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Ex-Chelsea housing chief will plead guilty, assist probe

Michael E. McLaughlin faces charges of concealing his inflated salary from federal and state investigators.

Kayana Szymczak for The Boston Globe

Michael E. McLaughlin faces charges of concealing his inflated salary from federal and state investigators.

Former Chelsea Housing Authority chief Michael E. McLaughlin has agreed to ­cooperate with federal investigators, according to documents filed in federal court Friday, poten­tially allowing him to avoid jail time for four alleged felonies if the information he provides implicates others.

In a plea agreement made public Friday, McLaughlin agreed to help authorities inves­tigate and prosecute others, though it did not identify any potential targets.

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McLaughlin will plead guilty Tuesday to four counts of deliberately concealing his ­inflated salary from state and federal regulators from 2008 until he was forced to resign in 2011, when it reached $360,000, according to an agreement filed in federal court Friday.

“Defendant expressly and unequivocally admits that he committed the crimes charged in all counts of the information, did so knowingly and inten­tionally, and is in fact guilty of those offenses,” federal prosecutors said in the document signed by US Attorney Carmen Ortiz’s office, McLaughlin, and his lawyer.

Under federal guidelines, if he does not adequately assist investigators, McLaughlin could be sentenced to 12 to 18 months in federal prison, with some portion of the time to be served in a halfway house or under house arrest.

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But if he provides “substantial assistance” to federal prosecutors, helping them “in the investigation or prosecution of another person who has committed a criminal offense,” he may do less time or none at all. Prosecutors also agreed not to use any information he provides against McLaughlin himself.

Lieutenant Governor Timothy P. Murray has acknowledged being questioned under oath about his ties to McLaughlin. Many Chelsea Housing Author­ity employees and politicians in the Merrimack Valley have told the Globe that they attended Murray fund-raisers hosted by McLaughlin, even though as a federal employee, he was prohibited from most political activity.

Murray has denied knowing that McLaughlin was collecting donations on his behalf and has said he was fooled by the housing authority head as were many other people.

“As the lieutenant governor has said before, Michael McLaughlin betrayed a lot of people, including him, and ­because of that, he and the admin­stration have tried to insti­tute reforms so that it doesn’t happen again,” said Scott Ferson, a campaign spokesman.

Asked about McLaughlin’s apparent cooperation with prosecutors in a continuing inves­tigation, Ferson said, “I’m not going to comment on ­Michael McLaughlin or his plea deal.”

McLaughlin first offered to cooperate in a letter dated Nov. 15, 2012, according to the plea agreement, which also spells out that if McLaughlin helps prosecutors, they will recommend the court impose a sentence below the guideline range of 12 to 18 months.

Lawyers who practice in federal court said the wording of the plea agreement indicates McLaughlin may have already provided useful information to prosecutors.

“It indicates this defendant has already cooperated and his cooperation has led to substantial benefits already and may lead to potentially greater benefits in the future,” said one longtime criminal defense lawyer, who did not want to be identified because he is not ­directly involved in the case.

“This is a powerful signal he is getting a sentence reduction,” the lawyer said.

If he does not provide “substantial assistance,” the agreement says, the prosecutors will recommend a jail sentence “at the low end of the guideline range,” a $4,000 fine, 24 months’ supervised release ­after he gets out of prison, and a $400 fee.

Any sentence must be ­approved by the judge, who could ignore prosecutors’ recommendation and impose a sentence on each count up to 20 years in prison, three years of supervised release, and a $250,000 fine.

McLaughlin declined comment, and his lawyer Thomas Hoopes could not be reached for comment.

McLaughlin, 67, of Dracut, allegedly deliberately under­reported his annual salary by up to $164,000 a year in mandatory ­reports to state and federal housing regulators.

McLaughlin resigned in late 2011 after the Globe reported his outlandish salary. By 2011, McLaughlin was making $360,000 a year, according to an analysis by the newspaper. The Globe also determined he was in line for one of the largest pensions in state history, up to $278,000 a year.

McLaughlin applied for his pension, but the Chelsea ­Retirement Board froze his appli­cation pending the investigation. Officials convicted of crimes related to their jobs generally lose their pensions.

The housing authority’s board of directors repeatedly ­approved generous pay ­increases for McLaughlin without ­even knowing his salary, the Globe found.

At the time, McLaughlin ­admitted to a Globe reporter that he had deliberately underreported his salary in reports to state and federal regulators, attrib­uting the misleading ­reports to “the rebel in me.”

“He thought he could get away with it,” said one Chelsea Housing Authority employee, who asked not to be named for fear of retaliation. “It’s a tragedy, but he brought it all on himself. This is how he will go out, how he will be remembered. I’m sure he did a lot of good in 40 years of public service but what he did in Chelsea, that was wrong. Once he got away with a little bit, he didn’t know when to stop. He didn’t know how to stop.”

A state grand jury convened by Attorney General Martha Coakley is continuing to investigate McLaughlin’s fund-raising for Murray and others.

Since McLaughlin’s inflated salary was revealed in 2011, federal investigators have ­focused on a range of issues, includ­ing how the housing agency spent more than $7 million in federal grants.

McLaughlin accepted the money with promises to use it to upgrade public housing units, but promised improvements were not done, and much of the money was diverted to everyday expenses and salaries for McLaughlin and key lieutenants.

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