The State Worker

California State Lottery director stepping down amid investigations

California Lottery employees decry lewd and fraudulent behavior of senior executives

Veteran Lottery employees demand resignations of senior department executives on Thursday, Sept. 20, 2018, after an anonymous whistleblower sent a letter to Gov. Jerry Brown alleging lewd sexual behavior and fraud.
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Veteran Lottery employees demand resignations of senior department executives on Thursday, Sept. 20, 2018, after an anonymous whistleblower sent a letter to Gov. Jerry Brown alleging lewd sexual behavior and fraud.

California State Lottery Director Hugo Lopez is stepping down immediately, he announced in an email to lottery staff on Friday.

Lopez has led the department since 2015. It’s been under scrutiny from the Department of Justice and the State Controller’s Office since August, when anonymous employees sent a letter to former Gov. Jerry Brown’s office alleging misconduct among senior executives at sales conferences.

Lopez in his message said he was proud of the department’s performance, particularly in growing annual revenue to more than $7 billion. A decade ago, the department brought in less than $3 billion a year.

“At the national level, the California Lottery has been one of the fastest growing lotteries over the past few years,” Lopez wrote.

He is a longtime California state employee who has held senior positions at the Department of Motor Vehicles and the State Treasurer’s Office.

The Department of Justice opened an investigation into the department last summer at former Gov. Brown’s request. Lottery employees who spoke with investigators believe it is wrapping up.

The anonymous employee’s letter to Brown’s office also led California State Controller Betty Yee to expand a regular lottery audit. Yee’s office found that lottery staff misspent hundreds of thousands of dollars on travel, food and accommodations for sales conferences over four years.

The employee’s letter alleged that senior lottery staff misbehaved at a Southern California piano bar following a 2016 sales conference and used inappropriate language when speaking with colleagues. The message included photographs that been posted online of senior-ranking lottery staff carousing at the bar.

In September, a group of lottery employees at a public Lottery Commission meeting demanded that senior executives resign, alleging that department had shown favoritism in its hiring and promotions.

Lopez at public meetings has said the department took the allegations seriously. At least one senior-ranking lottery executive has been dismissed since the investigations opened.

Lopez as a department director served as an appointee of the governor’s office. Newsom’s office said the governor wound announce Lopez’s successor soon.

Lottery spokesman Russ Lopez declined to comment on Hugo Lopez’s departure.

“I want to express my sincere gratitude to Govs. Brown and Newsom for the opportunity to have served in this capacity, making my lottery directorship the pinnacle of my career of over 31 years as a public servant,” the director wrote to lottery employees. “This experience has surpassed anything I could have imagined as a small child working with his family in the fields of rural northern California.”

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