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AG seeks Cahill lottery records

Publicly funded ads are at issue; suggestion of bid to help candidacy

By Frank Phillips
Globe Staff / April 26, 2011

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Attorney General Martha Coakley has subpoenaed records from the Lottery Commission and the state treasurer’s office as prosecutors step up the investigation of former treasurer Timothy P. Cahill’s $1.2 million taxpayer-funded state lottery advertising blitz. Documents suggest the advertisements were orchestrated and written by his gubernatorial campaign staff last fall.

Officials with knowledge of the grand jury subpoenas said prosecutors from Coakley’s staff are seeking details on the radio and television ads, including particulars about involvement by campaign advisers in creating scripts and schedules of when ads were to run in the weeks prior to the November election. They specifically asked for written and e-mail communications to and from Cahill about the ad buy, according to two sources familiar with the investigation.

The ads, paid for with public funds, were billed as promoting the lottery. But a Globe review last fall of internal campaign e-mails, court documents, and lottery records suggest that Cahill’s campaign advisers had the ads crafted to boost his image as an effective manager, in an effort to benefit his independent bid for governor. As treasurer, Cahill oversaw the lottery.

In his eight-year tenure at the treasury, Cahill had never previously touted his management successes. State law says public employees may not use their position or public resources to further their political careers. The state’s anticorruption law calls for heavy fines and up to five years in prison for public officials who, with “fraudulent intent,’’ use substantial public resources for campaign purposes.

In October, shortly after the ads first aired, Coakley’s office began investigating whether they violated state law. She urged him to take down the ads “to avoid even the appearance of impropriety.’’ Cahill subsequently agreed to cancel the media campaign until after the Nov. 2 election. By then he had spent about half of the intended $1.2 million on the ads, which had aired for about two weeks.

One of the questions prosecutors must answer is whether the advertising campaign was carried out with “fraudulent intent’’ — a legal term that can be hard to prove.

The attorney general’s office declined to comment on the status of its investigation yesterday. Prosecutors sought to place a clamp of secrecy over the records requests, firmly asking officials at both the state Lottery Commission and the Treasury not to comment to the media.

Cahill did not respond to messages left on his home phone and his cellphone yesterday. His lawyer, Joseph L. Demeo, was on vacation out of the country and could not be reached for comment. Cahill has spent $35,000 in legal fees to Demeo paid through his campaign committee over the last several months.

In October, Cahill argued that the ad campaign was merely part of the Lottery Commission’s attempt to boost sagging sales and not designed to promote his candidacy for governor. He noted that he did not personally appear in the ads. Still, the paper trail suggests that Cahill’s political staff was heavily involved in developing the ads highlighting his lottery management successes.

In a text message exchange in late July, Cahill’s campaign adviser, Dane Strother, wrote to campaign manager Adam Meldrum that Cahill had approved the strategy to use the lottery’s advertising budget to promote his image as a strong manager of an agency that has produced billions for local communities.

“We just found a million for extra publicity,’’ Strother said in a July 27th text message that was submitted in a civil court case. The context of his comment indicates strongly that he was referring to the lottery’s advertising budget.

He said that Cahill should not appear in the ads. “But we run ads about the lottery being well run and putting money back in the communities. I am going to speak to the ad company about copy. Cahill agreed.’’

That same day Strother sent an e-mail to Meldrum and other top Cahill campaign aides, referring to a conversation he had with Cahill. It was titled, “What I helped get done with him today.’’

Strother said the treasurer agreed that there were nine items that needed to be accomplished. The first: “Get the lottery immediately cutting a spot and get it up,’’ he wrote. “Needs to focus on the lottery being the best in the country and above reproach.’’

The top executive at Hill Holliday, the lottery’s longtime advertising vendor, got involved. On Aug. 11, Michael J. Sheehan, the ad agency’s chief executive, e-mailed the text of the television ad to Cahill’s political director, Scott Campbell, who then distributed it to the campaign’s top staff. Sheehan and other Hill Holliday executives contributed over $50,000 to Cahill’s political committee since he was elected treasurer in 2002.

After noting the billions of dollars the Lottery generates for roads, education, police officers and firefighters, the script reads: “That’s the result of a consistently well-managed Lottery. And luck has nothing to do with it.’’

The documents were released as part of legal wrangling between Cahill and his former Republican consultants, including Meldrum.

Meldrum said in a sworn affidavit in that suit that he was “aware of the coordination’’ between the campaign staff and Cahill to produce the television ads.

“I was also aware of coordination between campaign staff and employees of the State Lottery or its vendors regarding the produces of these ads,’’ he said.

The allegation that Cahill spent what amounted to 60 percent of the Treasury’s $2 million annual advertising budget on the campaign project never came before the lottery’s five-member governing commission, according to the minutes of its meetings.

Those familiar with operation of the commission said that while the board does vote to approve the full advertising budget, the decisions as to when to run the ads and their content are left to the treasurer and the lottery management.

Frank Phillips can be reached at phillips@globe.com.