December 16, 2004
Judicial Watch sues over payments to gambling lobbyist

Judicial Watch is a bunch of crackpots, but they can be useful.

A lawsuit filed by a watchdog group seeks to block the state from making more payments to a Las Vegas law firm hired a year ago to draft legislation to legalize video slot machines.

The lawsuit, filed Tuesday by Russ Verney of the national watchdog group Judicial Watch, contends that the state exceeded its authority when it agreed to spend lottery proceeds to pay the firm.

The Texas attorney general's office hired the law firm Lionel, Sawyers and Collins to develop legislation that would effectively legalize a form of casino gambling.

"We believe that it is an abuse of the public trust to allow government officials to use lottery funds that are supposed to go to public education as their own private piggy bank," Verney, who heads Judicial Watch's southwestern regional office in Dallas, told the Fort Worth Star-Telegram for a story in Wednesday's editions.


Republican Gov. Rick Perry and his staff were trying to draft a package of legislation to overhaul the state's property-tax-reliant school finance system. Legalizing video slot machines was a key component of the plan because they could bring the state more than $1 billion over a two-year budget cycle.

The proposed legislation, which lawmakers ultimately rejected during a special legislative session in the spring, envisioned allowing as many as 40,000 video slots at Texas' racetracks and Indian reservations.

Any change in state law would have to be in harmony with federal laws governing American Indian tribes and gaming. That was when the state's lawyers decided they needed outside help, according to the state auditor's office.

Lottery Commissioner James Cox, who worked in Las Vegas during the 1970s and 1980s, recommended that the state contact the law firm. Because none of the firm's lawyers who would be working on the Texas project was licensed to practice in the state, the attorney general's office hired the firm on behalf of the lottery commission.

Cox has defended the decision to hire the firm, which represents gambling venues such as the MGM Mirage, Aladdin Gaming and the Horseshoe Hotel and Casino.

The state first agreed to pay the firm $100,000. The fee ceiling was later raised to $250,000, and the firm's bills to the state have topped $350,000.

To date, the firm has been paid $176,373 from the attorney general's account. However, because of controversy raised by lawmakers when the arrangement first came to light last spring, no additional checks to the firm have been cut.

More background here, here, here, and here. The Star-Telegram has been all over this new development:

State owes money to gambling consulting firm

Comptroller Carole Keeton Strayhorn, a Republican who first proposed legalized video slots two years ago, has refused to reimburse the attorney general's office the $176,343 it had essentially loaned the lottery to pay the law firm's first installment. Strayhorn has also served notice that unless she gets the expressed go-ahead from legislative leaders, she won't pay the $187,125 the firm says it is owed for work done for the state since March.

The figure is more than $113,000 above what the contract calls for.

Suit seeks nonpayment to law firm in Vegas

The state had first agreed to pay the firm $100,000. The fee ceiling was later raised to $250,000, and the firm's bills to the state have topped $350,000.

To date, the firm has been paid $176,373 from the attorney general's account. But because of controversy raised by lawmakers when the arrangement first came to light last spring, no additional checks to the firm have been cut. And State Comptroller Carole Keeton Strayhorn has refused to reimburse the attorney general's account with money from the lottery commission.

AG's office defends hiring Vegas firm

The Texas attorney general's office on Wednesday defended its decision to hire a Las Vegas law firm to assist with legislation to expand gambling and denounced a lawsuit seeking to limit additional payments to the firm as "misguided."

The comments by Angela Hale, communications director for Attorney General Greg Abbott, came one day after the regional head of a national watchdog organization filed a suit alleging that the state overstepped its authority when it agreed to pay the firm as much as $250,000 for legal advice.


Russ Verney, who heads the Dallas office of Judicial Watch, said at a news conference in Austin that he filed the lawsuit because the attorney general's office and the Texas Lottery Commission had no business hiring private lawyers to rewrite state laws.

He also said that the state was, in effect, paying the firm to lobby for the legislation, which also runs counter to state law.

In a written statement, Hale rejected those arguments.

"Russell Verney's claims are misguided, riddled with factual and legal errors and insupportable in both fact and law," Hale said. "Contrary to his claim, no lottery commission dollars have been spent, period. Secondly, contrary to his claims, no money has been spent for lobbying."


In his lawsuit, filed in the 126th District Court in Travis County, Verney contends that the lawyers for the Las Vegas firm attended legislative hearings on proposed video slot-machine legislation, offered testimony and had discussions with lawmakers and their aides.

"That's lobbying, pure and simple," Verney said.

Seems to me that if Carole Keeton Strayhorn ever figures out that she won't be the Republican nominee for Governor, she could do the world a favor and go after Greg Abbott's job. There's some decent ammo here for her to use.

Posted by Charles Kuffner on December 16, 2004 to Budget ballyhoo | TrackBack

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Posted by: abelard on December 16, 2004 7:17 PM

Remember early this year when a memo circulated outlining the steps that would need to be taken to file impeachment papers against Rick Perry for corruption in connection to this fraudulent VLas Vegas contract and other potentially criminal malfeasance? Don't be surprised if we see a renewal of that effort as the Legislative session convenes.

Posted by: Zangwell Arrow on December 17, 2004 11:49 AM

A friend of mine who works at the Capitol reports that the pro-gambling forces are planning to push through a bill to lower the legal age for playing the slots from 21 to 18.

That's the only way the revenue estimates work, he says. Thus, Republicans will be able to generate enough new money to claim victory on school finance reform, while lowering property taxes and continuing to boast about not raising taxes.

But I wonder if their Christian conservative cohorts are going to go along with the plan?

Posted by: Oh, Sarah! on December 17, 2004 3:28 PM

Judicial Watch has very competant lawyers; they almost never lose cases, and certainly not on the law.

Texas is one of the few jurisdictions that gives taxpayers standing to sue state officials to prevent illegal expenditures. Also, citizens can sue to force the Comptroller to get money back already shoveled out the door by McBee.

Posted by: Oh, My! on December 18, 2004 10:25 AM