Illinois Probes Lottery-Agency Payments

CHICAGO The Illinois Attorney General’s office is “looking into” the advertising accounting practices of the Illinois Lottery and its agency, R.J. Dale Advertising and Public Relations, a representative of the state office confirmed.

While the rep stopped short of calling the process an investigation, the scrutiny comes after the Illinois Auditor’s Office released a report earlier this month stating the lottery failed to properly account for payments made to cover estimated media costs. According to the auditor’s report, officials from the Illinois State Lottery, which is overseen by the Department of Revenue, made media payments based on estimates submitted by the Chicago ad agency. In several cases, however, final invoices did not contain sufficient detail to justify the payments.

“Our testing indicated out of 20 invoice vouchers for detail testing, 13 did not have appropriate supporting documentation provided in a timely manner,” according to a summary of the audit. “Approximately $2.1 million out of $3 million tested could not be adequately supported with the information on the invoice from the vendor.”

A representative for the Department of Revenue said the state agency did not dispute the audit report’s findings, but added that it was confident that the documentation they did receive “protected the state’s interest.”

“We did submit invoices that are substantially similar to what previous ad agencies had submitted,” said department of revenue spokeswoman Geraldine Conrad in a voicemail message. “But the standards are a bit higher now, and we have taken steps to ensure those standards are met.”

She added that the agency has set up an escrow account through which media vendors are paid, and said the department has ordered a complete forensic accounting report for the contract. “Right now there is no basis for us to terminate the contract,” Conrad said. “We’re very pleased with R.J. Dale’s results. They’ve helped increase sales by 8 percent since they became the general contractor on the account.”

R.J. Dale, which is a minority-owned shop, won the estimated $20 million account in June 2004 after a review that included Chicago independent agency the Marketing Store, as well as the Chicago offices of Publicis Groupe’s Burrell Communications and WPP Group’s JWT. The agency’s advertising has featured comedian Bernie Mac.

Robert Dale, the agency’s CEO, said the shop has not done anything wrong and that it has all the proper affidavits for its media buys, but kept the paperwork at the shop through an agreement with the Department of Revenue. “The auditor’s office was obviously not aware of this agreement,” Dale said.

Dale’s two-year contract for general-market advertising runs through June 30, 2006, Dale said.