Former Chelsea housing director Michael E. McLaughlin, already serving three years in prison for corruption, was indicted again Tuesday along with two others on charges of rigging federal inspections so that public housing in Chelsea would pass with high marks even though the apartments were poorly maintained.
A federal grand jury in Boston charged that McLaughlin, along with former assistant housing director James H. Fitzpatrick and consultant Bernard Morosco, conspired to defraud the federal government by rigging the inspections, charges that carry a maximum penalty of five years in prison, a $250,000 fine, and three years’ probation.
Morosco, a certified federal inspector based in Utica, N.Y., allegedly gave McLaughlin and Fitzpatrick confidential lists of apartments that the US Housing and Urban Development officials planned to inspect, according to the federal indictment, allowing workers to clean them up in advance.
The indictment does not explain exactly how Morosco got the information, but says he had a password and “access to the secure [HUD] computer data base and software.” However, no HUD officials are charged or named in the indictment.
US Senator Charles Grassley, of Iowa, an outspoken HUD critic who has accused the agency of lax supervision of public housing across the country, cited the latest indictments as cause for increased scrutiny of the agency. “The allegations that a HUD-connected consultant conspired with a housing authority to game inspections raises a new level of concern,” he said in a statement. “HUD needs to conduct greater oversight of public housing authorities. . . . Otherwise, taxpayers are getting a false picture of housing quality and housing authority performance.”
McLaughlin, now incarcerated at the United States Penitentiary in Lewisburg, Pa., does not have a lawyer.
Fitzpatrick, who resigned in March after more than a decade with the Chelsea Housing Authority, did not return a phone call, and his lawyer, Syrie Fried, declined comment. Fitzpatrick has admitted that during his tenure the agency kept virtually no records of how millions of dollars in HUD modernization funds were spent.
Morosco previously denied giving McLaughlin confidential information, and said there was broad access to the HUD computer system that generated the inspection lists. “Almost any HUD employee had access to the system,” he said.
Reached by phone Tuesday, Morosco said he was unaware of the indictments. “I’ll deal with it when it hits,” he said.
The Globe reported in May that federal prosecutors were investigating whether McLaughlin had been tipped off about which apartments would be inspected by HUD. The Globe reviewed maintenance records of 50 apartments and found that in the three weeks before the inspections in 2011, exterminators sprayed all of the 25 apartments that ended up on the inspection list, while the 25 apartments next to those units were not sprayed.
If anyone asked how McLaughlin knew which apartments to clean up, McLaughlin instructed his staff to tell employees that an unnamed coconspirator, apparently another Chelsea Housing official, had devised a formula to predict which units HUD would inspect, the indictment said.
By knowing in advance which apartments would be inspected, McLaughlin and Fitzpatrick were able to ensure that the apartments were in near-perfect condition. As a result, Chelsea housing was consistently rated a “high performer,” allowing the agency to undergo less monitoring, fewer inspections, and annual increases in federal funding. The indictment accuses the men of conspiring to rig the inspections in 2007, 2009, and 2011.
The new case against McLaughlin was assigned to US District Court Judge Douglas Woodlock, the judge who sentenced him in July to three years for lying to state and federal regulators about his $360,000-a-year salary. Woodlock rejected the recommendation of prosecutors, who had sought an 18-month sentence.
If convicted of the new fraud charges, McLaughlin could receive additional prison time.
McLaughlin also faces indictment on state charges that he violated campaign laws by soliciting donations — often in cash — for political candidates, including Timothy P. Murray, former lieutenant governor.
Murray had asked state campaign financial officials to investigate after the Globe reported in January 2012 that McLaughlin had organized fund-raisers for Murray despite the fact that as a public employee McLaughlin was barred from fund-raising.
Investigators eventually scrutinized Murray, questioning him and others about his relationship to McLaughlin, and whether he knew that McLaughlin had violated the law on his behalf.
The controversy derailed Murray’s political career and he resigned in June to take a private sector job. In August, Murray agreed to pay $80,000 to settle charges that he collected $50,000 in illegal campaign contributions from McLaughlin and another public official.
McLaughlin was arraigned on the state charges Sept. 5, a few days before he was scheduled to begin his prison sentence. He was expected to plead guilty on the same day as his arraignment, in exchange for a sentence of probation to be served after his federal time.
But after learning that federal prosecutors were considering new charges against him, he backed out of the deal, according to two people briefed on his decision. McLaughlin feared he might face a longer federal sentence with a state conviction on his record, according to the two people.