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Remember the messy way the D.C. Council awarded the city’s lucrative lottery contract? Long story short: the council and then-Mayor Adrian Fenty fought over who the local partner on the deal would be. Fenty lost, then-Council Chairman Vince Gray won, and the local partner wound up being Veteran Services Corp., a little-known company formed by Emmanuel Bailey in the summer of 2009, which now has a 51 percent equity stake in the $38 million lotto deal.
Including a local partner in the lottery deal was the price of admission for Intralot, the Greek gaming giant that won the contract. But plenty of questions have been raised about just how much (or how little) VSC was vetted. The Washington Times did a lot of legwork last summer in uncovering VSC’s spotty background.
Now Marie Drissel, the city’s most vocal opponent of the District’s plan to legalize online gambling, has unearthed a city document that raises more questions about the local company. The document is a site visit report by two city employees who visited VSC’s listed address in August 2009 to make sure they were eligible to be certified as a local business, or in city-speak, a CBE. VSC’s “office” was in Barbara Bailey‘s family room in her home on Mississippi Avenue SE. (Barbara Bailey is a former city government employee who reportedly worked with Gray back in the ’90s; she’s also Emmanuel Bailey‘s mother and is currently listed as VSC’s chairman.) VSC’s entire office consisted of two computers, two desks, a printer, and two chairs in Barbara Bailey’s family room.
From the report:
Barbara explained that the two desks were utilized by her son Vernon (not present during site visit) and herself. She displayed several stacks of paper in which she explained her ideas to achieve contract negotiations, motivational speaking and third party arbitration. Emmanuel added that Barbara was not very computer savvy.
Emmanuel Bailey told the city employees that “he primarily works from home (Burtonsville, MD) and in the field. He stated that he came into the office occasionally.” Bailey could not be immediately reached for comment.
The employees note in their report that the CEO needed to “perform [his] managerial functions” at an office in the District before getting a CBE certification, and therefore, they couldn’t certify VSC as a CBE. VSC must have been able to overcome the problem somehow (Bailey’s currently listed as the COO, not CEO), because they are currently listed on the city’s website as a CBE. Their address is still listed as Barbara Bailey’s home.
It’s worth asking whether this is the kind of “local” business that deserves special preference from District government when doling out contracts. CBEs can wind up winning District business even if they aren’t the lowest bidder, because of the preference points they get from being a local company. But if a guy from Maryland can put a few computers in his mom’s family room and call it a day, that’s not only unfair to taxpayers, but to legitimate local companies as well.
LL and Emmanuel Bailey have been exchanging emails. “VSC made a prudent decision (as millions of small business have made and continue to make) to legally begin operations from its approved home offices,” writes Bailey.
So then why put VSC’s office in his mother’s family room instead of his house in Maryland?
“As is standard business practice for large and small firms around the world, many firms locate their base of operations near their key customers. Why is this news?” Bailey writes, who also notes: “The Bailey family has resided in the District of Columbia for nearly 100 years.”
He also says that the office space at his mother’s house “is the entire first level of the property—larger than the typical home office. Importantly, none of the lottery operations business is conducted from this location.” (In the above mentioned report, the city employees noted that the office/family room “was occupied with home furniture including [a] television, sectional sofa, family photo, and other personal items.”)
LL also got a very angry call today from David Umansky, the spokesman for Chief Financial Officer Nat Gandhi whose job description also apparently applies to defending Bailey’s company. Umamsky noted, as did Bailey, that the company formed between Intralot and Bailey that actually runs the lottery, called DC09, has offices on M Street SE and recently was recognized for employing a high percentage of D.C. residents.
That’s great and all, but LL’s still not sold that VSC was a “local” as the city says it was back in 2009.