The Washington Post - 29.08.2019

(Joyce) #1

A4 EZ RE THE WASHINGTON POST.THURSDAY, AUGUST 29 , 2019


District as she began work for
DC09. In 2013, she got married
and moved to Houston, court
records show. From there, she
continued as DC09’s general
manager until she was “promot-
ed in May 2019 to an executive
role with INTRALOT,” Bailey’s
statement said.
This summer, in a job posting
for Mattingly’s replacement, In-
tralot sought someone who could
ensure DC09 workers’ “adher-
ence to the Intralot Employee
Handbook.”
For nearly a decade, Mattingly
has been featured on Veterans
Services’ website as its executive
vice president. She declined to
comment.
The website has also contin-
ued to list Bailey’s mother as the
company’s chairman, “with pri-
mary responsibility for strategy
planning and business execu-
tion.”
One afternoon last month, a
reporter knocked on the door of
Veterans Services’ former head-
quarters, where Barbara Bailey
still lives. She said she couldn’t
talk because she had something
on the stove; she promised to call
the reporter but didn’t.
Curt Merritt, a Virginia con-
struction company executive, has
long appeared on the website as
“VP of Preconstruction Services.”
Reached by The Post, Merritt at
first said a reporter had the
wrong person. Later, he called
back to say he had helped Bailey
prepare a proposal for a govern-
ment contract years ago.
“Then that guy apparently
took my information and put me
on his website,” he said. “I didn’t
even know that.”
Days later, Merritt called back
again and left a message: “I did
give Emmanuel Bailey permis-
sion to use my résumé and stuff.”
Vernon Bailey, who web ar-
chives show was initially listed as
the chief executive on the Veter-
ans Services’ site, was described
as its treasurer as recently as
Aug. 1. He retired from mainte-
nance work for Campbell County,
Va., two years ago, and he died
last year.
After The Post a sked Emmanu-
el Bailey about the website four
weeks ago, it was taken down. A
second website created in 2015
that listed the same executives
but under a different name, Vital
Services Corp., was also taken
down.
In their 2016 proposal for the
Maryland lottery contract, Bailey
and Thomas Little, then presi-
dent and CEO of Intralot’s U.S.
subsidiary, said the joint venture
between Intralot and Veterans
Services would o perate under the
name Gaming Innovations. They
listed its address as that of a firm
in Lanham, Md., called Ezra
Te chnologies, which on its web-
site lists Bailey as its chief operat-
ing officer.
An evaluation committee not-
ed Veterans Services “has no
capital; has very limited business
or industry experience; and was
unable to provide a coherent and
consistent explanation of the role
it will play in the operation of the
gaming system,” according to a
report by procurement officials
that was first reported by the
website District Dig.
The report said Bailey “ac-
knowledged to the Evaluation
Committee that he and VSC had
no financial resources whatso-
ever to undertake their contract
responsibilities during conver-
sion.”
The evaluation committee
concluded that Intralot’s part-
nership with Veterans Services
resulted in an entity that was
“weaker than Intralot on its own.”
steve.thompson@washpost.com

“This can be a model for the
country,” Barry said, lauding
“this situation where you have
the largest minority vendor in
the lottery in the nation located
right here in Washington, D.C.”
As Intralot began running the
District’s lottery in 2010, it did so
through DC09. Although Veter-
ans Services had a majority own-
ership in DC09, Intralot was in
charge of the venture, according
to Intralot financial statements
and public reports from agencies
in the District and Maryland.
Intralot “controls the subsid-
iary DC09LLC, even though it
holds less than 50 percent of the
voting rights” because it “has
signed agreements with other
shareholders under which the
Company has the ability to direct
the business decisions of the
subsidiary,” the financial state-
ments said.
To finance DC09’s start, Intral-
ot loaned it more than $12 mil-
lion, according to people familiar
with the arrangement and a doc-
ument provided by Bailey.
Intralot guaranteed a lease
held by DC09 for office space on
the third floor of a glass-and-steel
building in Southeast Washing-
ton, according to a copy of the
lease submitted to the District by
Veterans Services in 2013. Bailey
began listing the location as Vet-
erans Services’ headquarters.
Mattingly, the Florida execu-
tive Bailey said Veterans Services
had hired, went to work instead
for DC09. So did everyone else
Intralot needed for the effort,
according to the statement pro-
vided to The Post from Intralot
officials. Bailey went on DC09’s
payroll as its chief executive.
Intralot, through its subsidiary
DC09, w as now doing everything.
However, there was one thing
DC09 could not provide. Barbara
Bailey’s 51 percent stake in Veter-
ans Services did not extend to
DC09. When Intralot submitted a
subcontracting plan to the Dis-
trict in 2014, it needed a certified
local b usiness to meet the partici-
pation law. It listed Veterans
Services.
Emmanuel B ailey has said t hat
Veterans Services’ ownership
stake in DC09 is no sweetheart
deal.
“People tend to think I’ve got
51 percent of the upside only,” he
told The Post in 2011. “The bad
news part is I’m responsible for
51 percent of the loss.”
In fact, DC09 lost money each
of the past five years, according
to Intralot’s financial statements.
Veterans Services’ share of those
losses totaled $1.6 million.
Over the same p eriod, Emman-
uel Bailey’s compensation as an
employee of DC09 far eclipsed
those losses, totaling $2.9 mil-
lion.

No workers, no wage reports
When Veterans Services
sought recertification as a local
business i n 2013, District officials
noted it “has had no (0) employ-
ees over the past three (3) years,
of which none (0) or zero (0%)
percent was a DC Resident,” ac-
cording to a report by the city’s
Department of Small and Local
Business Development.
The company again reported
no employees in 2015, and Dis-
trict officials said recently in
response to a Freedom of Infor-
mation Act request that they
have no wage reports from Veter-
ans Services that are required of
D.C. employers.
Intralot officials said in their
statement to The Post that “all
local employees are employed by
DC09LLC (NOT Intralot/Not
VSC).”
Mattingly, the lottery execu-
tive from Florida, moved to the

report. Nonetheless, two days
later, a manager overrode that
concern and approved the firm’s
certification as a small, local
business, a subsequent report by
D.C.’s inspector general found.
That fall, District officials
again found Intralot’s proposal
the best of three and submitted it
to the D.C. Council for approval.
Intralot and Veterans Services
then formed DC09.

A certified local business
At a D.C. Council committee
meeting in November 2009,
then-council member Marion
Barry spoke of how the city
wanted to foster bonds between
large companies and smaller lo-
cal firms, “where they share in
the work, and they share in the
profits or they share in the loss-
es.”
Barry asked Intralot attorney
Jay Lapine about the relationship
between Intralot and Veterans
Services Corp. Lapine said 51
percent of DC09 would be owned
by Veterans Services Corp.
“A nd VSC would do 51 percent
of the work?” Barry asked.
“Correct,” testified Lapine.
“Probably more.”
Lapine did not respond to a
request for comment about his
testimony.
At the 2009 meeting, Bailey
said Veterans Services had hired
the former director of Florida’s
lottery, Rebecca Mattingly, who
then lived in Ta llahassee, to be
executive vice president.
A week later, the council ap-
proved the $38 million contract
to Intralot to run the city’s lottery.

51-percent owner, according to
the company’s submissions to the
District.
“Ms. Bailey has over 40 years
experience in senior government
roles, both within the District of
Columbia Government and for
Fortune 500 companies,” materi-
als the company submitted to the
District said. She had been laid
off as an employee relations ad-
ministrator for the District after
working there for 25 years, the
records said.
In 2009, city inspectors con-

ducted a site visit of Veterans
Services’ headquarters, then lo-
cated in Barbara Bailey’s South-
east Washington home. They
found a couple of desks and one
working computer at the end of
her living room, according to
their report. Emmanuel Bailey
told them he primarily worked
from his home in Burtonsville,
Md., but occasionally came into
the office.
The inspectors concluded that
Veterans Services did not qualify
as local, according to the site v isit

“We asked several times about
who would be responsible for
what,” he said, and Intralot “pre-
sented us with a lot of sugges-
tions that they would be respon-
sible for everything.”
Bailey declined to discuss
those characterizations.

Forming Veterans Services
When Intralot first entered the
D.C. market with its bid to run
the city’s lottery a decade ago, it
didn’t expect big profits. The
Greek company, founded by a
billionaire and traded on the
Athens Stock Exchange, thought
the prestige of running the lot-
tery in the U.S. capital would
make it worthwhile, according to
a later report by the District’s
inspector general.
Intralot’s bid beat competing
proposals, but some D.C. Council
members objected to a local firm
with which Intralot had planned
to partner; they voted the con-
tract down.
As the bidding started over,
Intralot officials found a new
local partner in Bailey, an entre-
preneur with experience on both
sides of the procurement process
and contacts within D.C. political
circles.
Bailey, 56, has donated more
than $30,000 to D.C. political
candidates since 2006, campaign
finance reports show. He has
served on the boards of the
Greater Washington Urban
League, the Boys & Girls Clubs of
Greater Washington and other
groups.
A onetime bank branch man-
ager and a former chief diversity
officer at Fannie Mae, Bailey has
also played roles in several small
businesses.
He formed Veterans Services
Corp., which applied to the Dis-
trict to be certified as a local
business.
The initial majority owner of
Veterans Services Corp. was Bai-
ley’s stepbrother, Vernon Wayne
Bailey, according to records the
company submitted to the Dis-
trict.
At the time, Vernon Bailey was
a full-time maintenance worker
for Campbell County, Va., a four-
hour drive from the District. He
had worked there since 1990 and
would continue in that job until
2017, officials there said.
Within three months, the Bai-
leys transferred much of Vernon
Bailey’s share of the company to
Barbara Bailey, making her the

ment shows was formed by In-
tralot and Veterans Services 10
years ago. At the time, Intralot
was vying to run the D.C. lottery.
Intralot and Bailey say that
because Veterans Services owns
51 percent of DC09, it is responsi-
ble for that share of DC09’s work.
Intralot, however, funded the
creation of DC09, guaranteed the
lease for its office space and
controls the company, according
to Intralot’s financial statements,
public records and interviews.
Bailey’s six-figure compensation
in each of the past five years has
also been paid by DC09, not
Veterans Services, according to
Intralot’s financial statements.
Intralot said it formed DC
with Veterans Services to meet
the city’s goals of supporting
small, local minority businesses.
“Mindful of the District’s sup-
port for minority vendors and
Intralot’s commitment to diversi-
ty, Intralot searched for [an ap-
proved] minority firm as a sub-
contractor,” said an Intralot
statement provided by its Ohio-
based communications consul-
tant, Sandy Theis.
Veterans Services said it is a
D.C. business because Bailey’s
75-year-old mother, Barbara,
holds a majority stake and lives
in the city. The business also lists
DC09’s Southeast Washington of-
fice as its headquarters.
Emmanuel Bailey, who de-
cli ned to answer questions about
what Veterans Services can con-
tribute to the contract work, said
in a statement that his firm has a
good record.
“For the past ten years, VSC
has played a central role in the
successful administration of the
DC Lottery contract through its
joint venture, DC09LLC, as Sub-
contractor to INTRALOT,” he
said.
Bailey received $618,562 last
year as DC09’s chief executive,
according to Intralot’s financial
statements, which include rev-
enue and expenses of DC09. He
received similar compensation in
each of the previous four years,
the statements show.
Bailey called Veterans Services
“a case study” for the success of
the District’s small-business pro-
gram. “I’m both gratified for the
opportunities afforded to the
company and proud to have
made the most of them,” he said.
The subcontracting plan In-
tralot submitted this summer to
the District to show compliance
with the local business participa-
tion law does not mention DC09.
Bailey and Intralot both say
District officials know about and
accept the arrangements be-
tween Veterans Services and
DC09.
Indeed, as city officials recent-
ly approved the plan delegating
up to $109.7 million in work to
Veterans Services, they repeated
Intralot’s boasts of local business
involvement.
“The District’s sports wagering
contract is the only one in the
U.S. to date that mandates 35%
local and minority business par-
ticipation (let alone delivers
55.58% participation),” David
Umansky, a spokesman for the
District’s chief financial officer,
Jeffrey DeWitt, wrote in an email
to The Washington Post.
Maryland officials had a differ-
ent reaction when Intralot and
Veterans Services unsuccessfully
sought to run that state’s lottery.
Maryland’s lottery director,
Gordon Medenica, recommend-
ed against the proposal during a
2017 meeting of the Maryland’s
Board o f Public Works, saying the
joint venture’s structure “kept
changing on us.”


GAMBLING FROM A


BY AMY GOLDSTEIN


Federal health officials are ac-
cusing an academic medical cen-
ter in Vermont of violating the
civil rights of a Catholic nurse by
calling on her to assist with an
abortion although she had put
her name on a list of staffers who
objected to participating in the
procedure.
The notice of violation, sent
Wednesday to the University of
Vermont Medical Center, is the
latest example of the Trump ad-
ministration’s focus on protect-
ing “religious freedom” — a core
value for antiabortion activists
and other social conservatives
who are key to the president’s
political base.
The action against the UVM
medical center is the third en-


forcement action taken in the 1^1 / 2
years since the Department of
Health and Human Services cre-
ated a conscience and religious
freedom division within its civil
rights office. It is the first that
deals specifically with a health-
care worker’s o bjection to partici-
pating in an abortion.
The nurse is represented by
Francis Manion, senior counsel
for the American Center for Law
and Justice, a conservative or-
ganization that works on reli-
gious freedom issues and whose
chief counsel, Jay Sekulow, is a
personal attorney to President
Trump.
In his daily podcast Wednes-
day, Sekulow announced the cen-
ter had uncovered “coerced abor-
tion at the University of Ver-
mont.” He portrays HHS’s action
as a victory, and urges donations
to a fundraising campaign for the
group.
In a conference call with re-
porters, Roger Severino, director
of HHS’s civil rights office, said
the office conducted an investiga-
tion “for many months” based on

a May 2018 complaint that a
nurse at the Burlington-based
medical center, whom he de-
clined to name, was asked to
assist with the abortion. He said
she had previously made clear
she was not comfortable being
involved with such procedures.
Severino said that the nurse,
whose name is redacted from
HHS documents released
Wednesday, had helped in the
past with dilation and curettage,
in which tissue is scraped from
the uterus for a variety o f reasons,
and believed that she was going
to help with another one. But
when she walked into the room,
Severino said, a doctor told her,
“Please don’t hate me” because
the procedure was an elective
abortion. The nurse feared losing
her job and felt coerced to partici-
pate, according to Severino’s ac-
count.
The complaint was lodged sev-
eral months after the medical
center expanded its services in
2017 t o include elective abortions.
The medical center issued a
statement saying it had “prompt-

ly and thoroughly” conducted its
own investigation into the allega-
tions and “determined that they
were not supported by the facts.”
The statement had no additional
details, saying “the issue involves
patient care and personnel mat-
ters.”
Annie Mackin, a medical cen-
ter spokeswoman, said UVM has
“robust formal protections that
strike the appropriate and legal
balance between supporting our
employees’ religious ethical and
cultural beliefs, and making sure
our patients are not denied access
to safe and legal abortion.”
The notice does not carry a
penalty but could eventually lead
to the withdrawal of federal
funds, including about $1.6 mil-
lion allotted over the past three
years by HHS’s Health Resources
Services Administration, Severi-
no said. For now, the notice gives
the medical center 30 days to
begin bringing its personnel rules
into compliance with federal re-
quirements about employees’
participation in procedures to
which they have moral objec-

tions.
Severino emphasized that
Wednesday’s action did not rely
on a new HHS conscience rule,
which is being challenged in
court. He said it was being taken
under a 1970s federal law, known
as the Church amendments,
which includes a requirement
that employees of federally sup-
ported health-care facilities not
be compelled to participate in
abortions if the procedure con-
flicts with their beliefs.
Manion, the Kentucky-based
attorney representing the nurse,
said a co-worker of hers brought
the incident to his attention. He
then filed a three-page letter of
complaint with HHS’s civil rights
office in May 2018. He said the
nurse had worked at the hospital
for several years and left volun-
tarily within the past year, in
large part because “she felt the
atmosphere over this issue had
become toxic.”
Manion said his client was not
an antiabortion activist but had
placed her name on a list of
employees objecting to partici-

pating in the procedure. The day
of the incident, he said, the nurse
had scrubbed in and, when she
learned the doctor was perform-
ing an abortion, was reluctant to
leave, fearing that abandoning a
patient could jeopardize her li-
cense. She asked whether a co-
worker could replace her, Manion
said, and was told that could not
happen.
The two previous enforcement
actions by the conscience and
religious freedom division in-
volved instances in California
and Hawaii in which the states
tried to compel crisis pregnancy
centers to provide women with
information on how to access free
and low-cost abortion services.
According to HHS figures re-
leased Wednesday, the civil rights
office received more than 1,
complaints, 784 of which related
to conscience or religious free-
dom. In c omparison, HHS figures
show, the civil rights office re-
ceived 10 conscience-based com-
plaints throughout the Obama
administration.
amy.goldstein@washpost.com

HHS accuses Vermont hospital of forcing Catholic nurse to assist in abortion


Local firm’s role in D.C. sports gambling deal is questioned


BILL O'LEARY/THE WASHINGTON POST
The office building at 5 5 M St. SE is home to DC09, the joint venture between Intralot, a Greek gaming
giant, and Veterans Services Corp., which the District has certified as a local business. Intralot said
most of the $215 million contract that the D.C. Council awarded it to bring sports betting to the District
and to continue to operate its lottery would go to Veterans Services Corp., but it has no employees.

KEVIN CLARK/THE WASHINGTON POST
Emmanuel Bailey, a Maryland resident and local businessman, is
the chief executive of Veterans Services Corp.

Medical center says its
investigation concluded
allegations were baseless

“[Veterans Services] has


had no (0) employees


over the past three (3)


years, of which none (0)


or zero (0%) percent


was a DC Resident.”
City report, in response to the firm
seeking recertification in 2013
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