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Tenants owed restitution, Chelsea agency argues

Seeks $550,000 in salary scandal

At the urging of its tenants, the Chelsea Housing Authority is seeking restitution against its disgraced former public housing chief, Michael McLaughlin, saying his criminal deceptions forced them to live in dismal conditions while he profited.

In a motion filed in federal court Friday, the agency, joined by the city’s tenants association, said it is entitled to almost $550,000 in restitution, a sum equal to the extra money McLaughlin received between 2007 and 2010 beyond his reported salary. McLaughlin faces sentencing June 14 for concealing his $360,000 salary from regulators, an amount that ranked among the highest of any public housing official in the country.

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“The funds which McLaughlin lied about in order to continue to receive them were intended to benefit CHA [Chelsea Housing Authority] for the low-income residents it serves,” the motion stated.

During the years McLaughlin was boosting his salary, maintenance and repairs were “foregone due to financial constraints,” it stated.

Residents came up with the idea to file the motion, then approached housing officials. The tenants are not seeking individual damages in the case, said Jay Rose, a lawyer with Greater Boston Legal Services who is representing the tenants association.

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Rose said the effort to pursue restitution marked a rare legal alliance.

“I’m not aware of any other litigation in the country where a public housing authority and its residents are on the same side in litigation,” he said.

In handwritten letters submitted to the court, tenants described unsafe and unsanitary living conditions and said problems were rarely addressed. One said rats had been crawling into her apartment, and described a hallway that flooded when it rained.

“It’s been 14 years that housing hasn’t come to fix or inspect my apartment,” the tenant wrote. “I live in these conditions with my 5-year-old grandson.”

Beyond hiding his true salary, McLaughlin appears to have diverted millions in federal funds earmarked for construction projects and repairs at the developments. That left tenants living in apartments that had not been updated in decades.

“His deeds went far beyond lying about his salary,” said Thomas Standish, who is chairman of the housing authority’s board of commissioners. “Any monies he absconded with for his own benefit were monies intended to be spent on housing.”

In the motion, the housing authority requests the opportunity to deliver a victim impact statement at McLaughlin’s sentencing.

The housing authority oversees some 1,450 units in eight developments, including three for elderly and disabled residents. The majority of residents live at or below the poverty line.

The funds McLaughlin diverted for his personal gain, the complaint stated, directly affected the tenants.

“While McLaughlin was enhancing his own salary, the facilities and [tenants] were suffering from the negative effects of deferred capital improvements and maintenance expenditures, including but not limited to inadequate pest control,” the complaint stated.

In a letter to the court, one tenant said her unit was infested with rats and cockroaches, and the stove did not work.

“There was a repair done once in the bathroom, but it was worthless,” she wrote.

A mother of two wrote that “mice are coming from the back wall of the cabinets,” and another tenant described cabinets that are falling apart.

“My young daughter is in danger every time she walks by them,” the tenant wrote. “I’m scared they can fall on her. I tell them, and they won’t fix anything.”

McLaughlin’s lawyer declined comment Friday.

In February, McLaughlin admitted to understating his salary by about $140,000 annually for at least four years. He has agreed to cooperate with prosecutors in hopes of a more lenient sentence.

McLaughlin resigned under pressure in late 2011 after the Globe reported his inflated salary. The entire housing authority board followed suit.

Last October, a Globe review found that more than $3.5 million was slated for projects that were not done. Federal prosecutors are also investigating whether officials helped McLaughlin by giving him advance notice about surprise inspections. Several agency employees told the Globe McLaughlin received the list of apartments slated for inspection ahead of time, giving him time to make improvements.

Sean P. Murphy of the Globe staff contributed to this report. Peter Schworm can be reached at schworm@globe.com. Follow him on Twitter @globepete.
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