Intralot and VSC to Pay Hefty Fine for Defrauding DC Council
Former sole regulated sports betting provider in Washington, DC, Intralot, has been ordered to pay a substantial penalty for breaching the terms of its licensing contract.
LISTEN TO THIS ARTICLE:On Tuesday, January 14, the Office of the Attorney General (OAG) in Washington, DC, announced that it had imposed a fine of $5 million on Intralot for violating small business subcontracting agreements stipulated in its sole-source sports betting and lottery contract.
Veterans Services Corporation (VSC), a subcontractor of Intralot, was additionally fined $1.5 million for its role in the contractual breaches.
According to the OAG, in 2019, Intralot and VSC colluded to influence the DC Council's decision to secure the contract without undergoing a competitive bidding process.
The agreement was predicated on VSC assuming 51% of the workload, self-sourcing all necessary resources, and, in return, receiving an equivalent 51% proportion of the contract's revenue, with other small businesses receiving a smaller supplemental allocation. DC law mandates that at least 35% of major government contracts be allocated to local small businesses through subcontracting arrangements.
The Conspiracy Uncovered
However, investigations revealed that Intralot and VSC had secretly agreed that an Intralot subsidiary, rather than VSC, would provide the majority of resources for the contract. It was also discovered that much of the contract money earmarked for subcontracting with VSC was ultimately funneled back to Intralot.
The two companies worked together under the false premise to cheat the District out of millions of dollars.
More Regulation News
The OAG reported that VSC's owner, Emmanuel Bailey, earned hundreds of thousands of dollars each year as part of the alleged conspiracy. To cover their tracks, the two sides allegedly falsified expense amounts, documentation, and verification forms and distorted quarterly report data.
Intralot and VSC’s sports betting deal was a sham from the start—an elaborate scheme to secure a lucrative, high-profile opportunity on a sole-source basis while circumventing the District’s small business contracting laws. 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.
In addition to the fines, the settlement also included other provisions. Both companies are required to provide accurate contract and subcontract information in all future district contracts, plans, and bids.
Furthermore, Intralot is restricted from supplying resources to subcontractors, while VSC is prohibited from using undisclosed resources from other entities.
RELATED TOPICS: Regulation
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