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Housing chief looked to friend to cut checks

McLaughlin put former bouncer in charge of finances

John Tlumacki/Globe Staff

Michael McLaughlin, former head of the Chelsea Housing Authority, drove away from his office in a Jeep with James McNichols, the office accountant and also a family friend.

The office accountant who wrote former Chelsea Housing Authority executive director Michael McLaughlin checks for more than $200,000 on his way out the door is a longtime family friend who also helped him remove boxes from the housing authority after the office closed Wednesday night.

James McNichols, who worked as a nightclub bouncer in Boston for nine years before he was hired to handle the finances of the Housing Authority in 2000, issued three checks totaling $200,948 to McLaughlin, who quit abruptly after Governor Deval Patrick demanded his resignation amid the furor over his $360,000 pay package.

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The checkwriting incensed state officials, who immediately ordered Chelsea Housing Authority’s new interim director to stop payment. But McLaughlin had already cashed one for more than $80,000. Officials said they will try to get the money back.

McNichols, whom McLaughlin considers family according to someone with direct knowledge of the department’s personnel, is close to McLaughlin’s sons, Matthew and Michael, and, according to school alumni records, attended Providence College with them in the early 1990s.

McNichols, whose title is senior accountant/purchaser, makes $65,434 a year, according to a list of salaries the housing authority provided to the state. It’s the same list that reported McLaughlin’s salary as $160,000.

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After issuing the checks, McLaughlin and McNichols left the office together and traveled to McLaughlin’s Dracut home. Questioned there, McLaughlin acknowledged that the two men had used a housing authority vehicle to remove six boxes from the office after it had closed the night before.

He described the items in the boxes as “family photos and mementos’’ but refused to let a reporter look inside.

‘Everyone is looking for the financial . . . irregularities.’

Gregory W. Sullivan, Inspector general
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Meanwhile, investigators continued to sift through records in an effort to determine where the money for McLaughlin’s salary came from and how he was able to conceal the true amount from state authorities.

“Everyone is looking for the financial, accounting and transaction irregularities,’’ said Inspector General Gregory W. Sullivan in a phone interview yesterday, adding that investigators plan to sift through four bags of shredded and partly shredded documents they found at the agency’s Locke Street offices.

Investigators, who already seized computer hard drives and financial records, ordered employees to retain all documents.

Neither McLaughlin nor McNichols returned phone calls yesterday seeking comment.

State officials on Friday issued a blanket order to the new interim director of the authority, Albert Ewing, to make no further payments of any kind to McLaughlin, who until his resignation, may have been the highest-paid public housing official in the United States.

“The department hereby orders that the CHA immediately stop, suspend, cancel, and refrain from making any further payments of any kind to Michael McLaughlin, including any payments for sick or vacation leave or any other form of payment, no matter how categorized,’’ wrote Steven Carvalho, acting director of the state Department of Housing & Community Development.

That agency provides some $2.5 million in funding to Chelsea annually.

According to a memo McNichols wrote to the “file,’’ McLaughlin had directed him to cut three checks at 1 p.m. Thursday - about an hour before McLaughlin left the agency for the last time - accompanied by McNichols.

He cut three checks - one for $114,237 for more than 1,000 hours of unused sick leave, a second for $81,578.79 for 793 hours of unused vacation and a third for $5,133.82 for 47 hours of accrued personal time.

McLaughlin instructed McNichols to withhold roughly $22,000 - 135 hours of unused sick leave - “for any expenses that arise.’’

By the time investigators from the inspector general’s office found evidence of the checks, McLaughlin had already cashed one of them - for $81,578.79. They immediately ordered the agency to stop payment on the other two.

Under McLaughlin’s contract, he was allowed to cash in four weeks of unused vacation a year - around $25,000 this year - and carry over from year to year an additional two weeks. He was also allowed to carry over unused sick leave and receive 100 percent of the value when he left or retired.

He also had use of a housing authority vehicle, a Jeep Laredo.

Sullivan said he believes these perks probably violate state rules. “Agencies across government are scrutinizing what happened here,’’ he said. “If it is determined that these payouts don’t meet federal and state guidelines, we’re going to make sure he doesn’t get them.’’

Late Thursday night, Chelsea city manager Jay Ash sent a long, emotional e-mail to the residents of the city.

“An inexcusable offense has occurred and needs to be addressed head-on’’ he wrote. “I have been working with state officials since this story broke and believe that every effort is being made to address the issue and examine each and every other “rumor’’ of this or that. I remain convinced that city government did not contribute to or has been a party in any way to the incidents that have occurred.

The episode, he wrote, “has besmirched the good name that we have been building for the last two decades, and that upsets me greatly.’’

Andrea Estes can be reached at estes@globe.com. Sean P. Murphy can be reached at smurphy@globe.com.
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