A federal judge Friday postponed sentencing of Michael E. McLaughlin, former Chelsea Housing Authority executive director, so that he can hold a hearing to determine whether McLaughlin should receive a longer prison term than the roughly one year recommended by prosecutors.
Douglas P. Woodlock seemed exasperated that prosecutors — who recommended a sentence “at the low end” of the 12- to 18-month sentencing guidelines — had not taken into account allegations of obstruction of justice or the fraud McLaughlin allegedly committed by collecting more than $500,000 in salary that he failed to report.
“This is a very serious sentencing matter,” said Woodlock, who scheduled July 17 for a hearing at which witnesses will be asked whether McLaughlin instructed them to destroy his personnel records.
Woodlock said new allegations that McLaughlin may have obstructed the investigation — raised by prosecutors in a presentencing memo — could require a longer prison term and he wanted to hear from two witnesses cited by the prosecutors.
James McNichols, a former Chelsea Housing Authority senior accountant — and another unnamed witness, who was described in the prosecutors’ memo as having been given a “cover story” by McLaughlin — will be asked whether McLaughlin directed them to lie or destroy time cards and any other material in connection with his $360,000 pay and excessive absences.
McLaughlin, 67, who had requested probation with no jail time, left the federal courthouse in Boston looking grim.
The case took an unexpected turn when Woodlock made it clear he was not ready to hand out a sentence to McLaughlin, who pleaded guilty in February to four felony counts of falsifying records in reporting his salary to regulators.
Chelsea tenants and dozens of spectators had packed the courtroom waiting to hear McLaughlin’s fate.
During the 45-minute hearing, the judge cited two possible reasons to impose a significantly longer sentence than the one recommended by federal prosecutors. He said that a finding of obstruction of justice could require more prison time, but he also said McLaughlin could face more jail time if prosecutors calculated how much McLaughlin defrauded from the government by concealing his salary.
Woodlock appeared angry when the prosecutor, Assistant US Attorney Theodore Merritt, with little enthusiasm, told the judge he would participate in the obstruction of justice hearing “if you ask me to.”
“This is not ‘mother, may I?’” Woodlock shot back.
Woodlock said he wanted someone else to step in to question witnesses about the obstruction of justice allegations, and he picked a lawyer representing the Chelsea Housing Authority to do it, J. William Codinha.
Woodlock said McLaughlin’s misconduct arguably “constituted fraud as to the Chelsea Housing Authority and its beneficiaries, the tenants.”
Woodlock asked the Probation Department to produce a memo on McLaughlin’s pension, calculating it both on his reported salary of $160,000 and his actual salary of $360,000.
The difference is expected to be more than $1 million in payments over a decade, and Woodlock said McLaughlin’s attempt to obtain the higher amount could be considered another fraud against the government.
In their memo to Woodlock this week, prosecutors disclosed the allegations that McLaughlin asked McNichols to destroy records in 2012, a year after McLaughlin was forced to resign. They said they received the information after McLaughlin pleaded guilty, and after they agreed to recommend 12 to 18 months of prison time.
In the memo, they said they were not seeking more prison time for McLaughlin, but wanted Woodlock to be aware of the new information.
In requesting probation, McLaughlin’s lawyer, Thomas Hoopes, had argued that McLaughlin, a longtime public servant with no criminal record, poses no public safety risk. In addition, he said, McLaughlin is “irreplaceable” in the care of his bedridden wife, who is has Alzheimer’s-like symptoms and cannot be left alone.
Hoopes also said that McNichols, the witness who said McLaughlin pressured him to destroy records, has “acknowledged lying” to investigators and should not be believed.
Under McLaughlin’s plea agreement, he was required to provide assistance to prosecutors in their ongoing investigations. In turn, prosecutors agreed not to use any information he provided against McLaughlin.
It’s unclear how much McLaughlin helped investigators. Hoopes wrote that McLaughlin “has addressed the issues surrounding his cooperation with law enforcement in documents filed under seal.”
A federal grand jury has been looking into whether McLaughlin was improperly tipped off about “surprise” federal housing inspections, allowing him to achieve the highest possible scores even though the buildings were poorly maintained.
A separate state grand jury has been investigating McLaughlin’s fund-raising on behalf of politicians, including Timothy Murray, former lieutenant governor.
The Chelsea Housing Authority and tenants have asked Woodlock to recognize them as victims who should be compensated for McLaughlin’s actions. The authority, represented pro bono by Codinha and his firm Nixon Peabody, have asked Woodlock to order McLaughlin to pay them $548,192 — an amount equal to the overpayments made to McLaughlin in 2008 through 2011.
After Friday’s hearing, Jay Rose of Greater Boston Legal Services, who is representing tenants, said, “I think the judge clearly showed that he considers this a very serious criminal matter and that he’s committed to taking the time necessary to explore all the issues.”