Minnesota gambling enforcement agents have begun a sweeping investigation into the Minnesota State Lottery that likely will involve inspecting hundreds of contracts with vendors for any improprieties. It is expected to take months to complete.
"As far as I'm concerned, there are no boundaries," said Norm Pint, special agent in charge of the gambling enforcement division of the Department of Public Safety, which is conducting the probe.
Pint said Wednesday that the investigation was prompted by the apparent suicide last month of lottery director George Andersen and by auditors' questions about his relationship with at least one vendor. The investigation initially will look at whether the lottery or Andersen failed to submit some vendors for criminal background checks as required by law.
Pint said the probe was not prompted by criminal allegations. He considers the probe to be civil, not criminal, but, he said, that could change.
"Our scope is rather wide," he said. "If we find anything criminal, that would be referred to the appropriate county attorney or the attorney general."
The gambling enforcement division of the Public Safety department conducts background checks and criminal investigations relating to the state lottery, parimutuel horse racing and tribal casinos. State law requires the lottery director to ask gambling enforcement "to investigate the background, financial responsibility, security, and integrity" of persons seeking lottery contracts.
However, Andersen, who ran the lottery with little oversight, didn't submit all vendors for scrutiny, according to gambling enforcement agents. While he gave gambling enforcement information about vendors applying for large contracts, he often neglected to send investigators the names of many smaller vendors for background checks.
"A lot of them, we were never given the information to do that," Pint said. "There were a lot of smaller ones, he didn't ask us to do it. Now we're trying to take a look at it all."
Two gambling agents under Pint's supervision will examine as many as 200 vendors and sponsors of fishing and other tournaments that the lottery has used for promotions. "Who knows what is going to shake out?" Pint said. "We're not going in there with blinders."
He said he expects the investigation to be wider in scope than the one done by the Legislative Auditor, whose report is to be released this morning. The report will show that the lottery spent more on administration than did other state lotteries. It also will question Andersen's relationship with Media Rare, a public relations and promotions vendor that received millions of dollars in lottery contracts.
Media Rare was founded by Michael Priesnitz, a close friend of Andersen's. For years it received work as a subcontractor to the lottery's advertising agency, Carmichael Lynch. When Carmichael's account ended in 1998, Media Rare risked losing lottery work, too. Andersen told the lottery's new ad agency, Foley Sackett, that Media Rare would be working as its subcontractor, said John Foley, president of the agency, now called The Foley Group.
Although Priesnitz sold Media Rare four years ago, he remained dependent on the success of the business. He told the Star Tribune that Media Rare's current owners make monthly payments to him under the sales agreement.
In addition, Media Rare remains heavily dependent on the lottery, which has been its largest ongoing client.
According to WCCO-TV, Priesnitz attempted suicide Feb. 6 by taking an overdose of sleeping pills because he was "just in total despair over how George [Andersen] was put in this position." That was one day after the Star Tribune interviewed him about his relationship with Andersen and a day before it reported on the relationship.
Pint said gambling enforcement has interviewed Priesnitz since his reported suicide attempt, "trying to figure out what's going on." He said, "That whole episode was kind of a different twist in this continuing saga, and we're trying to make sense of a lot of different things. The information is coming to us faster than we can digest it."
Pint said the investigation into contracts may find no wrongdoing, but "the reason to do this is to protect the integrity of the lottery.... The lottery should be transparent to this division."