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Ex-Mass. treasurer facing corruption charges

BOSTON — Former state treasurer Timothy Cahill was indicted Monday on charges he used taxpayer-funded ads promoting the state lottery to boost his unsuccessful campaign for governor in 2010.

The indictments, returned by a Suffolk County grand jury, were announced by Attorney General Martha Coakley, who said Cahill abused his position of trust and put his political ambitions ahead of the public interest.

"We allege that Treasurer Cahill gained an unwarranted and unlawful privilege by his ability to launch a television ad campaign ostensibly on behalf of the Massachusetts state lottery, but was actually carefully coordinated primarily to promote his own campaign for governor instead of promoting the lottery," Coakley said.

Cahill, 53, did not immediately return messages seeking comment. He has said the ads were meant only to bolster the lottery's image and boost sales.

Cahill's lawyer, E. Peter Parker, said he was surprised by the indictments.

"I have seen no evidence of criminal conduct by anybody, which does not surprise me because the truth is that nobody did anything wrong," Parker said Monday.

Cahill was indicted on charges of violating state ethics law and procurement fraud and conspiracy to violate both those laws.

Two former aides also were named in the indictments. Scott Campbell, Cahill's former chief-of-staff, faces similar charges, and Alfred Grazioso, the lottery's former chief of staff, was indicted on two counts of obstruction of justice. It wasn't immediately known if they had retained lawyers.

Cahill served two terms as treasurer as a Democrat before running for governor as an independent. He finished a distant third behind Democratic Gov. Deval Patrick, who won re-election, and Republican Charles Baker.

The $1.5 million lottery ad campaign began airing in September 2010 and highlighted the success of the lottery in helping provide funding for local communities. It did not feature Cahill or mention him by name.

The state treasurer oversees the lottery.

According to Coakley, the ads were framed after a series of focus groups designed to identify a message that would resonate with voters in the governor's race. As a result of those focus sessions, the Cahill campaign identified the treasurer's leadership of the lottery, considered one of the most successful in the nation, as "the major selling point for him as a candidate for governor," the attorney general said.

Cahill's one-time gubernatorial campaign manager, Adam Meldrum, who by then had defected to Baker's campaign, said in October 2010 that he was poised to give the attorney general evidence that Cahill improperly coordinated with his campaign to release taxpayer-funded TV ads touting how well the lottery was run.

Cahill filed suit at the time against Meldrum and other former staffers to prevent them from sharing information about the Cahill campaign with Baker's campaign.

Coakley said investigators reviewed emails, phone records and other documents and interviewed former aides to the treasurer and lottery employees.

Parker, Cahill's lawyer, said the ads were run in response to ads attacking the integrity of the lottery by the Republican Governors Association. He said those ads undermined the public's confidence in the lottery and hurt sales.

"Treasurer Cahill had an obligation to maximize lottery revenues," Parker said. "He and the lottery made the right choice to run the ads."

After the indictments were announced, Cahill's wife, Tina Cahill, tweeted: "A good man is being persecuted for challenging the (status) quo. Its not enough to be defeated you need to be destroyed politicly & personally."

Cahill currently works as a registered representative for Compass Securities Corp., a Braintree-based brokerage.

Cahill began his political career on the Quincy City Council in 1987 and won election as Norfolk County treasurer in 1996.

In 2002, still largely unknown statewide, he entered the race to succeed Treasurer Shannon O'Brien, who was running for governor. He adopted the slogan "Tim for Treasurer," to separate him from Michael Cahill, one of three other Democrats seeking the office. The campaign was boosted by a lighthearted TV spot featuring his youngest daughter, then 10-year-old Kendra.

If convicted, Cahill could face up to five years in prison and a $10,000 fine on the ethics and procurement fraud charges. The two conspiracy counts each carry penalties of up to 2 1/2 years behind bars and a $2,000 fine upon conviction.

There was no immediate word on when Cahill would appear in court.

Current state Treasurer Steven Grossman, a Democrat who succeeded Cahill, said his office had cooperated fully with the probe and will continue to do so.

"These indictments detail fundamental and outrageous violations of the public trust, as well as gross abuse of public office," Grossman said in a statement.

Coakley said the indictments are the first issued by her office under the state's new ethics law signed by Patrick in 2009.

Before the law, Coakley said, the allegation of conflict of interest would have been a civil rather than a criminal violation.

The new law was prompted by a wave of political scandals, including one that led to the indictment and conviction of former Democratic House Speaker Salvatore DiMasi on federal corruption charges. DiMasi maintained his innocence as he reported to prison in November to begin an eight-year sentence.

Associated Press writer Denise Lavoie contributed to this story.