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The former executive director of the Chelsea Housing Authority pleaded guilty Tuesday to four federal counts of deliberately hiding his bloated salary from regulators, a case that sparked a call for statewide reform of Massachusetts housing authorities.
Michael McLaughlin, 67, of Dracut, was charged last month with knowingly concealing his salary in annual housing authority budgets from 2008 to 2011 and submitting the false figures to state and federal regulators.
McLaughlin resigned from his job in 2011 under pressure from Gov. Deval Patrick after The Boston Globe reported that his annual salary had topped $300,000.
During a plea hearing in federal court Tuesday, McLaughlin admitted he had falsely reported his annual salary as $160,415 in 2011, when his actual salary was at least $283,471 and his total compensation was at least $324,896. He also admitted under-reporting his salary in 2008, 2009 and 2010.
U.S. District Judge Douglas Woodlock scheduled sentencing for May 14.
Under a plea agreement with federal prosecutors, McLaughlin has agreed to cooperate with investigators. The agreement does not name any other potential targets of the investigation.
Assistant U.S. Attorney Theodore Merritt said McLaughlin falsely stated his salaries in annual budgets that were approved by the housing authority's board of commissioners with "very little, if any, review." Those budgets were submitted to the state Department of Housing and Community Development and the federal Department of Housing and Urban Development.
Merritt said McLaughlin was hired in 2000 with a starting salary of $77,500. By the time he resigned in 2011, his salary was $360,000, a figure Merritt called "exorbitant" when compared with the salaries of other public housing authority directors. McLaughlin was the fifth-highest paid housing director in the country, even though he supervised just 900 housing units, Merritt said.
In response to questions from Woodlock, Merritt said McLaughlin's motive appeared to be to conceal his high salary from state and federal regulators so they would not investigate and take steps to stop him from receiving that amount. There was no salary cap by HUD, Merritt said.
"They would have done whatever they could to rein it in," Merritt said.
McLaughlin did not speak during the hearing, except to answer a series of questions from the judge about his background and whether he understood his legal rights. Both he and his attorney declined to comment as they left the courthouse.
Gov. Deval Patrick has proposed streamlining the state's public housing system by eliminating its 240 local public housing authorities and replacing them with six regional agencies aimed at saving taxpayer money and eliminating corruption. The state has a total of 83,000 public housing units for low-income families and elderly residents.
Under Patrick's legislation, filed last month, local communities would retain control over land use and redevelopment decisions, said Lizbeth Heyer, the state's associate director for public housing.
"The reforms seek to reorganize the resources inside the system - the financial resources, the staff and the operating systems, accounting systems, maintenance systems - to more efficiently deliver services to tenants in every single community," Heyer said.
Patrick's proposal, which must be approved by the state Legislature, has been criticized by some local housing officials and lawmakers.
Lt. Gov. Timothy Murray has said he is cooperating with an investigation into possible campaign finance violations by himself and his political committee by accepting donations raised by McLaughlin. State campaign finance laws ban public employees such has McLaughlin from soliciting or receiving campaign donations.
Murray has acknowledged that McLaughlin was a political supporter, but that he never asked McLaughlin to raise campaign money for him. He has also said he was unaware of McLaughlin's inflated salary.
This program aired on February 19, 2013. The audio for this program is not available.
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