NAHANT — Essex County prosecutors are investigating whether town administrator Andrew Bisignani improperly funneled public contracts to favored contractors, prompting him to resign abruptly and roiling this normally tranquil island community.
State Police raided Town Hall Friday, seizing computers, paperwork, and lists of the town’s vendors, Selectman Michael Manning confirmed, part of what he called a “very broad investigation” into spending by Bisignani. Manning said he learned of the investigation two weeks ago when prosecutors subpoenaed records from the town clerk.
Officials in nearby Saugus, where Bisignani served as town administrator until 2011, said that Essex District Attorney Jonathan W. Blodgett’s investigators are looking at Bisignani’s conduct there, too. Audits conducted by accountants identified more than $2 million in questionable spending during the last two years of Bisignani’s tenure, including what they called “intentional violation” of state laws and rules.
“We had increased money coming in from taxes, but we were always broke,” said former Saugus selectman Stephen Horlick, who publicly called for criminal prosecution of Bisignani in 2012. “The deficit kept growing. I asked for the bills — show me invoices — but he couldn’t show where the money was going.”
Carrie Kimball Monahan, a spokesman for Blodgett, confirmed the investigation, but declined to provide details. However, a person briefed on the investigation, but not authorized to speak publicly, said Blodgett convened a grand jury to hear evidence on whether Bisignani broke state bidding laws, giving business to favorites, possibly in exchange for payments. Federal authorities were originally involved, the person said, but declined to prosecute.
On the night before the raid, Bisignani turned in his resignation, effective July 1, at the request of selectmen.
Bisignani’s criminal defense attorney, Tracy Miner said Bisignani “voluntarily resigned to avoid any appearance of impropriety as town administrator. He served the town faithfully.”
Bisignani could not be reached Monday for comment. He was not in his office, where staff members had no comment. A man who answered the door at Bisignani’s Nahant home Monday afternoon said Bisignani might be sleeping and he did not want to wake him.
In Friday’s raid, state troopers arrived in a van as well as cars and swarmed Town Hall. They also roped off Bisignani’s Nahant home as they searched for evidence inside.
Selectman Manning said that investigators appear to be focused on Bisignani’s use of emergency contracting to hand out work without a normal public bidding process. He admitted that he had disagreed with Bisignani’s judgment on when it was appropriate to make emergency expenditures, but he insisted the amounts were small and the disagreements infrequent.
But Saugus officials said they were surprised that Nahant hired Bisignani after Saugus selectmen failed to reappoint him in 2011 and hired a Wakefield accounting firm, Powers & Sullivan, to review Bisignani’s management and spending patterns from 2010 to 2012.
Powers & Sullivan officials said they found “significant violations” of law under Bisignani, including about $2 million in questionable purchases on everything from town vehicles to contractors to removal of tree stumps and repair of fire hydrants.
“Our findings lead us to believe that there was a systematic, knowledgeable, and intentional violation of the municipal procurement laws, rules, regulations, town policies and procedures,” the accountants concluded in their final report issued July 18, 2012.
They found, for example, that Bisignani bought salvaged vehicles from a Revere firm, Brothers Auto Body, at inflated prices, violating “municipal finance laws, procurement laws, rules . . . and regulations.”
The audit said that Bisignani asked an employee to solicit bids from other companies, sometimes after the vehicles were already purchased, but instructed the employee to make sure the bids were higher than the bids from Brothers so that Brothers would look like the low bidder.
In addition, the audit found, Bisignani repeatedly bought low-quality salvaged vehicles that had been in accidents and could not be insured against collisions.
Bisignani denied any wrongdoing in his dealings with Brothers, telling the Globe in 2012 that “the vehicles are still in service and are fully insured . . . It worked out well. The town saved thousands of dollars.”
Saugus officials turned over the audit findings to the state inspector general, whose investigators found that contracts were awarded to certain vendors on an emergency basis when there were no actual emergencies. The inspector general also found that, even when bids were solicited, the bids were sometimes rigged to make sure a favored vendor got the job, according to a person briefed on the findings.
The inspector general then turned over the results to Blodgett’s office, which convened a grand jury. Investigators assigned to Blodgett’s office are looking for a similar pattern of contracting in Nahant, said the person.
In fact, some of the companies that Bisignani contracted with in Saugus — including Agganis Construction and G/J Towing, owned by the son of the late mob boss Gennaro Angiullo — have gotten work in Nahant since he switched jobs. State Police seized records related to G/J as well as Raffaele Construction of Swampscott and other companies in the raid, according to someone briefed on the investigation.
Bisignani was appointed Saugus town manager in December 2002 and was its longest-serving manager before choosing to retire amid controversy over his spending. Before that, he worked for Revere for 25 years as chief financial officer, city auditor, and purchasing agent. He also chaired the city’s Retirement Board.
Bisignani had an unusual arrangement with Nahant, promising to “work full time for part-time pay,” he said. Because he was technically retired and collecting a pension, he could work only 19 hours a week for pay, but he agreed to volunteer for another 21 hours. He was paid around $54,000 a year, but said that was enough.
“I’m energized and glad to give something back to the community,” he said in February when selectmen extended his contract until 2017.
But, on Monday, Manning insisted that Bisignani’s resignation was part of a planned transition unrelated to the investigation.