
Attorney General Brian L. Schwalb announced a settlement in which Intralot, Inc., and its subcontractor, Veterans Services Corporation (VSC), will pay the District a combined $6.5 million for defrauding the city in securing a hefty lottery and sports betting contract. According to the Office of the Attorney General (OAG), the companies misrepresented their relationship and resources to bypass competitive bidding and win the contract based on false promises.
An investigation by the OAG found that Intralot and VSC colluded in 2019 to quickly obtain the DC Council's approval of the contract by making false claims. They promised that VSC would independently perform 51% of the work and to equally share the revenue, in accordance with the District's Small, Local, and Disadvantaged Business Enterprise Development and Assistance Act (SBE Act). Instead, they had secretly agreed to use an Intralot subsidiary's resources while shuffling much of the money back to Intralot. "This is a warning to any company that tries to manipulate and exploit District contracting laws, especially laws intended to build the capacity of the local businesses vital to our economy," Schwalb said in a statement obtained by OAG.
The SBE Act mandates that District-based small businesses should receive at least 35% of large government contracts. However, the promise made by Intralot and VSC never materialized as the investigation brought to light that the companies inflated the amount of work and revenue purportedly going to VSC and other certified business enterprises (CBEs). Intralot ended up channeling a significant sum to the owner of VSC, Emmanuel Bailey, for his role in the deception.
Initially, when the misconduct was exposed, the companies vowed to cease their deceptive practices. Even after pledging reform in 2021, Intralot's subsidiary continued to provide, and VSC to accept, undisclosed resources. The resolution of this case includes Intralot paying $5 million, while VSC settles for $1.5 million, with both firms agreeing to comply with strict reporting in future dealings with the District. "My office will continue to enforce the False Claims Act to root out contracting fraud, hold accountable anyone who tries to get over on the District and its taxpayers, and level the playing field for law-abiding companies seeking to do business with District government," Attorney General Schwalb told OAG.
This legal action was handled by Assistant Attorneys General Charlie Sinks, Christian Whitmer, and Norman Anderson, under the guidance of Workers’ Rights and Antifraud Section Assistant Chief Dennis Corkery and Section Chief Graham Lake. Settlement agreements with both Intralot and VSC are accessible for the public to review.