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State looks into lobbyist's Kentucky Derby expenses

Entertaining of Mass. officials at event questioned

By Andrea Estes
Globe Staff / November 14, 2008
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Cognos ULC, a software vendor at the center of an ethics controversy on Beacon Hill, paid $13,000 to lobbyist Richard McDonough for expenses he racked up over three days at last year's Kentucky Derby, leading the secretary of state to ask if McDonough entertained any Massachusetts state officials during the premier horse-racing event.

The payments - $5,500 for tickets to the races, $4,950 for lodging, and $1,477 for meals - were disclosed to Secretary of State William Galvin in lobbying reports filed by Cognos this month.

Galvin has asked McDonough to disclose whom he was entertaining, saying state law requires lobbyists to explain all expenditures made while attempting to shape legislation or secure public contracts.

"If we treat those whose influence is being pursued anonymously, we defeat the purpose of the law," said Galvin. "He's being treated no different than any other lobbyists. If the expenses are related to lobbying fees, the public has a right to know."

The state's conflict of interest law prohibits lobbyists from giving anything of value to public officials. Both the official and the lobbyist are subject to possible fines or prosecution.

Whether McDonough will provide answers to Galvin is unknown. McDonough refused repeated requests from the Globe for information, saying, through spokesman Doug Bailey, only that his close friend, House Speaker Salvatore F. DiMasi, was not among his guests at the 2007 Derby.

McDonough's lawyer, Thomas Drechsler, said he had not reviewed Galvin's request yet and was not sure how he will respond. "I can only repeat that he [McDonough] never did anything improper or wrong and has always conformed with his obligations as a professional lobbyist."

Cognos did not respond to requests for comment.

Representative Ronald Mariano said through a spokesman, Scott Ferson, that he was at the Derby but paid his own way. Mariano paid for tickets, travel, and meals, Ferson said.

According to several former Cognos employees who spoke with the Globe on condition of anonymity, Cognos started putting on an extravagant spread at the Derby in 2004.

The event drew many elected officials, one of the former employees said.

Guests were treated to a party and dinner on Thursday night, limo service to the track Friday and Saturday, and dinners on both nights.

According to one former employee, legislators were told that attending the event would not be an ethical problem for them because the event was "educational in nature."

Cognos filed amended lobbying reports for McDonough earlier this month after Inspector General Gregory Sullivan discovered that Cognos and its sales agent, Joseph Lally, had made $1.8 million in undisclosed payments to McDonough and two other associates of DiMasi's, accountant Richard Vitale and lawyer Steven Topazio, while the company was pursuing state business.

Sullivan's investigation is among several probes into the payments and what actions DiMasi may have taken that benefited Cognos.

In its filing this month to Galvin, Cognos also said it believes "our prior filings concerning retainers paid to McDonough . . . are materially correct and are consistent with applicable law."

"Nonetheless . . . we have simply elected to report all amounts paid to McDonough Associates from June 2003 through June 2008," the company said.

Galvin's office also asked for details of other expenses McDonough ran up that were disclosed by Cognos, including $2,000 he spent at a unspecified "leadership conference" in 2004, $4,500 at the National Speakers' Conference in Las Vegas in 2005, and $287.40 on a golf outing in 2003.

DiMasi is an active member of the Speakers Conference, a convention sponsored by the State Legislative Leaders Foundation, a business-backed group.

McDonough earned $1.45 million from Cognos and Lally over several years, but failed to report more than $1 million. McDonough has contended that the fees were for consulting, not lobbying, and did not have to be disclosed.

Attorney General Martha Coakley has convened a grand jury to investigate Vitale and his work on behalf of a state ticket brokers association that was seeking legislation to gut state antiscalping laws, the Globe said in an Oct. 21 story.

Without mentioning or confirming any grand jury investigation, Coakley said during an NECN interview yesterday that she would make public the results of an investigation into Vitale and the ticket brokers - which resulted from a referral from Galvin's office over allegedly undisclosed lobbying fees.

Coakley would not describe the status of the investigation.

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