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Cahill holdover ousted from lottery post

Timothy Cahill

AP

Former Massachusetts treasurer Timothy Cahill.

The State Lottery Commission fired its chief of staff yesterday amid allegations that he inappropriately coached his assistant and two other lottery employees to be nonresponsive to questions from Attorney General Martha Coakley’s investigators.

Alfred J. Grazioso Jr., a holdover from former treasurer Timothy P. Cahill’s administration and one of his Quincy political allies, was removed yesterday from his $107,000-a-year job during a meeting with lottery director Paul R. Sternburg. According to a person familiar with the situation, Sternburg confronted Grazioso with evidence that three agency employees said he tried to influence what they would tell investigators when they were interviewed at their Braintree headquarters Aug. 8.

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The latest twist comes as prosecutors try to wrap up their probe into Cahill’s decision to launch a $1.65 million taxpayer-funded state lottery advertising blitz during his floundering gubernatorial bid last fall. They are trying to determine whether the ads were intended to benefit Cahill’s campaign by boosting his profile as the overseer of the state lottery.

Lottery spokeswoman Beth Bresnahan acknowledged that Grazioso was let go from yesterday, but she declined to say why.

“As a matter of policy, the lottery does not publicly discuss personnel matters; therefore, no further comment will be provided,’’ she said in an e-mailed statement.

Grazioso did not respond to messages left on his office voice mail and at his Quincy home.

When allegations of his actions surfaced last Thursday, Grazioso was placed on unpaid leave, and the current treasurer, Steven Grossman, ordered an investigation. That review was supervised by his general counsel, Jamey Tesler, and conducted by Shanel Lindsay, the lottery’s human resources director. Lottery officials refused yesterday to comment on the findings.

According to the person familiar with the situation, who was not authorized to speak publicly, the three staff members Grazioso allegedly urged to say little to investigators included his executive assistant, Kerri Coyne, budget director Lisa Perna, and Mary Beth O’Brien, assistant to former lottery director Mark Cavanagh, who ran the agency under Cahill. Cavanagh was at the helm last fall when the ads ran. They were among seven employees interviewed because of their knowledge or direct involvement in last year’s advertisements.

Grazioso’s removal is yet another jolt in the nearly yearlong investigation by the attorney general’s public integrity unit into Cahill’s decision to air the lottery ads last September and October when he struggled to gain footing as an independent candidate for governor.

Internal campaign e-mails emerged in a civil court case last October indicating that Cahill’s political staff had consulted with him and received his approval to use the ads as a means of touting his management of the lottery.

State law prohibits public officials from using their positions or public resources to advance their political career.

Cahill has said that he needed to run the ads because the agency’s image was damaged and the sale of lottery tickets threatened, by attack ads from the Republican Governors Association.

For years before he was named as the lottery’s chief of staff in 2007, Grazioso, a 57-year-old former deli owner, had been part of Cahill’s political inner circle in Quincy. When Cahill was elected treasurer, Grazioso was serving as the chief procurement officer for the city of Quincy.

Cahill appointed him assistant treasurer for administration and finance, a post he held until he moved to his lottery job in January 2007. Grazioso took a leave of absence to work on Cahill’s campaign for governor.

Cahill, whose misfortunes have mounted since he lost his bid for governor, has paid his lawyer, Joseph L. Demeo, more than $140,273 over the last year to represent him, both in a civil suit filed by former political aides and in the Coakley investigation.

He also retained E. Peter Parker, a Boston attorney who specializes in white collar criminal cases. He has paid Parker $24,000 so far this year.

Cahill is also facing inquiries from the US Securities and Exchange Commission as part of its probe into former Goldman Sachs vice president Neil Morrison, who continued to do political work for the treasurer’s gubernatorial campaign, even while negotiating a $455.9 million bond with the state water pollution control board, which Cahill chaired.

Federal securities regulations sharply restrict public-finance bankers from contributing, either financially or through in-kind work, to political candidates and elected officials who issue public bonds.

Goldman fired Morrison late last year just as the SEC investigation began.

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

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