For Immediate Release - April 02, 2012

Former State Treasurer Timothy Cahill Indicted on Public Corruption, Fraud and Conspiracy Charges

AG’s Office Alleges Lottery Ads Created to Boost Cahill’s Struggling Campaign for Governor; Former Treasurer’s Chief of Staff Also Indicted on Public Corruption Charges; Former Lottery Chief of Staff Indicted for Obstruction of Justice

BOSTON – Former State Treasurer Timothy P. Cahill has been indicted on public corruption charges for his alleged role in orchestrating an advertising campaign for the State Lottery, funded with taxpayer dollars, that was intended to assist his 2010 campaign for Governor, Attorney General Martha Coakley announced today.

Listen to press conference audio:

Timothy P. Cahill, age 53, of Quincy, was indicted this morning by a Suffolk County Grand Jury on one count of violating the State Ethics Law (Use of Official Position to Obtain Unwarranted Privilege) and Conspiracy to violate the State Ethics Law. Cahill was also indicted on one count of Procurement Fraud and one count of Conspiracy to Commit Procurement Fraud. 

Scott Campbell, age 41, of Quincy, Cahill’s former Chief of Staff at the Treasury and former Campaign Manager, was also indicted on similar charges. Campbell was indicted on one count each of Conspiracy to violate the State Ethics Law, Procurement Fraud, and Conspiracy to Commit Procurement Fraud.  In addition, Alfred J. Grazioso, Jr., age 57, of Quincy, the Lottery’s former Chief of Staff, was also indicted today on two counts of Obstruction of Justice.

“We allege that Treasurer Cahill abused his position to launch a television advertising campaign at the Lottery that was carefully coordinated to promote his own campaign for Governor,” AG Coakley said. “This was more than a million dollars in taxpayer money that was intended to benefit the public and the Lottery. We allege that the timing, amount budgeted, and coordinated messages of the Lottery ads all point to a decision made by Treasurer Cahill to abuse his position of trust and put his own political ambitions over the best interests of the taxpayers he was elected to represent.”

The indictments follow a comprehensive investigation by the AG’s Office that examined the timing and reason for Lottery TV and radio ads that began airing in September 2010. When the AG’s office began its investigation in October 2010, it requested, and the Lottery agreed, to immediately take down the ads pending the completion of the investigation. Dozens of witnesses were interviewed and thousands of electronic communications examined to determine the purpose behind the $1.5 million ad campaign. As a result of that investigation, the AG’s office alleges that a series of advertisements were procured by Cahill, with Campbell’s assistance, for the purpose of aiding Cahill’s struggling campaign for Governor, rather than to simply boost the Lottery’s image and sales. 

The AG’s Office alleges that a series of Lottery “permission” ads were approved at Cahill’s direction and with Campbell’s assistance, even though sales at the Lottery were already on the way up after a brief slow period in July 2010. These ads are typically intended to give potential buyers “permission” to purchase Lottery tickets by demonstrating that the money spent is being put to good use through increased local aid. While similar ads had been run in the past, “permission” advertising had been cut significantly in FY 2008 and FY 2009, with no “permission” style television ads running at all in either FY 2009 or FY 2010 (July 1, 2009 through June 30, 2010). Due to state budget constraints, the Legislature in FY 2010 drastically cut the Lottery’s advertising budget from $10 million to $2 million, and television advertising was eliminated. The advertising budget for FY 2011 began July 1, 2010 and was also set at $2 million. 

The investigation determined that at the end of July 2010, the Cahill campaign identified through a series of focus groups that promoting Cahill’s strong management of the Lottery was a key campaign theme that could influence voters. This issue was allegedly identified at a time when campaign contributions to Cahill were falling. The day after the focus groups, a campaign staffer allegedly met with Cahill. Following the meeting, the campaign staffer sent a series of text messages that read in part, “I just got the go ahead on everything we discussed. Yes on Lottery ads and he has plenty of money…Cahill thinks most of the two million is there…We just found a million for extra publicity. But Cahill can’t be in the ad…But we run ads about the lottery being well-run and putting money back in communities. I’m going to speak with the ad company about copy cahill agreed.” The following day, the investigation determined, Cahill allegedly had direct contact with the advertising agency, and that same day the agency began plans for by far the largest “permission” ad campaign the Lottery had ever run. Ultimately, as a result of the focus groups, a series of television and radio Lottery ads were allegedly planned and authorized by Cahill to run at a cost of $1.5 million in taxpayer funds.

Furthermore, the AG’s Office alleges that the script for the ads was modified in order to specifically tout the Lottery as “the most successful in America” and to credit that success to “a consistently well-managed Lottery,” language that had never before been used in “permission” style ads. Despite serious objections raised by Lottery officials, the ads were allegedly again approved and authorized by Cahill to run from late September through November 2010. During a portion of this same time, the Cahill for Governor Campaign was running its own television ads that promoted Cahill’s skill in managing the Lottery.

Finally, the AG’s office contends that the Lottery’s ad campaign would have almost entirely wiped out the Lottery’s advertising budget less than halfway through the fiscal year.  This would have severely reduced funding for advertising during the critical holiday period, which typically generates the Lottery’s highest sales figures, as well as funding for “jackpot awareness” ads, which the Lottery has long relied on to stimulate player excitement and boost sales whenever jackpots soar over the $100 million level. As a result of the ad campaign being suspended at the AG’s request in mid-October 2010, about $1 million of the planned $1.5 million was saved and spent on more traditional forms of Lottery advertising.

As a result of changes to the Massachusetts' ethics reform laws in 2009, the ethics indictments returned against Cahill and Campbell are now felony charges rather than civil violations.

In addition to the indictments returned against Cahill and Campbell, a Suffolk Grand Jury also indicted Alfred J. Grazioso, Jr., for allegedly obstructing justice during the course of the AG’s investigation. Prosecutors allege that Grazioso, in August 2011 and while still Chief of Staff for the Lottery, intimidated and harassed two witnesses prior to those witnesses being interviewed by the AG’s office for this investigation.

All defendants are expected to be arraigned on these charges at a later date. These charges are allegations, and the defendants are presumed innocent until proven guilty.

This case is being handled by Jim O’Brien, Chief of Attorney General Coakley's Public Integrity Division, along with Assistant Attorneys General Peter Sacks, Jason Cofield, and Sarah Bookbinder, Sallyann Nelligan, Deputy Director of Financial Investigations Division, and Massachusetts State Troopers assigned to the Attorney General's Office. The Attorney General’s Forensic Lab conducted an extensive forensic analysis of the evidence seized during the investigation.

In February 2011, AG Coakley announced the formation of the Public Integrity Division - the first division in the office focused exclusively on cases of public corruption and fraud.  Anyone with information relating to public corruption in state government, state agencies or Massachusetts cities or towns is urged to contact the AG's Office or the Massachusetts State Police.

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