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    Treasurer wrestles with potential conflicts over family firm

    Steven Grossman issues disclosures over his family-firm clients’ business

    State Treasurer Steven Grossman declined to be interviewed about the potential conflicts.
    State Treasurer Steven Grossman declined to be interviewed about the potential conflicts.

    State Treasurer Steven Grossman’s family marketing firm touts an impressive list of high profile clients that includes some of Boston’s biggest private sector names: the Bruins, the Celtics, J.P. Morgan Chase, and the high-powered law firm Mintz Levin.

    Those organizations each have something else in common. They all have lucrative financial relationships with the state Treasury or the Massachusetts State Lottery, which Grossman oversees.

    Grossman, elected treasurer in 2010 and now running for governor, has not hidden his majority interest in Grossman Marketing Group. He prominently refers in his official biography to his 35-year career as chief executive of the firm. He resigned when he became treasurer, leaving two of his sons to run the company, but he still owns “approximately 50 percent” of the firm and collects dividends from his stock holdings.


    In an effort to be transparent, he has filed nearly two dozen public disclosure letters with the State Ethics Commission, citing potential conflicts that arise when those companies have business or seek contracts from government agencies that he controls.

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    Those letters paint a complex web of possible ethical conflicts that Grossman’s private business dealings could create for him as treasurer. There is no evidence he has acted illegally. He can rightfully boast that he has been transparent and that his disclosures constitute compliance with state ethics laws.

    But now that he is running for governor, those business dealings will probably receive greater scrutiny. A Globe review of his filings to the Ethics Commission, and records of his official duties, found that even as Grossman insulated himself from ethics charges, he was involved in the awarding of public contracts and gave lucrative financial and legal work to businesses and law firms that are substantial clients of his marketing company. Rarely did he recuse himself.

    Grossman declined to be interviewed about the potential conflicts.

    In one case, Grossman Marketing was selling promotional items to the Bruins and the Celtics — things such as bobbleheads and rally towels — at the same time the teams signed on with the lottery for partnerships to promote scratch tickets bearing the teams’ logos. Those arrangements allowed the hockey and basketball franchises to collect hundreds of thousands of dollars in instant ticket sales.


    In 2011, Grossman, as Lottery Commission chairman, voted to approve a $120,731 contract between the lottery and the Celtics that created a partnership to promote the team’s “Heroes Among Us” program. He filed a general disclosure letter with the Ethics Commission noting Grossman Marketing Group’s business with the team, but never told the commission about the actual contract vote. The minutes of the Dec. 20, 2011, meeting indicate that he did state for the record before he cast his vote that the team was a client of his firm.

    Also in 2011, Grossman OK’d a contract with the law firm Mintz Levin to act as bond counsel for the Treasury. The firm has since collected $1.2 million in legal bills. He described Mintz Levin as a “significant client” of Grossman Marketing. While the treasurer himself was not involved in the early procurement process, he has the final approval on such agreements, once an internal committee has recommended a finalist. He filed a letter of disclosure noting the relationship with his family’s company, but did not recuse himself from giving final approval to the bond deal.

    The situation with J.P. Morgan Chase in 2011 was similar. The company, which Grossman described in a disclosure letter as a “current and potentially significant” client of his family’s marketing operation, was hired after a similar procurement process to provide investment banking services to the Treasury. Once again, Grossman was not involved in the early negotiation stages, but had the formal sign-off on the contract. The international financial giant has collected over $9 million from the state for its work since Grossman took office, state records show.

    Asked whether the dealings present the appearance of a nonlevel playing field for other firms seeking business from his office, Treasury spokesman Jon Carlisle said Grossman’s large number of public disclosures and his frequent consultations with the Ethics Commission demonstrate his dedication to “the spirit and the letter of the state’s ethics laws.”

    “Prior to taking office, Treasurer Grossman requested that the Ethics Commission conduct a review of his business and personal financial affairs, and the guidance that the Commission provided has been applied thoroughly and consistently throughout his tenure,’’ Carlisle said.


    Grossman’s file at the Ethics Commission contains 23 letters, among the most by any statewide elected official. Former governor Mitt Romney, whose holdings and private business deals are vastly larger than Grossman’s, filed only 21 letters. William F. Weld, who, with his wife, had sizable inheritance holdings, filed none in the last four years of his gubernatorial tenure, commission records show.

    The state ethics statute prescribes that elected officials seeking to dispel an appearance of conflict in matters before them can file a public disclosure letter outlining the ethical issues. The Ethics Commission can then advise the official if there is a problem; there is no record the commission signaled any restriction on Grossman’s voting or granting of approvals.

    In almost all of his disclosures, Grossman cites the potential for conflict, but stops short of recusing himself from participating in matters that are before him as treasurer.

    By comparison, Governor Deval Patrick, whose wife, Diane, is a partner at the law firm Ropes & Gray, recuses himself from signing any state bond issuances when that firm is representing a client that is receiving the funds. He has instead called upon the lieutenant governor, or more recently the secretary of state, to approve the work. That caution comes in spite of the fact that Patrick’s wife, whose speciality is labor law, has no involvement in the bond work.

    Grossman routinely makes clear that he believes a letter is sufficient.

    “Both the Boston Bruins and Boston Celtics are substantial clients of GMG [Grossman Marketing Group],’’ Grossman wrote to the Ethics Commission in a July 22, 2011, disclosure letter. “Accordingly, in order to dispel any appearance of a potential conflict of interest occasioned by my prior business relationships with these GMG clients, I am formerly disclosing these matters . . . ”

    Two months after he wrote that letter noting the conflict, Grossman played a prominent role in the announcement of a renewal of the lottery’s longstanding partnership with the Bruins that included both an official sponsorship for the 2011-2012 season and the scratch-ticket deal. In a joint statement with the team, he praised the “Boston Bruins Stanley Cup Champions Instant Ticket” arrangement.

    “The lottery’s partnerships with the Boston Bruins and other sports teams have been tremendously successful, helping Massachusetts emerge as the worldwide leader in marketing of professional sports-branded lottery games,’’ Grossman said in the announcement.

    Lottery records estimate that the Bruins grossed about $850,000 from the $5-ticket sales. The Celtics deal garnered about $400,000.

    Officials for the lottery make clear that Grossman is not directly involved in choosing sponsors for the instant games. Instead, the Lottery Commission hires ticket vendors who negotiate the deals with potential sponsors. The lottery’s executive director, Paul Sternburg, and the marketing director approve those decisions and the commission is briefed on the plans but does not take a formal vote.

    Nevertheless, Grossman, as the chairman of the commission, has the power to override or impose his preference for instant ticket partnerships. The executive director serves at the will of the treasurer.

    Christopher Johnson, the Bruins’ vice president for marketing, said he has never had any direct dealings with the state treasurer over the instant ticket game. The teams’ contact at the Grossman family company has been the treasurer’s son, Ben Grossman, who along with his brother has run the company since Grossman took over as treasurer in January 2011. The Bruins relationship with the lottery dates back to the 1990s, he said.

    As for the relationship between the Celtics and the lottery, the partnership on the “Heroes Among Us” program allowed Grossman to participate in publicity events with former Celtics players and team officials, who together with the treasurer presented awards to local citizens.

    Frank Phillips can be reached at phillips@globe.com