Another Letter From The Bluegrass State

Poker Deal Reeks of Cronyism

Frankfort, the state capitol of Kentucky is in turmoil. Kentucky Republican Governor Matt Bevin’s explosive charges against the administration of his predecessor Democrat Steve Beshear coming on the same day that federal prosecutors had secured a guilty plea on bribery charges from former Beshear Personnel Cabinet Secretary Timothy Longmeyer, makes one thing very clear – investigations into Kentucky corruption aren’t going to end anytime soon.  Most of you can buckle up and enjoy the ride while others better consider lawyering up!

If you needed any more proof, look no further than the public comments made by the FBI Special Agent in charge of cleaning up the Commonwealth, who went so far as to say that that government corruption was “tolerated” and “ingrained” in Kentucky’s political culture.

In light of everything going on, our first communication endeavored to shine a brighter light on a legal case that requires much closer scrutiny – the staggering and legally absurd $870 million judgement (plus 12% annual interest) against Amaya/Poker Stars.  The suit was part of the Beshear Administration’s long-run vendetta against online gambling, aka a government money-grab by Frankfort politicians desperate to plug budget holes created by their overspending.  

Legally speaking, the handful of people paying close attention to the case know that this outrageous ruling has virtually zero chance of holding up on appeal based on the clearly applicable and definitive ruling from the highly-respected Seventh Circuit Federal Appeals Court.  The 7th Circuit recently struck down a substantially similar, if not identical, case in Illinois to the one here in Kentucky.  

But while the legal case is interesting on its own merits, the players involved make for an even more compelling tale that raises serious questions about how roughly $18 million in losses by 34,000 online poker players in Kentucky, turned into a billion-dollar judgement benefiting the state and their handpicked trial lawyers courtesy of an ethically-challenged judge.

You’ll hear more about all of them in the coming weeks, but let’s start with the lawyers.

As you know, the Commonwealth’s lead attorney is William H. May, III, who previously served as General Counsel to the Kentucky Democratic Party.  At one time, Mr. May also served as General Counsel for the Kentucky Lottery Corporation wherein he supervised legal staff and served as the Legislative and Executive Branch Agent for the Lottery. In addition to those duties, Mr. May was responsible for supervising outside counsel in litigation, establishing the internal rule and regulation process, handled all internal/external employment law and intellectual property matters and advised the Board and senior management on a variety of general corporate issues affecting the Lottery’s proprietary business.  In short, he had incredible influence on the operation of the state lottery.  More on that later.

Notably, Mr. May was once questioned by a federal grand jury as part of the Ross Harris vote-buying scandal back in 2005.  That case famously involved the campaign of Family Court Judge Debra Lambert, the wife of then Supreme Court Chief Justice Joseph Lambert.  In the category of “you can’t make this stuff up” – Mr. May’s law partner, Jim Deckard, was Chief of Staff to Chief Justice Lambert at the time.  

According to the popular political blog, the two cases were tied together.  They reported that Chief Justice Lambert was investigated “for his involvement in a multi-million dollar appeal by convicted felon Ross Harris, who months earlier made thousands of dollars in illegal contributions to Lambert’s wife, Family Court Judge Debra Lambert.  Those donations came during the final days of her 2000 re-election campaign, and just months before Lambert himself cast a tie-breaking vote that allowed Harris to keep a $14 million jury award.”  Interestingly, during the related investigation, Deckard pleaded the Fifth when called to testify.

The background on Mr. May and Mr. Deckard is important because their law firm has a sweetheart contract with the Commonwealth (courtesy of Gov. Beshear) that would permit them to take an outrageous – and potentially unprecedented – 25% contingency on any final judgement.  Additionally, the rumored future daughter-in-law of the Judge on the Amaya case, Thomas Wingate, is employed by the May-Deckard law firm and has been in some fashion since May 2012.

Not included on Mr. May’s law firm biography is the fact that he’s not just a lawyer, but he is also a lobbyist.  Mr. May owns and operates a lobbying firm called HCM Governmental Relations LLC, which shares the same membership, address and telephone number as the law firm.  Among his clients are Anthem, who is at the center of the charges against Mr. Longmeyer.  It would be interesting to see what, if anything, Mr. May knows about the kickback scheme between his fellow Democratic Party powerbroker and his current client.  

In addition to Anthem, Mr. May is also the registered lobbyist for IGT/GTECH and the Kentucky Lottery Corporation.  In fact, according to the website, IGT/GTECH employed an active lobbyist in just one state during the period when the Amaya lawsuit was starting up, and that state was the Commonwealth of Kentucky.  Want some more?  IGT/GTECH has a lucrative contract with the Kentucky Lottery.  More?  IGT/GTECH is in competition with Amaya/Poker Stars in, among other aspects, online gaming.

Think about that the ethics and optics of this for a second and see if you are as queasy as we are: The Beshear Administration chose as the Commonwealth’s attorney, a lobbyist for IGT/GTECH, and then allowed him to make the government’s case against its competitor, Amaya/Poker Stars.  In doing so, Mr. May can curry favor with his lobbying client by attacking a major competitor in the online gaming space, while pocketing upwards of $200 million in contingency fees courtesy of his eye-popping 25% contingency agreement with the Commonwealth.