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7 on lottery staff face questions from AG team

Inquiry on ads, Cahill may be in final phase

By Frank Phillips
Globe Staff / August 8, 2011

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Investigators from Attorney General Martha Coakley’s office are scheduled to converge on the Massachusetts State Lottery office today to interview top agency executives and staff, a signal that prosecutors are entering the final stages of their review of the $1.65 million lottery advertising blitz that former treasurer Timothy P. Cahill ran last year during his gubernatorial campaign.

Coakley’s office - which is examining whether Cahill used the ad campaign to boost his campaign profile - contacted lottery officials late last week to inform them that the investigators would spend a good part of the day at the lottery’s Braintree headquarters. They will interview seven agency employees, including its chief financial officer and its budget director, according to sources with direct knowledge of the prosecution’s plans.

The attorney general’s office has not explained exactly what its prosecutors are seeking, the sources said, but all seven people on the list would have had knowledge of or been directly involved in the launch of radio and television advertisements last September. Documents have shown that although the ads were billed as promoting the lottery and paid for with taxpayer money, they were written by Cahill’s gubernatorial campaign staff. The treasurer’s office oversees the lottery.

Among those to be interviewed at the agency’s office today are CFO Ed Bartley, budget director Lisa Perna, and assistant legal counsel Beth Day, according to the sources. Bartley and Perna would have been responsible for signing off on the ad purchases. Neither they nor the others being interviewed are implicated in any wrongdoing, the sources said.

Investigators also want to talk to Kerri Coyne, who is the assistant to chief of staff Alfred J. Grazioso Jr., a close Cahill ally from Quincy who has been held over by state Treasurer Steve Grossman. Grazioso was summoned in June to testify before a grand jury, as part of what is now a nearly yearlong investigation into Cahill’s actions.

Another person on the list is Mary Beth O’Brien, the assistant to former lottery director Mark Cavanagh, whom Cahill chose to run the agency. Cavanagh, once part of Cahill’s inner circle, was at the helm last fall when the ads were run.

Cahill’s attorney said yesterday that he and the former treasurer are convinced that the investigation will not find any wrongdoing.

“The lottery ads that ran during the campaign were legal, ethical, and appropriate,’’ said Joseph L. Demeo. “We are confident that the attorney general’s office will agree once they finish their investigation.’’

Beth Bresnahan, the communications director for the lottery, referred all questions to the attorney general’s office. Coakley’s press office said it would not comment.

The attorney general began her investigation shortly after internal campaign e-mails emerged in a civil court case last October indicating that Cahill’s political staff had consulted with him and had gotten his approval to use the lottery ads to boost his candidacy.

State law prohibits public officials from using their position or public resources to advance their political careers. Those found guilty face heavy fines and up to five years in prison.

Internal lottery e-mails obtained by the Globe in June confirmed that Cahill was directly involved in the decision last year to switch the ad campaign from one that would promote specific lottery games to one that touted the successful management of the lottery’s operations.

It came at a critical time in Cahill’s independent campaign for governor, a race in which he would ultimately garner only 8 percent of the vote, far behind Republican Charles D. Baker and Governor Deval L. Patrick, who won reelection.

Cahill, through his attorney, has not denied he was involved in ordering the new strategy for the ads. But he said he was compelled to do so because the agency’s image was badly tarnished - and the sale of tickets threatened - when the Republican Governors Association ran ads attacking him for playing politics with the lottery.

“If the lottery did not respond, the treasurer would be criticized for falling revenues,’’ Demeo said in June. “The treasurer would have been remiss if the lottery did not act to protect crucial state revenues. The decision to run the ads was both sound business judgment and completely legal.’’

It is not clear from last year’s sales figures, however, that the ticket purchases declined because of the GOP attacks, according to lottery officials who have reviewed the figures.

The ads were scheduled to end in late November, consuming more than 80 percent of the lottery’s annual advertising budget less than halfway through the fiscal year. But Cahill pulled the campaign in mid-October under pressure from Coakley, as she launched her investigation.

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