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Archive | Sept. 1, 2010

Executive accused of campaign fraud

A top executive of the developer behind the failed $800 million Columbus Center project in Boston was charged yesterday in federal court with illegally funneling $12,000 in campaign contributions to four Massachusetts congressmen.

Federal prosecutors said that Martin Raffol, 54, executive vice president of the residential arm of WinnCompanies, engaged in a scheme to conceal money the company donated in an attempt to win support from congressmen in a position to help its projects.

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Raffol is accused of persuading WinnCompanies contractors to give donations to the congressmen and then secretly reimbursing those firms, which hid the true source of the money. Federal law prohibits companies from directly donating to political candidates. Raffol was also charged with witness tampering in allegedly telling one WinnCompanies vendor to lie to authorities if questioned.

Prosecutors did not charge WinnCompanies or any of its other executives. Prosecutors also said there was no evidence the congressmen knew of Raffol’s reimbursement scheme.

The charging document said WinnCompanies executives directed Raffol to solicit contributions from the firm’s vendors to politicians who supported its projects, including the company’s efforts to win public subsidies for Columbus Center, which was struggling.

Raffol’s lawyer, Douglas S. Brooks, said that under pressure to raise money, Raffol crossed the line and concocted an elaborate scheme to secretly reimburse the contractors for their contributions.

“As an employee, Marty was directed to raise large amounts of money for politicians,’’ Brooks said in a statement. “The pressure was intense, and in his attempts to satisfy these directives, some of the contributions violated federal campaign laws and regulations. Marty never personally benefited from these efforts.’’

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WinnCompanies said that none of its executives was aware of Raffol’s alleged scheme to reimburse the vendors for their donations and that no one else at the company has been charged with wrongdoing.

“Immediately after learning of the allegations, the company took steps to ensure that our internal controls were strengthened, and such behavior will not occur in the future,’’ said WinnCompanies. It added that Raffol was fired yesterday.

In addition to the $12,000 to the four congressman — Representatives Barney Frank of Newton, Stephen F. Lynch of South Boston, Michael E. Capuano of Somerville, and William D. Delahunt of Quincy — prosecutors said Raffol illegally directed more than $30,000 in contributions to candidates running for state and local offices in Massachusetts.

The charges against Raffol are related only to the contributions to federal officeholders.

The charges are an outgrowth of the federal corruption case against former state senator Dianne Wilkerson, according to the charging document. The Boston Democrat pleaded guilty in June to taking $23,500 in bribes in 2007 and 2008 allegedly in exchange for helping one businessman get a liquor license and to help pave the way for a commercial development in Roxbury. She awaits sentencing.

The former senator was also an ardent supporter of Columbus Center, the megaproject in a corner of her district that promised to reconnect the Back Bay with the South End through a six-building complex over the Massachusetts Turnpike. After Wilkerson was arrested in October 2008, Arthur Winn, former WinnCompanies chief executive, acknowledged to the Globe that he had given her $10,000 several years earlier, in 2004, when the former senator was struggling to pay outstanding tax debts.

Winn said the money was not meant to influence Wilkerson’s public support of Columbus Center, but was a gift to help a “close friend.’’ The contribution was not illegal, but appeared to violate a restriction the State Ethics Commission had placed on her fund-raising.

During much of the period involving Raffol’s alleged scheme, the cost to build the Columbus Center project escalated dramatically, doubling to $800 million, prompting WinnCompanies officials to lobby government officials for public aid.

WinnCompanies is a prominent developer and manager of affordable-housing complexes around the country that often sought and used taxpayer subsidies, grants, and public assistance. For years, according to US Attorney Carmen M. Ortiz, its executives solicited campaign contributions for politicians, “primarily to advance the business interests of the company, including to obtain support for public financing of a large-scale, mixed-use development project within the city of Boston,’’ a reference to Columbus Center.

During its lobbying for Columbus Center, WinnCompanies persuaded Governor Mitt Romney to call President George W. Bush’s former chief of staff, Andrew H. Card Jr., to help with his request for federal funds.

WinnCompanies later lost control of Columbus Center to its business partner, the California Public Employees’ Retirement System, which itself lost the right to build the project on state land after defaulting on its lease.

In Raffol’s case, prosecutors said, the aggressive fund-raising continued even as they closed in on the alleged scheme. On the October 2009 morning that one WinnCompanies vendor was scheduled to appear before a federal grand jury in Boston, prosecutors said, the contractor received a call from Raffol’s executive assistant asking him to donate to a candidate running for state treasurer.

Later, prosecutors allege, the FBI recorded a phone call in which Raffol discussed the scheme with the contractor and instructed him to lie about it to investigators. “We never did anything like that in our whole life . . . you know what I’m saying,’’ Raffol was quoted as saying in the charging document. “Like if anybody asked, OK, the answer is no. You did work if we asked and that was it.’’

Raffol was charged yesterday in a document called an information, which prosecutors typically use when a plea agreement has been reached. Raffol did not return calls to his home in Natick.

If convicted, he faces up to 20 years in prison on the witness tampering charge and five years for the election law violation.

Spokesmen for the Lynch and Frank campaigns said the congressmen knew nothing about the illegal contributions.

The campaign “had not been contacted by federal authorities,’’ said a spokesman for Lynch’s committee, Scott Ferson. “It’s not clear from the information under what names the contributions were made. Once we know, we will identify them and return those funds.’’

Officials with Delahunt and Capuano did not return calls for comment.

Federal officials declined to identify the state and local politicians who received $30,000 in illegal contributions, but said it included candidates for governor, lieutenant governor, secretary of state, the Legislature, district attorney, mayor of Boston, and Boston City Council.

Saltzman can be reached at jsaltzman@globe.com; Ross at cross@globe.com.

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