A Suffolk County grand jury indicted former state treasurer Timothy P. Cahill and two top aides Monday on charges that they conspired with his political staff to use more than $1.6 million in state lottery funds to boost his floundering 2010 gubernatorial bid.
Cahill, who becomes the first statewide officeholder in the post-World War II era to be indicted on corruption charges relating to his official duties, was charged with directing the state lottery and its advertising agency, Hill, Holliday, Connors & Cosmopulos, to launch the ad blitz, which was designed to promote the image of a well-managed agency.
At the time, Cahill’s campaign was cash-strapped and was looking at a number of ways, including using the lottery and the abandoned property division, to bolster his flagging independent campaign for governor.
At a press conference announcing the charges Monday, Attorney General Martha Coakley said that her 18-month investigation uncovered “an orchestrated effort by Treasurer Cahill to coordinate the message and the timing of the lottery ads to unlawfully assist his campaign for governor, instead of promoting the interest of the lottery and the taxpayers.’’
The indictments say Cahill, who served two full terms as treasurer, violated criminal statutes governing the use of public funds for political purposes, procurement fraud, and conspiracy.
Cahill, 53, who has been working as a consultant on public financing with a Braintree firm, did not respond to a message left on his cellphone seeking comment. His wife, Tina Cahill, wrote a message on Twitter, saying: “A good man is being persecuted for challenging the status quo. It’s not enough to be defeated you need to be destroyed politicly [sic] & personally.’’
Cahill’s criminal lawyer, E. Peter Parker of Boston, said he was surprised to learn of the grand jury indictment and accused Coakley of being an overzealous prosecutor who was “wasting scarce resources’’ in pursuit of his client.
“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 in a statement .
The grand jury charges mark a disastrous new turn for the former Quincy city councilor, who emerged from relative obscurity in 2002 to win statewide office and become one of the rising stars of the Democratic Party.
But his decision to run as an independent candidate for governor in 2010 turned into a political fiasco. His strong showings in the early polls against Charles D. Baker, a Republican, and Governor Deval Patrick, a Democrat, were quickly eroded by a $2 million advertising blitz by national Republicans, his running mate’s decision to defect to Baker’s team, and the resignation of key members of his campaign team five weeks before the election.
In the end, he received just 8 percent of the vote.
Although Cahill is the first statewide office holder to be charged with corruption in more than a generation, he joins a growing list of Beacon Hill figures tarnished by corruption charges, including former House speaker Salvatore F. DiMasi, former state senator Dianne Wilkerson, and probation chief John J. O’Brien.
While Cahill abandoned the Democratic Party to wage his 2010 campaign, the corruption charges could still prove harmful to the state’s dominant party, with Republicans already using it as a way to further highlight problems within the Beacon Hill establishment.
Patrick called the allegations troubling, but said he remains confident that “the overwhelming majority of public workers do their best honorably and ethically to serve the interests of the Commonwealth’s residents.’’
Baker did not return calls for comment.
Coakley’s investigation focused on an October 2010 ad campaign, the largest of its type ever run by the lottery. It was scheduled to air from September through the November election and would have spent more than 75 percent of the agency’s $2 million ad budget less than half-way through the fiscal year.
Coakley said her investigators found that Cahill not only approved his campaign aides’ plans to air the ads but also directed Hill Holliday to abandon the original plans, which were designed to boost individual games, and instead to create image-polishing ads for the lottery agency.
At Coakley’s urging, the ads, which had become the topic of hot debate in the campaign, were halted on Oct. 15, 2010, after $601,501 was spent, according to lottery records. The agency was credited for the remaining $1 million or more that had been booked with the media outlets.
Yesterday, Parker reiterated Cahill’s position that the ads were needed because the Republican Governors Association had spent $2 million attacking the treasurer and his management of the lottery, damaging its revenues. He said Cahill had an obligation to maximize lottery revenues.
“The RGA attack ads had undermined public confidence in the lottery and hurt sales measured year over year,’’ Parker said. “Not running the ads because the RGA or an overzealous attorney general might later question whether the ads might have benefited the treasurer politically would have been the wrong thing to do.’’
Coakley acknowledged the pain of Cahill’s family, but said her office did not “seek these charges lightly.’’
“I am sympathetic to family members who face this, but my job is to look at the evidence and present it to a grand jury,’’ she said.
The jurors also issued indictments against Cahill’s former chief of staff and top political confidant, Scott Campbell, on the same charges. Another close Cahill aide, Alfred J. Grazioso Jr., the lottery’s former chief of staff, was indicted on two counts of obstruction of justice. Coakley alleged he “intimidated and harassed’’ two lottery employees who were being interviewed by her investigators.
Campbell was indicted last September by a Suffolk grand jury on a charge that he illegally conspired to hire the wife of the state’s probation chief officer for a job at the lottery. He was also charged with campaign finance violations stemming from his work on the Cahill gubernatorial campaign.
Coakley’s office began its investigation shortly after internal campaign e-mails emerged in a civil court case in October 2010 indicating that Cahill’s political staff had consulted with him and obtained his approval to use the lottery ads to boost his candidacy.
Cahill’s campaign brought the suit against his former campaign manager and consultant, who had recently quit. Had he not instigated the legal action, it is unlikely the evidence would have emerged that led to the criminal charges against him. In the proceedings, his former campaign manager included e-mails and made a sworn statement that said Cahill and his staff had agreed to coordinating the lottery advertising with the campaign.
“I was also aware of coordination between campaign staff and Treasurer Cahill regarding the production of TV ads which may benefit the campaign through the office of the state lottery,’’ said Adam Meldrum, who had just days before quit as Cahill’s campaign manager.
Internal lottery e-mails obtained by the Globe last June confirmed that Cahill, who chairs and controls the agency, was directly involved in the change in ad strategy.
On Aug. 3, just three months before the election, Cahill had lunch with Hill Holliday’s chief executive, Michael J. Sheehan. Following that lunch, according to the internal e-mails, the lottery’s marketing director and the advertising firm’s executives scrambled to put together a new television and radio ad campaign. They were directed to switch gears, abandoning the media campaign it had developed for the holidays that promoted the individual lottery games and instead air ads promoting the agency’s image.
Cahill’s Quincy neighbors expressed support for the former treasurer yesterday.
“I think any politician in this state can be indicted for a lot of different reasons if they want to open their closets,’’ said John Rodophele, 70. “So whatever he’s done, I’m sure he’s done nothing anymore than anybody else has done in this state.’’