Grand Jury Probing Loans Linked to Tsongas Associate

A federal grand jury is investigating allegations that the chief fund-raiser for Paul E. Tsongas’ presidential campaign persuaded businessmen to make illegal campaign loans, a newspaper reported Saturday.

Nicholas A. Rizzo Jr. allegedly deposited the money into a secret bank account, then used much of it to pay himself and his consulting company for their fund-raising efforts, the Boston Globe reported, citing unidentified sources.

About five businessmen allegedly loaned money to Rizzo after he claimed that it would be used to help the campaign and at least two loaned more than $100,000 apiece, the newspaper said.

Federal law limits individual campaign loans to $1,000. Businesses are prohibited from making any campaign loans.

Rizzo’s attorney, E. Patrick McCann, confirmed that investigators were looking at Rizzo’s actions.

“Our position is very simple: Whatever money Nick has borrowed, he borrowed for his business and he intends to pay it back,” McCann said.

McCann acknowledged that some have accused Rizzo of getting the loans by saying they would be used for Tsongas’ campaign.

U.S. Atty. A. John Pappalardo in December sought a grand jury investigation of Rizzo’s dealings after the Globe reported that the Federal Election Commission had been examining Rizzo’s fund-raising activities, the newspaper said.

Tsongas campaign sources said the commission’s probe, which is still under way, uncovered that as many as 10 executives, most from Massachusetts, had loaned Rizzo money. About five of them allegedly were told it would be used for the campaign, while the others indicated Rizzo told them the money would be used for his ailing businesses, including real estate ventures.

Assistant U.S. Atty. Joseph Savage, who is directing the investigation, declined comment Friday. Gary C. Crossen, who is representing the Tsongas campaign, declined comment except to say that the campaign was cooperating with the investigation.