Since his forced resignation as head of the Chelsea Housing Authority in 2011, Michael E. McLaughlin’s life has been a series of defeats and humiliations, including a three-year federal prison sentence and more corruption charges pending. He could not even get a temporary release from his Pennsylvania jail cell to attend his wife’s funeral.
But McLaughlin finally got some good news earlier this month: The Chelsea Retirement Board has voted to let McLaughlin keep the money he contributed to the public pension system during more than 30 years as a public official.
Over the objections of Chelsea housing officials, the Retirement Board said that McLaughlin is entitled to the money he put into his retirement fund over the years. Housing officials had said they should get the money as restitution for $550,000 McLaughlin diverted from low-income people to his inflated salary.
“The board finds the nefarious conduct, which Mr. McLaughlin stands convicted of having committed, despicable,” the Retirement Board wrote in a 12-page decision. “Nevertheless, the board is constrained by the parameters of [the law.]”
Chelsea housing officials expressed disappointment at the decision.
“The decision defies common sense and is stunning in its lack of concern for taxpayers,” said Thomas K. Standish, chairman of the Chelsea Housing Authority’s board of commissioners, vowing to appeal the decision. “We’re not going to give up on this.”
The one-time payment is a boost for McLaughlin, 69, but it is a far cry from the $250,000 annual pension he is eligible for based on his $360,000 salary, which he deliberately concealed from regulators. The Retirement Board has not yet decided whether to rescind his pension based on his deceptions.
S. James Boumil, the lawyer who represented McLaughlin before the Chelsea Retirement Board, said the favorable pension decision cannot begin to offset other setbacks that McLaughlin has suffered, particularly the death of his wife last December.
“He was incarcerated when his wife passed away, and that brought him incredible suffering after so many years of marriage and so many years of taking care of her,” he said.
McLaughlin’s wife, Donna, had Alzheimer’s-like symptoms and could not be left alone before her death. Michael McLaughlin, who began serving his sentence in September at the US Penitentiary in Lewisburg, Pa., was not allowed to visit his wife before her death and was denied permission by federal prison authorities to attend her funeral.
“He was not allowed to be with her at the end,” he said.
McLaughlin, who is scheduled to be released in April 2016, still faces more legal troubles related to his time as Chelsea’s housing director.
On May 12, McLaughlin is scheduled to plead guilty to charges of rigging federal housing inspections so that apartments in Chelsea would pass with high marks, even though the apartments were poorly maintained.
McLaughlin was indicted on those federal charges, along with another former Chelsea Housing Authority official, James H. Fitzpatrick, and a consultant, Bernard Morosco, in October, after McLaughlin began serving his sentence for illegally concealing his huge salary from federal regulators.
The trio are accused of conspiring to defraud the federal government by rigging the inspections. The charges carry a maximum penalty of five years in prison, a $250,000 fine, and three years’ probation.
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.
The Chelsea Housing Authority, represented pro bono by the Boston firm Nixon Peabody, had argued to the retirement board that the housing agency is entitled to restitution of at least $550,000, a sum equal to the extra money McLaughlin received between 2007 and 2010 beyond his reported salary.
The $250,000 at issue was deducted from McLaughlin’s pay over the years to qualify for a pension.
The board, chaired by Joseph M. Siewko, the retired Chelsea fire chief, said the state law governing restitution gave the board no choice.
Still pending before the board is whether McLaughlin’s convictions require forfeiture of his pension. According to state law, retirees must forfeit public pension benefits upon “final conviction of a criminal offense involving violation of the laws applicable to his office or position.”
Former House speaker Salvatore F. DiMasi, after his conviction on corruption charges, was stripped of his $60,000 annual pension, but the $127,000 he contributed was returned to him.
Joseph E. Connarton — executive director of the Public Employees Retirement Administration Commission, which supervises local retirement boards — said the commission would discuss the McLaughlin case May 8.