shut case."

Then defense attorneys made their case, which included a tantalizing piece of information: that GTECH routinely pays "goodwill money" to companies across the country owned by influential people who never do any work for state lotteries or GTECH.

If GTECH knew about those payments, where was the crime?

"GTECH is not victimized here," said Dom Amorosa, who defended Smith. ''The so-called victim is not complaining. The only ones complaining are the prosecutors."

Though U.S. District Judge John G. Heyburn 2d called some of GTECH's practices unusual, he ruled no crime had been committed.

The jury never got the case.

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