Sioux Falls political consultant Steve Hildebrand said Saturday that a video-lottery addiction drove his former employee, Chad Schuldt, to steal more than $100,000 from Hildebrand's consulting company.

Hildebrand, a past campaign manager for Democratic Sen. Tim Johnson and former Democratic Sen. Tom Daschle, said he and partner Paul Tewes decided recently to fire Schuldt after learning that he had been stealing from the company and failing to pay federal payroll taxes. Hildebrand said he learned of the tax problem about three weeks ago and that further investigation revealed that Schuldt, the firm's business manager, had been diverting company money to pay for his video-lottery debts.

Schuldt has entered a treatment program for his addiction, Hildebrand said.

"Chad has dealt with a lot of issues of depression … and gambling, you know," Hildebrand said. "So on one level, he's an incredibly good, very smart person. On another level, he's dealing with some illnesses that he needs to take care of."

Hildebrand said he and Tewes hadn't decided whether to seek criminal charges against Schuldt, who worked with Hildebrand on previous Democratic campaigns. Schuldt has worked for Hildebrand Tewes since shortly after the company was formed in April of 2005.

"We haven't decided on that. It's a very emotional decision," Hildebrand said of the charges. "I'm not a lawyer. But the IRS and the state's attorney could potentially do something. A crime has been committed."

Contacted on Saturday at his home in Sioux Falls, Schuldt confirmed that he is in a treatment program for his gambling addiction but declined to comment further.

Schuldt has been a controversial political commentator who until recently ran an often-edgy Internet political blog. He slammed Republican Senator John Thune and other politicians in language that was often personal and profane.

Last year, Schuldt was at the center of a feud between Hildebrand and some Democratic state legislators. Schuldt drew fire when he said on his Clean Cut Kid blog that Democratic lawmakers who supported a controversial abortion ban were "(expletive) idiots" and "sickos"

Schuldt also called Democratic state Sen. Garry Moore of Yankton a "joke" as a legislative leader and encouraged his defeat by voters. Moore said Saturday that Schuldt should have been spending more time worrying about his own behavior and less time attacking others.

"I guess an individual like himself, when he starts casting stones, better make sure his house is not made out of glass as well. And I think this has come back to haunt him now," Moore said. "I'll probably try to be a little more gracious with him than he's been on his blog site. Maybe he can take an example from others."

Hildebrand defended Schuldt last year as "an incredibly smart political adviser" who was free to express his own opinion on his own blog. On Saturday, Hildebrand said Schuldt, a 36-year-old Sioux Falls native who is married and the father of three, was a good friend and accomplished professional who fell victim to a powerful addiction.

"I think Chad is a very good person," Hildebrand said. "He and his wife took it upon them to adopt three Native American children, to give those kids a good life. The kids are very well adjusted, smart, doing well in school. Chad just has some illnesses he needs to take care of."

Hildebrand said Schuldt's gambling addiction is one of many tragic examples of the human costs of the state's video lottery industry. The accessibility of the machines and their particularly addictive effect on some susceptible people makes them especially harmful, he said.

"The state of South Dakota and the people here made a huge mistake by allowing video lottery to be so incredibly accessible," Hildebrand said. "The state should deal with the gambling-addiction situations, and it doesn't."

A successful political consultant with a national profile in Democratic politics, Hildebrand ran Johnson's successful re-election campaign against John Thune in 2002. He also ran Dashle's unsuccessful campaign against Thune two years later, a race in which Daschle gathered more votes than Johnson .

A former executive director of the South Dakota Democratic Party, Hildebrand is currently an adviser to Sen. Barack Obama, D-Ill., in his presidential campaign.

Tewes is overseeing Obama's campaign in Iowa.

"It's been difficult,' Hildebrand said. "Working on a presidential campaign is very demanding. This has been a distraction to say the least."

Hildebrand said the embezzlement issue has not affected his company's standing with the Obama campaign.

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com