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Grossman taps donors with state business

Quietly raised thousands despite transparency pledge

STEVEN GROSSMAN STEVEN GROSSMAN
By Frank Phillips
Globe Staff / February 6, 2011

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State Treasurer Steven Grossman, who won election last fall on a platform of transparency and reform, personally solicited campaign donations for the state Democratic Party last year from lawyers and executives of firms that now have business before him, seek treasury work, or are regulated by his office.

In turn, Grossman received hundreds of thousands of dollars in financial support from the party.

The link between Grossman and contributions to the Democrats recently came to light when his political committee detailed in campaign finance filings the extensive financial support it received from the party. Grossman and party leaders say they did not coordinate Grossman’s fund-raising and the party spending on his behalf, but the arrangement provided the candidate for treasurer a way to quietly raise more money for his successful race against Republican Karyn Polito.

Both Grossman and the state party said they were unable to provide a list of all the contributions he personally sought. A Globe review of party contributors revealed a host of donors who do business, are seeking contracts, or are regulated by the treasurer’s office. In some cases, Grossman acknowledged going to them for funds.

Among the funds Grossman helped bring in for the state party were thousands of dollars from executives of Scientific Games, the gaming firm that has a $12 million-a-year contract to supply instant tickets to the state Lottery, which Grossman now chairs.

He also solicited contributions from executives of liquor distributors, which are regulated by his office, and from at least one law firm seeking work with the treasury on pension fund litigation.

Neither Grossman nor the party broke any campaign finance laws, but they used what campaign finance reform advocates say is a loophole that allows politicians to skirt disclosure laws and limits on contributions to candidates.

In an interview, Grossman acknowledged that he made numerous calls to potential contributors but said his fund-raising was part of a joint effort with Governor Deval Patrick and other party leaders to build Democratic coffers for the fall campaign.

“Nobody should have any illusion that they would get special treatment from Steve Grossman for contributions to my campaign or the Democratic Party,’’ he said.

The Democratic State Committee revealed in its year-end report last month that it spent more than $728,000 on Grossman’s campaign, most of it on radio and television advertising in the final weeks of the race.

Grossman, a former state and national Democratic Party chairman, was the only candidate on the Democratic ticket besides Patrick who received substantial financial help from the party. Patrick, who raised the bulk of the party’s money, got $2.5 million for his gubernatorial campaign.

Suzanne Bump, the Democratic state auditor candidate who won a tough race against a Republican opponent, received no financial help, records show. Attorney General Martha Coakley got $46,890 in assistance from the party, and Secretary of State William F. Galvin received nothing.

Grossman and party officials said there was no formal arrangement between the treasurer’s campaign and the state committee.

“There was no explicit, ‘You help us, we will return the favor,’ ’’ said state Democratic Party chairman John Walsh.

But some of the biggest bills — $620,000 the party gave to Grossman’s media consultant, Joe Slade White & Co. — were paid about the same time the donations were deposited into the party’s account.

Grossman said the party determined that his candidacy was particularly vulnerable because Polito had the resources to mount a major advertising campaign. (Grossman, however, has contributed hundreds of thousands of dollars to his own political campaigns.)

“If the state party hadn’t leveled the playing field, we may well have ended up with a Republican in the treasurer’s office,’’ he said.

Walsh said, “I had to make a decision on how we used our resources. Polito was up early and with a lot of ads.’’

In Bump’s race, Walsh said, the party used its organization to help.

But the fund-raising structure raises questions about Grossman’s vow, both as a candidate and as treasurer, to be open, candid, and transparent. He was the first major candidate to post his ethics disclosure forms on his campaign website and says he will put state’s financial transactions on-line. During the fall race, however, the public could not know the extent to which the party was helping to finance his campaign, partly with the help of donors with an interest in treasury business.

By using the state party, Grossman not only avoided immediately revealing the source of some of his campaign funds; he was also able to circumvent the $500-per-person limit on donations to political candidates. Individuals can donate up to $5,000 a year to political parties.

Executives at some of the companies also contributed to Grossman’s predecessor, Timothy P. Cahill, but they gave to Cahill’s campaign committee. That limited the donations to $500 each and tied them, in public filings, directly to Cahill. In Grossman’s case, some executives gave to his campaign committee as well as the state Democratic Party.

After Grossman reached out to Scientific Games, executives gave the state Democratic Party at least $22,500. The firm, which provides lottery products around the world, wins its Massachusetts Lottery contracts through competitive bidding. Scientific Games was at the center of a controversy in 2008, when the Globe reported that it was raising campaign money for Cahill and paying a close associate of Cahill’s to lobby as the firm sought to keep its contract with the Lottery.

A spokesman said Scientific Games would have no comment.

Attorneys at a law firm that has been seeking state pension fund work, Barrack, Rodos & Bacine of Philadelphia, donated $20,000 to the state party at Grossman’s request.

Grossman said that Leonard Barrack, the lead partner in the firm, is a longtime friend who worked with him in Jewish philanthropy and Democratic Party fund-raising. Grossman said he had no knowledge of the firm’s interest in contracting with the state pension fund board, which he chairs. But he was adamant that the donations and his relationship with Barrack will make no difference in his decision-making.

At least two executives at liquor wholesalers — whose businesses are regulated by the state Alcoholic Beverages Control Commission, which is under the treasurer’s office — donated to the party at Grossman’s urging, Grossman said. Robert Epstein, president of Horizon Beverage, gave $5,000 on Sept. 29, while Harvey Allen, the chief executive of M.S. Walker Inc., gave $2,500 six days earlier.

Grossman said he has known both men for decades, partly through work in the Jewish community and socially. He noted that he opposed the November ballot question that repealed a liquor tax, which the industry — including both Allen and Epstein — strongly supported.

Other big donations to the Democrats came from two law firms that perform legal work for the state pension fund, donations Grossman said he did not solicit.

Lawrence A. Sucharow, chairman of Labaton Sucharow, a New York-based law firm that specializes in class-action securities lawsuits, said the $12,500 he and his partners donated has nothing do with trying keep its current contract, which, like other similar deals, is competitively bid. Sucharow said he and his colleagues make numerous political donations and said he does not recall who asked for contributions to the Massachusetts Democratic Party.

“If we ID people who fit the needs of our clients, we let our partners know that,’’ Sucharow said.

Grossman said he has never met Sucharow and did not solicit the donations.

Thornton & Naumes, a Boston firm that acts as local counsel for Labaton Sucharow on state pension lawsuits, gave the state party at least $28,000. Its cofounder, Michael Thornton, who donates to Democrats around the country, said he cannot recall who solicited the funds. Grossman said he did not ask Thornton for the money.

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

Corporate political giving

Executives at several companies and law firms that have or seek business with the state treasury gave tens of thousands of dollars to the Massachusetts Democratic Party last year, which in turn helped fund Steven Grossman’s successful campaign for state treasurer.

Scientific Games
Holds a $12 million-a-year contract to supply the state Lottery, which Grossman oversees, with instant lottery tickets. Nine executives donated $22,500 between Sept. 23 and Oct. 26.

M.S. Walker Inc.
A liquor distributor, the company is regulated by the state Alcoholic Beverages Control Commission, which is under the state treasurer. CEO Harvey Allen donated $2,500 on Sept. 23.

Horizon Beverage
Also a liquor distributor, and also regulated by the state ABCC. President Robert Epstein donated $5,000 on Sept. 29.

Barrack, Rodos & Bacine
A law firm that has sought work with the state pension fund, which Grossman manages. Employees and spouses donated at least $20,000 on Oct. 20.

Labaton Sucharow
A law firm is on a small list of litigators the state pension fund uses. Lawyers gave $12,500 from Oct. 7. to Oct. 27.

Thornton & Naumes
The firm is local counsel to Labaton Sucharow on pension litigation. Lawyers gave $28,000 on Oct. 7 and 8.

SOURCE: Massachusetts Office of Campaign and Political Finance