New Costs Surface For Lottery Chief’s Exit; Senator Seeks Restrictions

Article as it appeared in the Hartford Courant

The Connecticut Lottery Corp.’s lucrative separation agreement last year with former CEO Anne Noble has stubbornly remained a focus of scrutiny, as a legislative leader criticized it this past week while pushing for more regulation of “quasi-public” agencies.

Also, newly obtained documents provide further details about costs to the lottery corporation in the wake of Noble’s exit — including payment of a $39,900 legal fee to a private law firm that represented Noble in negotiations for the agreement, and reimbursement of personal internet, phone and TV expenses for the chairman of the lottery’s board of directors.

On Wednesday, Senate Republican leader Len Fasano testified at a legislative hearing on a bill he has introduced to require “review and comment” by the state attorney general of quasi-public agencies’ contracts, such as Noble’s controversial separation agreement. Any employment or consulting contract costing more than $100,000 a year would have to be have to be submitted to the General Assembly committee that oversees a quasi-public agency, the bill says.

Noble’s separation agreement was signed late last August amid a state Department of Consumer Protection inquiry into problems with a lottery game that was marred by fraud. Noble says she provided only exemplary leadership at the organization that provides the state with hundreds of millions of dollars a year.

Various quasi-public agencies such as the lottery and Connecticut Housing Finance Authority have been created by the legislature to operate with considerable independence and the ability to use an “entrepreneurial and business-like” approach.

That autonomy can put taxpayers’ money at risk, Fasano told the legislature’s government administration and elections committee Wednesday. These agencies “were set up to have a certain amount of independence — but not too much independence,” he said. “Those dollars are, at the end of the day, taxpayer dollars.”

Once these agencies are launched, Fasano said, “we never hear from them again until something goes awry” and it ends up “in a newspaper article.”

It’s been too hard to penetrate the quasi-public agencies’ sometimes-secretive operations, Fasano said, adding, “I just want there to be more sunlight.”

The chairman of the lottery corporation’s board of directors, Frank Farricker, wrote an internal email in August, when the separation agreement was being negotiated with Noble, about keeping the investigation into the 5 Card Cash game quiet. “We will use best efforts to keep the [Department of Consumer Protection] investigation under wraps, meaning we will not ask DCP to further the investigation and we will ask them not to release the report,” he wrote.

Farricker — who now is also serving as the lottery’s unsalaried interim president and CEO as a successor to Noble is being sought — submitted written testimony opposing Fasano’s bill, which he said is “unnecessary and would negatively impact general fund returns.”

Also opposed was Kevin Dillon, executive director of the quasi-public Connecticut Airport Authority. He submitted testimony that the bill “threatens to stifle our ability to move quickly on opportunities.”

New Cost Details

Meanwhile, lottery corporation documents, obtained through a public-records request, provide new details about costs related to Noble’s departure:

•The lottery corporation paid a $39,900 legal fee on Dec. 30 to a private law firm in New Haven — Garrison, Levin-Epstein, Fitzgerald & Pirrotti — for representing Noble during negotiations for the separation agreement. The private law firm that represented the lottery corporation in those negotiations — Carmody Torrance Sandak & Hennessey, with an office in Stamford — was paid about $50,000 during that same period. Farricker, the lottery board’s chairman, said, “The board felt that it was considered reasonably standard in the industry … to … occasionally pick up the legal fees” for such an arrangement with an employee.

•Farricker, in his role as interim president and CEO, has been receiving monthly reimbursement checks from the lottery corporation since late summer for mileage and other expenses. Those include including a $145-a-month internet, TV and phone bundle at his Greenwich home, which is among other charges on Verizon bills totaling $1,597 for which he has been reimbursed. Reimbursement records also show that the lottery has reimbursed $1,039 for Farricker’s personal Sprint cellphone bills dating to mid-July.

Farricker said the lottery is paying for his “internet connectivity when I am working at home” and for his personal cellphone that he uses in service of the lottery. “I think it’s reasonable that if … I am working from home at no cost to the state, at least I am not paying the cost of doing my work,” he said. “I hope you highlight in your story that I also worked for free all this time, probably saving the state an incredible amount of money.”

He said the State Auditors of Public Accounts had looked over the lottery’s records, including the expense reimbursements, late last year after a rash of news reports and had not questioned any of it.

“We are continuing our review, and we have not reported our findings,” John Geragosian, one of the two chief auditors in that bipartisan office, said Wednesday. He declined further comment.

Fasano said that when he asked members of the lottery board for details about Noble’s separation agreement recently, he received responses that amounted to, “I don’t have to answer your questions because I’m making you money — stay out of my way.”

“I found that very disrespectful, but it speaks to the audacity of the [board] to believe that they are totally autonomous from the state of Connecticut. And they are not,” Fasano told the committee. He said afterward that it wasn’t Farricker who had answered that way.

5 Card Fraud

The lottery corporation began taking flak late last year after news surfaced that it had entered its controversial “transition agreement” with Noble. That was about a year after the 5 Card Cash lottery game was hit by a fraud scheme in which some people found a way to learn winning results before they came out of lottery machines.

At the time Noble negotiated her exit, the state Department of Consumer Protection was investigating the scheme and whether lottery personnel responded properly and promptly to problems when they heard about them. The department issues state licenses to all lottery corporation employees, and has the power to seek suspension or revocation of that license in cases of misconduct.

Noble said late last year that she had “never had a conversation” with consumer protection department officials “about my license being revoked or suspended. … My license was not suspended, nor was there any basis to suspend my license.”

She also said that Farricker did not include her among the recipients of his email about keeping consumer protection officials’ investigation “under wraps” — and that she never saw any investigative report that Farricker said he would ask the officials not to release.

The separation agreement gave Noble severance pay at her $212,000 annual salary rate from Sept. 22, when she stepped down as CEO and entered a senior adviser role, until Jan. 31, when she reached her 10-year employment milestone qualifying her for lifetime retirement benefits. She’ll also receive $25,000 a month through July as a consultant to the lottery board.

Fasano said he questions whether that arrangement legally qualifies Noble for retirement benefits — which would start, at earliest, next year when she turns 55. He said he has asked lottery corporation personnel to explain the basis on which the severance pay period counts toward the 10 years she needs for retirement benefits — and “I keep getting an answer that, even as a lawyer, is very complicated.”

Noble said Wednesday: “This agreement was negotiated by my attorney and the lottery’s attorney, and approved by my board of directors unanimously.” She said that it recognized her experience and expertise in a “complex” field, and “I am here to contribute to the lottery’s continued success” as it conducts a personnel search to replace her as CEO.

She said that both her lawyer and lottery lawyers agreed that the legal fee payment in her behalf was reasonable and justified. Noble said that in addition, “I did incur legal fees” on her own, in consulting attorneys “in an attempt to set the record straight” about some of last year’s news coverage last year. “I believe that some of the statements that were made were false and unjustified,” she said.

She declined to elaborate about whose statements she was talking about — although she said that none of them came from people at the lottery corporation, for whom she said, “I have nothing but the highest regard.”

Meanwhile the Department of Consumer Protection is continuing its “ongoing investigation into misconduct related to the game 5 Card Cash,” agency spokeswoman Lora Rae Anderson said. “We are conducting our investigation in a thorough manner that includes looking into both lottery retailers and Connecticut Lottery Corporation employees,” she said. “As soon as the investigation is complete, we will make sure details are made available to the public.”