Boozy California lottery parties risked embarrassing state agencies, investigation says
California State Lottery managers who visited a raucous piano bar on work trips ran afoul of a state law meant to protect public agencies’ reputations, state Department of Justice attorneys said in a recently completed report.
The report is the culmination of more than a year of investigations into the lottery that were launched in late 2018 after anonymous whistleblowers sent a letter to former Gov. Jerry Brown alleging mismanagement in the lottery’s sales division, including questionable trips to PianoPiano bar in Claremont in 2016 and 2017.
Investigators concluded that a “sale culture” inappropriate to public service took hold at the lottery after it hired sales representatives from the private sector, but the report didn’t recommend any criminal charges.
“Lottery managers showed poor judgment in visiting the bar and participating in the off-color comedic entertainment,” the attorneys wrote.
Sales managers traveled for conferences during years when the Lottery was dramatically growing its revenues after a change in state law allowed it to change its strategy. The department reached nearly $7 billion in revenues in 2018, up from $3 billion a decade earlier.
The visits to the piano bar occurred after-hours during the sales conference trips. The bar posted photos from the outings to its website, including one of a man with his head up a woman’s shirt that was included in the whistleblower letter.
The State Controller’s Office and the State Auditor’s Office conducted their own investigations of some of the letter’s allegations, identifying inappropriate spending at conferences and a decline in the share of revenue the lottery gives to schools.
Gov. Gavin Newsom’s office provided a summary of the latest report to The Sacramento Bee on Monday in response to a Public Records Act request. Names are redacted from the report. The department declined to release the full investigation, citing attorney-client privilege and other provisions in state public records law, but prepared summaries for release.
“The lottery employees were traveling on state business and should have made sure that their conduct did not discredit their job positions and the lottery,” Justice Department attorneys wrote in the report.
The whistleblowers accused the lottery manager who was pictured with his head under the woman’s shirt of sexual harassment and misconduct.
The investigation absolved him of those charges, determining the manager didn’t initiate the conduct.
His testimony and that of witnesses demonstrated the woman, who was intoxicated, “caught him unawares and placed her shirt over his head,” the report states.
Nonetheless, multiple visits to the bar over two years by the employees “created the risk that they would be placed in embarrassing situations if they participated in the entertainment or interacted with intoxicated customers,” according to the report.
The report said high-level managers in the sales division didn’t seem to understand that state employment carries a “duty of professionalism” that applies to after-hours events.
Off-duty misconduct by state workers violates state code when it bears a “rational relationship” to the employees’ jobs and “creates discredit that disrupts the public mission of the employing agency,” the attorneys wrote.
The lottery dismissed the manager of the sales division on March 1, 2019, according to the report.
The Justice Department also reviewed an investigation by another law firm of a lottery facilities services manager who used racial slurs on several occasions, according to the report.
When the employee complained about the inappropriate comments, the manager retaliated against him, according to the report.
The lottery denied the manager a raise and demoted her, but she retired before the demotion went into effect, according to the report.
Investigators determined that top-level managers at the lottery neither knew about nor condoned the misconduct related to the sales conferences or other misconduct whistleblowers alleged in their complaint. The department’s leaders took appropriate action when they learned of the misconduct, including eliminating off-site conferences and seminars and restricting business travel, the report says.
“The California State Lottery is committed to ensuring a healthy and safe workplace for all employees,” lottery spokesman Jorge De La Cruz said in an emailed statement. “The lottery is taking multiple actions in response to the allegations addressed in the DOJ report including, but not limited to, requiring staff to take training regarding respect and professionalism, harassment and discrimination, and diversity and inclusion.”
The lottery has also expanded its Equal Employment Opportunity Office and developed a new employee complaint process, De La Cruz said.
Paulina Vasquez, a lottery sales representative SEIU Local 1000 steward, said she thought the investigations failed to address some of the mismanagement and retaliation issues she has observed.
“At the end of the day, they did have a manager guilty of racial slurs, of retaliation, of inappropriate conduct,” Vasquez said. “This is reflective of lottery management, not necessarily of employees.”
This story was originally published May 5, 2020 at 5:57 PM with the headline "Boozy California lottery parties risked embarrassing state agencies, investigation says."