- Required Reporting - Process not in place???
What happened to it - it WAS there - they used it previously ...
(Page 11 - 2012 Prize Payout Account Review Report)
Oh my - do I ever take issue with the claim that "agency management
did not have an adequate process in place during the audit
period to ensure reporting .... " Let me show you WHY ...
You just read ...
Section 321.022 requires the Administrative Head
of State Agencies and universities
to report suspected fraud or
unlawful conduct to the State Auditors Office.
The Internal Auditors
that the Texas Lottery
NOT comply with this
statute because they did not have an "adequate process" in
place. Yet multiple
fraudulent activity were identified
in March of 2007 and continued through 2009.
So let's start by
that they actually had
something to report first ... OK?
As you see, Mr. Grief was keenly aware of alleged forged checks and fraud in March 2007.
Note - Mr. Sadberry, who was the Executive Director, was not included in the email ...
Were they purposely keeping this from him?
Now here's absolute, undeniable proof that in 2003 ...
the Texas Lottery obviously
had an "adequate
in place to
report violations of suspected fraud as
by Code 321.022.
(You do need to know that the Texas Lottery did
the following document to me though I did request it.
Instead they sent me a bill which you'll see in a minute)
Anyway .... read on ...
Excerpt from July 14, 2005 letter CONFIRMS ...
Texas Lottery did comply
to Section 321.022 in 2003 -
(The letter is signed by John Keel, State Auditor)
- Excerpt from Keel 2005 letter -
Explains requirement to 321.022 ...
Read Mr. Keel's letter in its entirety
By reading Mr. Keel's letter in its entirety, you will see that a
copy was sent to Acting Director Gary Grief in July 2005. It can
assumed that Mr. Greer would have made the original
report to the
State Auditor back in Sept. of 2003 as he
was the Director at that time. However, it would also be
wise to assume that either Mr. Grief or Ms. Kiplin or
have assisted Mr. Greer in his report
the SAO as
Mr. Greer was relatively new to state work.
(I must use the word "assume" as the
wanted $864 to research
and provide these documents to me)
At any rate, this letter is a clear
indication that Mr. Grief
- in 2005 -
knew about the statutory requirement.
read the letter from Mr. Keel.
So, in March of 2007, when Mr. Grief received the
email shown above, he should have known that it
was his responsibility to advise Director Sadberry
that they [Texas Lottery] were
required to report it
to the State Auditor. Did Mr. Grief do this?
Mr. Grief was the Executive Director in Oct 2008
2009 but he failed to comply with 321.022 by
reporting the fraudulent activity. And according to
the final report, most of it [fraudulent activity] was
caught in late 2008 & 2009 when he was
- in fact - the Director. (You know, this is also
those teams were working on the
<huge grin and sarcastic remark>)
Now let's put a cherry on the cake with
to failing to comply with 321.022 ...
Now hang with me, I'm leading you to a point here ...
Below is a directory found on the Texas Lottery website.
It is a page that should link you to all Internal Audit's
reports though I can assure you it is not complete
and on occasion they fail to post reports ....
want you to see specifically is that the top 4
links indicates that "Annual Internal Audit Reports"
"released in July 2013."
This is not true as those reports
were actually sent out in
Oct of the year indicated. Putting
this tidbit aside ....
Notice that you do not see the Annual Reports
for 2008, 2007, 2006, 2005. On August 5, 2013,
I asked about
them and I requested that
they be posted
with the others ....
Remember I'm making a point so stay with me ....
I received this response from Kelly Cripe the same day ...
Isn't this interesting - July 2013 is when
Gary Grief instructed
staff to post these mandated reports - AFTER - Ms. Melvin resigned ...
Needless to say, I made an Open Records request to obtain the
2005, 2006, 2007, 2008 reports that should have been
posted on the TLC website.
- FYI -
As I write this, the Texas Lottery has
refused to post the
earlier reports and
they have failed to provide
responsive to my request.
Now for my point ...
these annual mandated reports specifically acknowledges
that the Texas Lottery was in compliance to 321.022.
See excerpts below for the years I was able to obtain ....
As seen in Internal Audit Annual Report for FY 2009, page 12
Remember, fraudulent activity did occur in 2009 but the
leads us to believe it was not reported as required by 321.022.
Yet the Texas Lottery's - in its 2009 annual report - acknowledges compliance
As seen in Internal Audit Annual Report for FY 2010, page 14
As seen in Internal Audit Annual Report for Fiscal Year 2011, page 12
As seen in the Internal Audit Annual Report for Fiscal Year 2012, page 6
Whoa - wait a minute ... look, in 2012 they
made a sudden language change ...
I think it is being insinuated that the responsibility was the
Internal Auditors to begin with? Gee this can't be because
Mr. Greer complied in 2003 and I know Ms. Melvin
the Internal Auditor then. Her name is NOT
in Mr. Keel's 2005 letter.
Ironically, according to the "Contentious" report, reporting
to the SAO was the SOLE responsibility of the
it was not the Internal Auditors job
as implied in the 2012 excerpt shown above.
- FYI -
Below is the official description of the "Annual Internal
containing the above acknowledgment
to 321.022. Pay special attention to the remark ...
"the State Auditor's Office prescribes the content."
Also noteworthy, this same paragraph is applicable
to all years - not just 2012.
You probably guessed right about my motive ...
The reason I was asking for 2005, 2006,
2007, 2008 annual audit reports was because
I wanted to see if there was acknowledgment
to 321.022 in them.
The Texas Lottery
was hit by organized crime
and fraudulent activity
in 2007, 2008, 2009. And as you saw, the 2009
Annual Audit Report claimed the Texas Lottery
compliance with 321.022. Yet it appears
they didn't report it in 2009 as required - claiming
"there was not an adequate process in place."
Baloney .... What a crummy excuse ...
What I've shown you is conflicting information.
What I want to know is WHY did the Texas Lottery
report the fraudulent activity to the State Auditors
in 2008 and 2009. The Bank letters -
shown in Part 4 - was evidence that they
absolutely knew about the fraud.
So, bottom line ...
I do not believe there was "no adequate process" in
to comply with 321.022.
What do you believe?
Equally Important - Mr. Grief's Timeline
Feb 2003 - Mr. Greer was the Executive Director -
Gary Grief was Deputy Director
July 11, 2005 - Mr. Gary Grief was the Acting Director
Jan 2006 - Anthony Sadberry was the Executive Director
Gary Grief was Deputy Director
Oct 28, 2008 - Mr. Sadberry died -
Oct 2008 - Gary Grief named Acting Director
been there ever since!
I'll ask again ... Was this the Perfect Crime?
... An Open Records story - RE: Compliance 321.022 ...
To show you how badly the TLC tries
documents from surfacing, let me walk
a series of Open Records communications in my
to obtain the letter from Mr. Keel that you just read.
On April 28, 2013, I requested in part,
"... 2) Any occurrences (documents/emails/letters/reports) submitted
pertaining to the above noted Government Code in which the TLC
to the State Auditors Office and/or Special Investigation Unit
Jan 1, 2000 through today's date."
On May 1, Katelind Powers - (Open Records) wrote:
We have received your request shown below. Can you clarify
for us what information you are looking for in item #2
of your request?
Please let me know.
On May 1, I responded:
"That's an easy question - but I can't imagine that the TLC can't understand
question. I'm asking - has there ever been an occasion where Executive
of the Texas Lottery contacted/suspected that an employee/
client/contractor may have
committed fraud or unlawful conduct to
the State Auditors Office/Special
Investigations Unit (SIU)?
If so, I'm asking for documentation (reason and
the belief) to support whatever was reported to the SIU."
On May 3, I received
"With respect to your request, we have determined that the cost to produce
such information will be in excess of $40.00. Pursuant to Texas Government
Chapter § 552.2615 we have attached an estimate of the cost to
provide the documents"
The bill attached was for $864!"
- Excerpt -
"Cost Estimate" to receive documents responsive to my 4/28/13 request
Click here to see entire statement - a pdf)
Well needless to say I did not pay the $864! This, to me, was
an attempt to keep the
information out of the public eye. You think????
Guess I'm surprising them - they didn't know I already had PROOF
that they really had a process in place as it had been done previously.