Lies, bribes and videotape.

• Author: Loftus, Tom
• Position: Corruption by Kentucky legislators - Includes related article

Kentucky's former House speaker has been convicted of extortion and racketeering, and three other sitting lawmakers have been indicted in an FBI investigation of gambling corruption.

A nearly three-year federal investigation of public corruption in Kentucky reached a climax April 30 with the extortion and racketeering convictions of former Kentucky House Speaker Don Blandford.

Blandford, who had served an unprecedented eight years as speaker, was the most powerful figure charged in the investigation. Three other sitting legislators have been indicted, and a related probe produced another conviction of a House member.

Also convicted are five former legislators--three who had become lobbyists and one who served as Blandford's top aide; the state's most influential lobbyist; a lobbying organization; and the nephew of a former governor, who served as an aide on his uncle's staff.

Two weeks after Blandford's conviction, the first sitting senator was indicted, showing that the investigation is continuing. A few other legislators and people with legislative interests remain under investigation--the most notable being Louisville-based Humana Inc., a health care giant that won regulatory exemptions from the legislature in 1990 after an intense and controversial lobbying campaign.

The investigation has stunned the Kentucky General Assembly. Its public standing plunged from an all-time high in 1990 with the passage of landmark education reforms to a new low in 1992 after the investigation was revealed.

Since then, the legislature has been battered by revelations in 12 indictments and two trials. Particularly painful were the secretly recorded videotapes played at trials that showed rare glimpses inside the cash-happy world of some lobbyists and legislators.

"You are going to see a legislator take a payoff," Assistant U.S. Attorney Steve Pence said with apparent satisfaction in his opening argument at Blandford's trial. And they did.

A powerful speaker has been toppled, and key committees have new chairmen. At a special session early this year, the legislature endured a painful self-examination that ultimately produced some of the nation's toughest laws on legislative ethics and campaign finance.

Like many other FBI probes of legislative corruption, this one focused on expanded opportunities for gambling. The Bluegrass State already has parimutuel wagering; this investigation focused on a new development in the horse industry--betting on races televised from other tracks and the profits to be made from such "intertrack" wagering.

Kentucky was reluctant to embrace the idea, fearing that more televised races would mean fewer live races and less demand for horses produced by the state's famous thoroughbred industry. Yet the state's eight race tracks could not ignore the popularity of intertrack wagering, particularly as their handle was threatened by the state lottery started in 1989.

The General Assembly wrote the rules for intertrack wagering. Within the legislature, racing legislation is handled by the Business Organizations and Professions (BOI,) committees. The FBI named its probe Operation BOPTROT for the committees and the trotting races of harness horses.

The investigation grew from a bitter struggle between two tracks in Henderson over local rights to conduct intertrack wagering on races televised from Kentucky's thoroughbred tracks. Henderson, an Ohio River city of 25,000 near too small a market for two tracks.

The 1988 and 1990 sessions of the legislature passed bills that gave Henderson's thoroughbred track, Ellis Park, the upper hand in intertrack wagering. That threatened to drive Henderson's small harness track, Riverside Downs, into bankruptcy. When the chief owner of Riverside Downs, M.L. Vaughan, went pleading for relief, he got an interesting offer that soon led to BOPTROT.

Vaughan said that in September 1990, Senate Majority Whip Helen Garrett--who had been defeated in that year's primary and was seeking lobbyist contracts before her term ended-suggested that Vaughan's problems within the General Assemkly could be solved for about $100,000. Vaughan alerted the FBI, which got him to call Garrett back. He offered her a $2,000 payment, and she accepted, in a call monitored by the FBI.

The first crime in Operation BOPTROT had been committed, and the bureau had its foot in the door. (Garrett later pleaded guilty to mail fraud in connection with this payment.)

The FBI did not use its own agents as undercover moles. Instead, a tough-talking investigator, who worked for Vaughan's Florida insurance company, Chris Koumas, was sent in to pose as a new investor in Riverside Downs.

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