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Grand jury looking into bribes on District lottery deal

D.C. Lottery mobile truck (Examiner file photo)

A federal grand jury is probing whether bribes played a role in how the District awarded its controversial lottery contract.

The target of the probe is unclear. But The Washington Examiner has learned that the grand jury, which operates in secret, has subpoenaed records and testimony. At least one subpoena included a reference to a provision of federal law banning bribery of public officials.

Along with the grand jury's review, FBI agents have been meeting with potential witnesses for months, and one person said more sessions are planned, an indication that the probe is unlikely to wrap up soon.

The people who described the progress of the investigation demanded anonymity to discuss the ongoing review.

A spokesman for U.S. Attorney Ronald Machen Jr., whose office is spearheading the lottery investigation and several other probes into the District government, declined to comment.

The $120 million deal - which has mushroomed into a legal nightmare for District leaders - began in 2007 when the city sought bids for a new contractor to manage the lottery.

Although the District picked a winner in early 2008, the D.C. Council later rejected the deal, partly because of concerns about local businessman Warren Williams' role in the bid.

Eric Payne, who managed the lottery procurement process, has said that Vincent Gray, the chairman of the D.C. Council at the time, and Ward 1 Councilman Jim Graham exerted particularly strong opposition to Williams' bid.

Ultimately, the District awarded the contract to a firm controlled by Greek gambling giant Intralot -- Williams' partner in the original bid -- and another local businessman.

But Payne, whose lawyer has said that his client received a subpoena, said last year that his efforts to resist "inappropriate attempts to influence or change the contract outcome" cost him his job. A wrongful termination lawsuit he filed against the city is pending.

Graham told The Examiner Wednesday that he had not been called to testify before the grand jury.

"I don't belong in this story. I am not under investigation, and I haven't been subpoenaed," said Graham, who has given a deposition in Payne's civil lawsuit. "If there's a bribe, I haven't heard anything about it."

A spokesman for Mayor Gray referred a reporter to a review by the District's inspector general, which found "insufficient evidence that council members acted improperly and violated standards of conduct."

The lottery investigation is the latest potential threat to top members of the District's political hierarchy. So far this year, two members of the D.C. Council have resigned and pleaded guilty to federal charges linked to separate probes.

Prosecutors have also secured guilty pleas from three aides to Gray's 2010 campaign, though the mayor has denied any wrongdoing.