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Ex-Lottery Co. Executive Sentenced

October 8, 1998

NEWARK, N.J. (AP) _ The former national sales manager for GTECH Corp., the world’s leading lottery operator, was sentenced Thursday to 5 1/4 years in prison without parole for taking kickbacks in connection with a failed effort to add keno to New Jersey Lottery offerings.

J. David Smith was also fined $20,000 and ordered to repay GTECH $169,500 that a federal jury found he received from a politically connected lobbying firm he had the company retain in New Jersey.

The owners of the Atlantic County firm, Benchmark Group Inc. of Linwood, were also tried with Smith, but only one, Steven Dandrea was convicted. He was sentenced to 2 1/2 years in prison and fined $2,000.

During the 1996 trial here, prosecutors raised questions about the business practices of GTECH, which is based in West Greenwich, R.I.

But GTECH’s top executives testified that they are happy to pay ample sums _ often to former state officials _ for access to influential politicians and bureaucrats.

Prosecutors contended that GTECH was victimized by Smith and Benchmark, but the company was reluctant to embrace that role.

Smith was acquitted in 1995 in a related case in his home state of Kentucky. He was on trial there with L. Rogers Wells, the former Kentucky finance secretary and former secretary of the executive cabinet there. Wells did GTECH work in Kentucky and Georgia, but the judge dismissed the case after three days.

Smith, 51, of Morganfield, Ky., and Dandrea, 40, of Longport, maintain their innocence and intend to appeal.

The sentencing, just over two years since their convictions, was delayed by a controversy over grand jury material released by the U.S. attorney’s office. U.S. District Judge Nicholas H. Politan ordered the prosecutors to apologize, but in August accepted an admission from the office that it disclosed the secret information.

Smith and Dandrea were convicted of all 20 charges they faced, including conspiracy, fraud and bribery. The government sought a 10-year term for Smith and more than seven years for Dandrea.

GTECH operates lotteries in 28 states _ including New Jersey _ the District of Columbia, and 32 foreign countries.

GTECH hired Benchmark in March 1992 at $30,000 a month to push keno as an addition to the New Jersey lottery, chiefly because Dandrea’s partner Joseph LaPorta was a cousin of Joseph Salema, the top aide to then-Gov. Jim Florio, a Democrat, witnesses said. Dandrea came from a family active in Republican politics.

GTECH eventually paid $739,047 to Benchmark and two other consulting firms controlled by Dandrea and LaPorta.

Prosecutors charged that the fees were inflated so that the Benchmark entities could funnel $169,500 to Smith.

The defense maintained that money was payment for Smith’s moonlighting efforts, sanctioned by GTECH, to bring new clients to Benchmark.

Keno was approved 8-0 by the New Jersey Lottery Commission in January 1993, but then scrapped by Florio amid protests from church groups, race tracks and casino mogul Donald J. Trump.

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