US says funds paid for Michael McLaughlin’s trips

Alleged fraud may weigh on sentence

Michael McLaughlin resigned in 2011.
Globe Staff/File
Michael McLaughlin resigned in 2011.

As Michael E. McLaughlin flew out of Boston Feb. 7, 2011, he left behind a city buried in snow and freezing temperatures. For the next five days, McLaughlin, then executive director of the Chelsea Housing Authority, basked in sunny Miami, running up food and hotel bills of more than $2,400 along with his deputy and close friend, Linda Thibodeau.

Now, the US Department of Housing and Urban Development is challenging the legitimacy of the Miami conference trip along with about $175,000 in expenditures McLaughlin and Thibodeau racked up between 2005 and November 2011, when McLaughlin was forced to resign after the size of his $360,000 annual salary was disclosed.

HUD’s 12-page report detailing McLaughlin’s questionable expenses is circulating as McLaughlin prepares to face a federal judge Wednesday who has said that McLaughlin’s prison term for defrauding the government could hinge, in part, on the cost of the frauds he allegedly perpetrated.


A pro bono lawyer for the Chelsea Housing Authority has calculated that McLaughlin’s attempt to conceal his salary would have resulted in an extra $889,728 in pension payments if McLaughlin’s deception had not been discovered.

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McLaughlin has pleaded guilty to deliberately underreporting his income to regulators in four years.

Judge Douglas P. Woodlock originally planned to sentence McLaughlin for the four felony counts on June 14, but the judge appeared dissatisfied with the recommendations of the defense and prosecution alike. McLaughlin had asked for no prison time under the plea agreement, while federal prosecutors called for a prison term of about a year.

But Woodlock announced that he would consider a longer sentence based on allegations of obstruction of justice and fraud beyond those included in the plea bargain. Under federal guidelines, judges have the discretion to add months or even years to a prison term based on how much fraud costs the government and whether the defendant attempted to impede the investigation.

The HUD report, which is dated May 22 and was recently obtained by the Globe, contends that under McLaughlin’s stewardship the Chelsea Housing Authority misused $711,392, including the questionable spending on McLaughlin and Thibodeau’s travel.


“The [Chelsea Housing Authority] spent funds for many items that were not reasonable or necessary and that did not support [its] mission,” the reports says. “Inappropriate items include expenditures for excessive travel, various entertainment expenses, excessive salaries and unsupported reimbursements to employees.”

HUD is negotiating with the Chelsea Housing Authority to recover not only the $711,392 in program funds outlined in its May 22 letter but also millions in apartment modernization funds. HUD has informed the housing agency that it is considering recouping as much as $7 million, the amount HUD paid to the authority between 2002 and 2009 to upgrade apartments but which the agency spent on everyday expenses and higher salaries for McLaughlin and key lieutenants.

McLaughlin, 67, has argued that he should not go to prison because, as his lawyer has pointed out, he has no criminal record and is “irreplaceable” in the care of his bedridden wife, who has Alzheimer’s-like symptoms and cannot be left alone.

In recommending prison time, however, federal prosecutors have pointed out that McLaughlin traveled extensively, often with Thibodeau, during his tenure as Chelsea housing director, leaving his wife in Massachusetts. McLaughlin’s lawyer, Thomas M. Hoopes, declined to comment on the sentencing controversy.

The sentencing hearing is likely to include attempts to measure in cash the magnitude of McLaughlin’s alleged fraud. Woodlock has suggested estimating how much larger McLaughlin’s pension would have been if it were based on his real $360,000 salary instead of the $160,000 he reported to state and federal regulators. Public pensions are calculated based on the employees’ highest earning years.


In papers filed in preparation for the hearing, J. William Codinha, a lawyer for the Chelsea Housing Authority, calculated that McLaughlin stood to collect an extra $889,728 in lifetime pension benefits based on his real salary, compared to the one he reported. That sum, if considered an estimate of attempted fraud, is more than enough for Woodlock to tack on as much as 19 months more to McLaughlin’s sentence, under sentencing guidelines.

Woodlock could add even more time to the sentence if he were to find McLaughlin’s fraud exceeded $1 million.

If the judge includes findings of obstruction of justice and fraud in calculating McLaughlin’s sentence, he would face a recommended sentence ranging from 37 months to 46 months, according to Codinha, who is seeking $556,324 in restitution from McLaughlin for the Chelsea Housing Authority.

The HUD report and McLaughlin’s travel record have not come up for consideration during the sentencing hearing, though Woodlock could decide to hear testimony on the subject.

Two people who worked with McLaughlin and Thibodeau for years and later testified about their activities to the grand jury investigating McLaughlin said the pair traveled constantly, but rarely brought back anything of use to Chelsea.

“There was no take-home from the conferences,” said one of the people, both of whom asked not to be identified because investigators have advised them to say nothing. “They never came back with a suggestion of something we could implement, never.”

Three weeks after Miami, McLaughlin and Thibodeau traveled to Clearwater, Fla., where a software firm was holding a training session.

Yet McLaughlin rarely used a computer and Thibodeau’s computer skills remained “pretty primitive,” even after the conference, according to the person who worked alongside them.

Sean P. Murphy can be reached at Follow him on Twitter @spmurphyboston.