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Illegal deals of Minn. Lottery revealed in court documents

Minnesota LotteryMinnesota Lottery: Illegal deals of Minn. Lottery revealed in court documents

Authorities investigating former Minnesota lottery director George Andersen suspected he was involved in bribery, conspiracy and conflicts of interest, court documents show.

Search warrants unsealed Friday lay out the still-open criminal investigation into Andersen's dealings with Media Rare, a public relations firm that had no-bid contracts with the lottery. The warrants are the first public indication that investigators thought Andersen's dealings might have amounted to more than mismanagement.

The criminal investigation centers on Andersen, Media Rare founder Michael Priesnitz, and Media Rare Chief Financial Officer Jeffrey Denney.

Only Denney is still alive. Andersen killed himself in January 2004, just days before a critical audit became public. Priesnitz killed himself last April on his second suicide attempt.

After Andersen's suicide, Legislative Auditor James Noble said that while he found much to question and criticize about lottery finances, he found no criminal wrongdoing.

In the warrants, drafted in June 2004, investigators wrote there was "probable cause" to believe that the three "engaged in a conspiracy to wrongfully and illegally obtain Minnesota State Lottery funds and resources for Media Rare."

A Ramsey County judge agreed and permitted searches of Media Rare's offices and records. It's unclear whether investigators discovered anything in the searches that supported their allegations.

No criminal charges have been filed, even though Ramsey County prosecutors have had the case since May.

"We are still actively reviewing the case. There are some complicated legal issues," said Jack Rhodes, spokesman for the county attorney's office.

In a 27-page affidavit, lead investigator Douglas Forsman outlined lottery contracts and dealings with Media Rare that he said didn't add up.

The lottery signed several no-bid contracts with Media Rare to produce TV and radio shows promoting the lottery for about $1 million annually. The legislative auditor questioned the increasing costs of those contracts compared with their overall promotional value to the lottery.

The lottery also was a major sponsor of Media Rare's Minnesota Pro/Am Bass Tour. According to the search warrant, the lottery kept increasing its sponsorship of the relatively obscure fishing tournament while canceling more lucrative sponsorships with the Minnesota Wild and Timberwolves, and University of Minnesota athletics, even though lottery staff members doubted the bass tour's promotional value.

At the same time, the warrants said, Andersen was underreporting how much the lottery was spending on the fishing tournaments. The lottery reported investing $110,000 in the Pro/Am Bass Tour in 2003 but actually spent an estimated $248,000.

Michael Lange, a lottery marketing manager, told investigators that he and other lottery employees were directly involved in soliciting lottery partners to sponsor the bass tour, including the Star Tribune of Minneapolis, Treasure Island Casino, Anheuser-Busch and four pro sports teams. He also said lottery workers helped stage the bass tour because its owners "did not have the expertise to run the event."

Andersen bypassed the lottery's normal approval process by directing $27,300 in "supplemental cash sponsorships" to the event in 2002 and again in 2003, Lange told investigators.

One warrant also alleges that documents found in Andersen's office suggest that in addition to Media Rare and the bass tour, he was personally involved in a series of other businesses controlled by Priesnitz and Denney.

Lottery promotions director John Mellein told investigators that Media Rare and the bass tour were considered "untouchable" interests of Andersen.

"Mellein stated there was no one in the lottery that felt they could challenge George Andersen," an affidavit said.

The Minnesota Legislature established the lottery in 1989. Andersen was its first director. Since the audit, the lottery has reduced staff and slashed its operating expenses from $32 million to $22 million. It canceled its contracts with Media Rare in March 2004, and both the company and the bass tour are defunct.

Andersen's widow and his attorney said Friday the allegations don't match the man they knew.

"I know he didn't do anything illegal," said his wife, Darlene Coates Andersen.

"I thought he was a very outstanding person to come into this job brand new and that he did a very fine job. He provided a real service for Minnesota," attorney Joseph O'Neill said.

Jeff Denney, the last owner of Media Rare, said Friday that the supplemental payments to the bass tour in 2002 and 2003 were for work ordered by the lottery.

Asked if he feared being charged with a crime, he said, "No, absolutely not."

AP

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6 comments. Last comment 11 years ago by jim695.
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Atomic Dog's avatar - sniffer
Minnesota
United States
Member #13028
March 28, 2005
870 Posts
Offline
Posted: December 5, 2005, 9:57 am - IP Logged

Two suicides of former lottery directors and a bunch of other "Shady" occurrences make the Minnesota State Lottery incredibly corrupt!

 

If they want to save face, they should switch all of their drawings back to BALL DRAWINGS instead of these computer-based draws.  Nothing is more phony than these computer-based draws!

Good Luck,

John

    Todd's avatar - Cylon 2.gif
    Chief Bottle Washer
    New Jersey
    United States
    Member #1
    May 31, 2000
    23275 Posts
    Online
    Posted: December 5, 2005, 10:06 am - IP Logged

    Great point John!

     

    Check the State Lottery Report Card
    What grade did your lottery earn?

     

    Sign the Petition for True Lottery Drawings
    Help eliminate computerized drawings!

      Avatar
      Coastal Georgia
      United States
      Member #2653
      October 30, 2003
      1866 Posts
      Offline
      Posted: December 5, 2005, 11:47 am - IP Logged

      One more suicide and they will save the taxpayers some court costs.....

       

      I agree about the computer drawings. Wonder if they were rigged ?

       

      Hmmmmm

       

                                     

                    

       

       

        bellyache's avatar - 64x64a9wg

        United States
        Member #12618
        March 18, 2005
        2060 Posts
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        Posted: December 5, 2005, 12:55 pm - IP Logged

        They could be doubledown. Minnesesota seems to have a ton of corupt lottery officials.

        Dance like no one is watching.

          johnph77's avatar - avatar
          CA
          United States
          Member #2987
          December 10, 2003
          832 Posts
          Offline
          Posted: December 6, 2005, 6:44 am - IP Logged

          Counterpoint -

          Nothing in the allegations and charges have anything to do with conduct of the the drawings, whether balls or RNGs. They only referred to how the revenues from the lottery were expended. Having a ball drawing instead of RNGs wouldn't have altered this a bit.

          gl

          j

          Blessed Saint Leibowitz, keep 'em dreamin' down there..... 

          Next week's convention for Psychics and Prognosticators has been cancelled due to unforeseen circumstances.

           =^.^=

            Avatar
            Columbia City, Indiana
            United States
            Member #2978
            December 9, 2003
            381 Posts
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            Posted: December 6, 2005, 7:23 am - IP Logged

            From the article:

            After Andersen's suicide, Legislative Auditor James Noble said that while he found much to question and criticize about lottery finances, he found no criminal wrongdoing.

            In the warrants, drafted in June 2004, investigators wrote there was "probable cause" to believe that the three "engaged in a conspiracy to wrongfully and illegally obtain Minnesota State Lottery funds and resources for Media Rare."

            _____________________________________________________________________________________

            "...he found no criminal wrongdoing." Well, of course he did. Evidently, engaging in a conspiracy to wrongfully and illegally obtain state lottery funds and resources is perfectly acceptable behavior in Minnesota. Somehow, the words "wrongfully" and "illegally" seem woefully out of place in a discussion about two dead theives and another who didn't have the grapes to pull the trigger. 

            If Minnesota is anything like Indiana (and apparently it's a carbon copy), their legislators have no concept of wrongdoing because they exempt themselves and their cronies from the very laws they impose upon the rest of us! It's likely that they'll decide these poor men's families have been through enough, so there's no point in dragging their names through the mud with post-mortem convictions. Better that they should be buried as honorable men who served their state faithfully than have their good names besmirched by exposing their own intricate criminal activities to the pockets... oh, sorry... the people they served.

            Crooked Indiana legislators and agency heads (if the shoe fits...) should have a similar attack of conscience as that suffered by Mr. Andersen and Mr. Priesnitz. This would save LosingJeff and I the considerable time and trouble we expend every day trying to make them answer for what they've done, and would also ensure that they could never be held responsible or blamed for their crimes.

            Former and current senior Hoosier Lottery personnel and officials are hereby warned: LosingJeff and I (among many others) are coming to put you in handcuffs and send you to jail. If all goes well in the coming weeks, some of your friends in the statehouse may be joining you there. However, the situation is not entirely hopeless. As noted in the article above, all of you have viable options which would be equally satisfying...

            Come, Pinky; we must prepare for tomorrow night...

            Jim