A former Chelsea Housing Authority manager and a consultant face possible prison sentences after being found guilty on Wednesday of conspiring to defraud the government by rigging biennial federal inspections of apartments to make sure the housing agency received a high performance rating.
“This ends another chapter in holding accountable those who engaged in the extensive abuse of the public trust at the housing authority,” said Thomas K. Standish, who became chairman of the board of commissioners that governs the Chelsea Housing Authority in 2011, after the former board was forced to resign.
A jury found that James H. Fitizpatrick, the agency’s former director of programs to modernize and improve apartments, and Bernard J. Morosco, a consultant, improperly obtained an advance list of the apartments scheduled to be inspected by the US Department of Housing and Urban Development.
Those lists were supposed to remain secret until the day of the inspections, when the inspectors were supposed to run a computer program to randomly select two dozen of the hundreds of apartments at the agency for “spot” checks.
But testimony during the week-long trial portrayed Morosco, a HUD-certified inspector, as obtaining the lists weeks in advance, and that Fitzpatrick and others used the lists to make sure the pinpointed apartments were in tip-top condition for the inspections.
The Chelsea Housing Authority consistently received the highest ratings during the seven-year period in which Morosco was paid $25,000 in consulting fees. Its score plummeted after the housing agency severed relations with Morosco. HUD rewards high-performing housing authorities with wider discretion in using its funds.
Testifying witnesses described the housing authority as deeply corrupted by its former executive director, Michael E. McLaughlin, who previously pleaded guilty to hiding his inflated $360,000 salary at the small agency, and to conspiring to rig the inspections. McLaughlin is serving a three-year prison sentence.
McLaughlin abruptly retired in 2011 days after stories in the Globe exposed his annual pay and his keeping his salary secret for years from state and federal overseers.
Fitzpatrick, testifying in his own defense, repeatedly portrayed McLaughlin as having orchestrated virtually everything done by the agency’s administrative staff, especially when it benefited McLaughlin. In his last years in office, McLaughlin anticipated such a large public pension and severance package that he instructed the agency’s financial director to build an ample cash reserve for him, Fitzpatrick testified.
Fitzpatrick testified that McLaughlin repeatedly spoke of the financial package that, when McLaughlin finally did retire in 2011, included a $250,000 annual pension and more than $335,000 in severance pay.
McLaughlin constantly hounded Vitus Shum, the agency’s former financial director, to be ready with plenty of cash for McLaughlin’s retirement, Fitzpatrick testified.
McLaughlin arranged with Shum on his last day on the job to be paid severance in three checks for what he said were weeks of vacation, sick leave, and personal time off he had accrued as a public employee but had not used. Investigators stopped payment on two of the checks, which would have paid McLaughlin almost $200,000. McLaughlin cashed the other check for about $135,000.
In his own testimony, Shum identified Morosco as the one who provided the lists of apartments to be inspected and Fitzpatrick as the one designated by McLaughlin as the “point person” within the housing agency in dealings with Morosco.
In exchange for a promise that he not be prosecuted, Shum agreed to cooperate with investigators looking into corruption at the agency after McLaughlin’s resignation.
McLaughlin, Shum testified, had created a “cover story” to explain why managers knew which apartments would be inspected, and therefore could repair them beforehand. McLaughlin told everyone that Shum had figured out a “formula” to obtain the information, Shum testified.
McLaughlin failed to make promised improvements, like new boilers and modernized kitchens, because he was using the money instead to pay his inflated salary, Shum testified.
He testified that McLaughlin did not show up for work half the time, failed to fill out time cards, and traveled frequently to out-of-state conferences.
Shum testified that he went along with all of it, and once told investigators that “I leave my soul at home when I come to work.”
Under Standish and a new board of commissioners, the Chelsea Housing Authority is now trying to repair some of the damage done by suing an array of former managers, accounting firms, and board members.
The lawsuit is intended to force McLaughlin, Shum, and others to pay for financial losses because of alleged misappropriation of funds or negligence in failing to stop it.
The case against Fitzpatrick and Morosco was presented by Assistant US Attorneys Theodore Merritt and Brian Perez-Daple. Judge Douglas Woodlock set sentencing for July 2.
Sean P. Murphy can be reached at smurphy@globe.com. Follow him on Twitter @spmurphyboston.