No charges will be filed in Minnesota Lottery probe

(AP) - No charges will be filed against the remaining living subject of an investigation into financial transactions at the Minnesota Lottery involving former director George Andersen, prosecutors said Friday.

A news release issued by the Ramsey County Attorney's Office said a thorough investigation by the Department of Public Safety and the Division of Alcohol and Gambling Enforcement didn't turn up enough evidence to support criminal charges.

The criminal investigation centered on Andersen's dealings with Media Rare - a public relations firm that had no-bid contracts with the lottery - 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 report by the Legislative Auditor became public. Priesnitz killed himself in April 2005 on his second suicide attempt.

From 1999 to 2004, prosecutors said, the lottery provided 80 percent of Media Rare's business. Some of that money was paid after the lottery signed several no-bid contracts with Media Rare to produce TV and radio shows promoting the lottery. The auditor questioned the increasing costs of those contracts compared with their overall promotional value.

Also, Andersen arranged for the lottery to spend hundreds of thousands of dollars, and use staff time and state computers, sponsoring on a bass fishing tour that had been taken over by Media Rare.

According to an analysis of the case written by Philip Carruthers, director of the prosecution division, the lottery never maintained a booth or sold tickets the tour's events. Andersen was an avid bass angler.

Prosecutors concluded that although Denney bought Media Rare from Priesnitz in August 2000 - making Priesnitz the businesses biggest creditor - the evidence did not sustain charges against him.

The suicides of Andersen and Priesnitz "make it difficult to prosecute Jeff Denney. He can shift blame to Andersen and Priesnitz, since they were involved in virtually all of the activities and cannot deny his allegations," Carruthers wrote in his analysis.

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. The company is now defunct.

In September, the Legislative Auditor again examined the lottery. That time the report cited only a few bookkeeping deficiencies.

A working telephone number for Denney could not immediately be found. Denney's attorney did not return a call seeking comment.

(Copyright 2006 by The Associated Press. All Rights Reserved.)