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The Boston Globe

Metro

November 21, 2011

SJC justice approves takeover in Chelsea

Receiver to run housing authority

A single justice of the Supreme Judicial Court approved yesterday the state’s request to take over the troubled Chelsea Housing Authority, an agency engulfed in controversy and criminal investigations since its executive director resigned amid an uproar over his $360,000-a-year compensation.

Governor Deval Patrick took the rare step of requesting a court-appointed receiver to oversee the housing authority after director Michael E. McLaughlin and the five-member board of directors quit, leaving the authority virtually leaderless as the FBI and other agencies investigate alleged misuse of government funds.

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“The appointment of a temporary receiver is necessary to avoid a waste of the authority’s assets,’’ Justice Robert J. Cordy wrote in approving the request, only the third time in state history that the SJC has named a receiver for a housing authority.

“The authority is presently the subject of several ongoing investigations, and responding to those various investigations will require someone with the requisite authority to act in the authority’s best interests,’’ Cordy concluded.

Attorney General Martha Coakley, whose office represented Patrick at the hearing before Cordy yesterday, applauded the justice’s decision.

“Our office worked with the administration in an effort to appoint a temporary receiver with the goal of preventing the further abuse of taxpayer funds,’’ Coakley said. “We are pleased that the court has agreed to this request.’’

Under Cordy’s order, Judith Weber, a housing consultant recommended by the Patrick administration, will take control of the housing authority’s spending and staff and make all the decisions that normally would have been made by the board of directors.

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“The temporary receiver shall have full power and authority to take custody and control of all assets and interests of the authority,’’ wrote Cordy. He said she would report to him monthly on her progress.

Weber, who has run an affordable housing consulting firm called Viva Consulting since 2000, wasted little time after her appointment, meeting with Chelsea Housing Authority staff members yesterday afternoon.

In a brief interview, Weber said she expected to begin work in earnest by Nov. 30, but she declined to discuss her priorities.

“I assume the role of the board until such time as they have put a board in place,’’ said Weber. “I really am not going to talk about this any more.’’

Weber’s appointment will expire in 90 days or whenever Patrick and Jay Ash, Chelsea’s city manager, have appointed at least three members to the authority’s board of directors.

Ash, who will appoint four of the five board members, supported appointment of a receiver as other Chelsea leaders expressed fear that the scandal could pull the city back into the bad old days when staggering budget deficits prompted a court to appoint a receiver to run the city of 35,000 just across the Tobin Bridge from Boston.

Just a few weeks ago, McLaughlin was riding high, closing in on retirement after more than 11 years running the authority, which manages about 1,450 housing units for low-income people.

McLaughlin, 66, was making more than $360,000 a year, perhaps the most of any public housing official in the United States. Based on his income, he was looking forward to collecting the biggest public pension in Massachusetts history, $278,000 a year.

In an interview with the Globe, he even compared his career in government to that of football legend Joe Montana.

But things began to unravel after the Globe published his true salary, which was more than twice the $160,000 he had been telling the state officials who provide millions in funding for his agency.

Three days later, on Nov. 3, McLaughlin was forced to resign under pressure from Patrick, but not before he cosigned checks to himself totaling more than $200,000 for what he said was unused vacation, sick, and personal time.

State housing officials tried to stop payment on the checks, but McLaughlin had already cashed one for more than $80,000. Since then, the attorney general has pressured Chelsea retirement officials not to pay his pension yet, arguing that McLaughlin may not be entitled to the money.

Over the last three weeks, employees have admitted shredding and removing documents from the authority’s offices and destroying the records that could have shown whether McLaughlin was entitled to the enormous checks he cosigned for himself as he left.

As a result, the FBI, Coakley, the state inspector general, and others are investigating the conduct of McLaughlin and other members of the housing authority staff. Most of the authority’s $15 million budget comes from federal and state government.

Scott Allen can be reached at allen@globe.com. Martin Finucane can be reached at mfinucane@globe.com.

Correction: An earlier version of this story described Viva Consulting as a property management firm. It should be described as an affordable housing consulting firm.

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