Winners and Losers

Lottery operator Gtech was especially kind to the political friends of Texas Comptroller John Sharp. But when supervision of the company was moved from Sharp's office, the party was over.

An FBI spokesman issued the agency's standard refusal to confirm or deny that an investigation is in progress. What the FBI is trying to gather in Texas, according to sources who have been interviewed by agents, is evidence of cash or favors supplied directly by Gtech officials or lobbyists to lawmakers and other officials in connection with both the Legislature's approval of the lottery and the granting or the supervision of the state contract to operate it. The issue of political hires is not the focus of the investigation. "That is not high on my list of priorities," says FBI agent Mike Anderson, who has interviewed several of the onetime Gtech employees quoted in this article. Deputy comptroller Greg Hartman says he's aware an investigation by the FBI is under way, but he does not believe the agency is examining the actions of Sharp and his staff.

Back in 1992, J. David Smith was just a faceless, alluring voice on the phone to Democratic activists in Texas.

"You have been recommended by John Sharp and Nora Linares for a job," was Smith's blunt but pleasing announcement. Sometimes Smith's pitch line credited "Ann Richards and John Sharp" with recommending the person he was calling. "Are you interested?" Smith would inquire. In most cases, they were.

Among those whom Smith called was Lynda Phillips of Tyler, a member of the State Democratic Executive Committee and a political ally of Sharp. Phillips indeed was interested. She went to Austin not knowing if she had a job, and had no time to give notice to her superior at the state Department of Human Services before she signed on with Gtech, was outfitted with a salary and a new company Buick, and told to go back home and await further instructions.

Beaumont's Betty Smith had to come off disability to take her $40,000-plus position with Gtech, and she insisted that she be allowed to work out of her home at district manager salary. No matter that Beaumont, a small market by lottery standards, was in fact an outlying precinct of the Houston district. Smith was a key member of the Texas Coalition of Black Democrats, a group closely aligned with Sharp. Her home became her office and a storage area for lottery tickets and paraphernalia. One Houston field marketing coordinator who visited her there found little evidence of lottery activity, but plenty of signed photos on the walls from a plethora of Democratic politicians. On at least two occasions, Houston sales representatives say they were commandeered to take Smith grocery shopping or to the pharmacy for her medicines.

Betty Smith declined to comment for this story, except to confirm that J. David Smith had made her a job offer on the telephone. She says her relationship with Gtech, which ended in her dismissal less than a year later, has legal ramifications, and she referred questions to her lawyer son, who did not return a phone inquiry.

J. David Smith's calling list also included Houston's Doris Hubbard, who runs a potent Democratic political organization based in the Acres Homes community in the northwest part of town.

"Doris never went through any application process," recalls Tom Logans, who was Hubbard's supervisor in Houston. "David Smith would call the individual and say, 'You've been highly recommended by John Sharp and Ann Richards to work for Gtech.' Doris said he called her and said, 'What kind of job would you want?' She says, 'What kind of job do you have?' He says, 'We've got sales rep,' and she says, 'No, I don't want that. That's too much work.' He says, 'Oh, we got us a sales rep supervisor.' She asks, 'What does he do?' and then she says, 'That sounds fine, but what does it pay?'"

Logans, who applied for his job through the employment agency Gtech used, Enterprise Advisory Services Inc., shakes his head in bemusement. "I've never had an opportunity to get a job that way!" But Logans says that Hubbard, who declined to comment on-the-record for this story, performed satisfactorily during his tenure.

Robert Rendine, a Gtech spokesman in Rhode Island to whom inquiries to the company's Austin office were referred, denies that Gtech hires employees to win favor with politicians in the states where it operates.

"We routinely get references for lots of people [but] Gtech hires for itself, period," he says. "We don't hire at anybody's request."

As for particular cases like that of Beaumont's Smith, Rendine replies: "I don't know Betty Smith, and we don't explain why we hire people, except that we hire people we think are going to do a good job for Gtech."

After returning from Austin to direct the start of the lottery in Houston, Logans found that the "greenies" were a source of both humor and anger to other Gtech workers, and employees with political connections were the rule rather than the exception.

"[People] would laugh and say, 'I've got another 'Gtech Opportunity to Excel,' meaning that they are sending us another political hire," Logans says.

The issue of Betty Smith was a continuing irritation, says Logans. "Bill Glen had made her a district manager for Beaumont, but there was no Beaumont district. She wanted a private office, phone, fax. The whole works, to set up in Beaumont."

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