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Ex-Massachusetts Treasurer Charged in Ethics-Crime Case

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April 2 (Bloomberg) -- Ex-Massachusetts Treasurer Timothy Cahill was indicted and accused of using $1.5 million from the state lottery advertising budget to promote his unsuccessful 2010 campaign for governor.

“The message and timing of the ads was an unwarranted and unlawful benefit to Cahill and his gubernatorial campaign,” Massachusetts Attorney General Martha Coakley said today at a press conference in Boston.

Cahill, 53, controlled the budget for the lottery as state treasurer. He used 75 percent of the $2 million lottery budget for television and radio advertisements that promoted his campaign, according to Coakley.

Coakley said the lottery advertisements were broadcast during the last two months of the gubernatorial campaign. Without naming Cahill, they promoted his “effective leadership and management” of the lottery in returning money to municipalities, she said.

“These were taxpayer dollars specifically dedicated to the best interest of the lottery,” Coakley said. After Coakley’s office requested a halt, the ads were suspended, saving about $1 million, her office said.

E. Peter Parker, Cahill’s attorney, said in an e-mail he saw “no evidence of criminal conduct by anybody.”

Had ‘Obligation’

“Treasurer Cahill had an obligation to maximize lottery revenues,” Parker said. “He and the lottery made the right choice to run the ads.” He said the commercials were made in response to “attack” ads by the Republican Governors Association that had undermined confidence in the lottery.

Coakley said her investigation began after documents were released during a civil suit in Massachusetts. These showed “coordination” between the lottery ads and the campaign, she said.

Cahill, a resident of Quincy who was elected treasurer as a Democrat in 2002, ran for governor as an independent. He lost to incumbent Deval Patrick, a Democrat. Coakley is a Democrat.

“These indictments detail fundamental and outrageous violations of the public trust,” Steven Grossman, the current state treasurer, said in a statement.

Revised Statute

Massachusetts changed the ethics laws in 2009 to include criminal as well as civil violations. This is the first time criminal charges have been brought under the changed statute, Coakley said. She said the charge could carry a five-year prison sentence.

Cahill was indicted today by a Suffolk County grand jury. Besides the violation of the ethics law, he was also charged with procurement fraud and two counts of conspiracy.

“In the end, the attorney general will have wasted an enormous amount of time, energy and scarce resources to bring criminal charges that never should have been brought,” Parker said in his e-mailed statement.

Also indicted were Cahill’s former campaign manager, Scott Campbell, 41, and Alfred Grazioso, 57, the former chief of staff for the lottery.

To contact the reporter on this story: Don Jeffrey in New York at jeffrey1@bloomberg.net.

To contact the editor responsible for this story: Andrew Dunn at adunn8@bloomberg.net.

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