McLaughlin Arraigned in Illegal Fund-raising for Tim Murray

Last Thursday morning in Boston’s Suffolk Superior Court, former Chelsea Housing Authority (CHA) Director Michael McLaughlin faced a 12-count Grand Jury indictment. According to sources, he may have derailed Attorney General Martha Coakley’s plans by declining to enter a plea deal that same afternoon.

McLaughlin appeared visibly displeased alongside his Boston attorney Tom Hoopes as he answered to charges stemming from an Aug. 29 indictment involving campaign finance violations tied to former Lt. Gov. Tim Murray and former Lawrence mayoral candidate Israel Reyes.

Last week, the Attorney General’s office also assessed a fine of $80,000 against Murray in connection with the investigation.

The AG’s office presented a Statement of the Case—a document that has proven somewhat controversial within legal circles—detailing how McLaughlin and other disgraced former CHA employees had pressured current and former staff members into contributing to Murray’s campaign.

Three annual fundraisers for Murray were identified in the AG’s documentation: one each in 2008, 2009 and 2010.

According to the document, McLaughlin had functioned as an informal advisor and liaison to Murray since 2006, handling many legitimate campaign activities. Yet it also charged that he used coercion against CHA employees, vendors and associates to maximize contributions and event participation.

“To increase turnout and promote each of Murray Committee events, McLaughlin directed a subordinate at the CHA, James McNichols, to collect contributions from CHA employees and other persons who provided legal and accounting services to the CHA,” the document stated. “In meetings at the offices of the CHA, McLaughlin directed McNichols to seek contributions from persons identified by McLaughlin, particularly the director-level administrative staff, and also nearly all of the maintenance staff. As instructed by McLaughlin, for each of the Murray Committee events, McNichols collected contributions in the form of cash and checks, usually $100 per person, and delivered it all to McLaughlin in his office at the CHA. McLaughlin also distributed event invitations to McNichols, who distributed them to CHA employees as he collected their contributions.”

For each Murray Committee event, McNichols collected approximately $1,500 to $2,000 from CHA employees or vendors, which he then delivered to McLaughlin, the document further alleged.

“All the employees approached by McNichols understood that the solicitation for contributions was ultimately a request from McLaughlin, and by virtue of his involvement, many felt pressured to make contributions,” it continued.

The document also alleged that McLaughlin reached out to friends, professional contacts, people from other housing authorities, political allies and members of the state housing authority association to encourage attendance and contributions to Murray’s campaign.

“Over the course of the Murray Committee events, McLaughlin indirectly or directly solicited tens of thousands of dollars of illegal contributions, in violation of [state law],” the document read.

Three additional counts in the indictment centered on similar illegal campaign contribution allegations involving former Lawrence mayoral challenger Israel Reyes, who ran unsuccessfully in 2009.

Approximately $1,000 in illegal contributions were estimated to have been solicited from CHA employees and vendors for that campaign.

At Thursday’s proceeding, McLaughlin entered a plea of ‘not guilty’ to all counts.

According to courthouse sources present that day, a plan existed to finalize a plea agreement, with the court set to accept it that Thursday afternoon. The AG’s office reportedly intended to complete both the arraignment and the plea in a single proceeding.

The plea agreement portion never materialized, and sources suggested someone had had a change of heart.

The AG’s Office declined immediate comment on whether any plea agreement had been proposed.

Hoopes informed the court that McLaughlin would likely remain incarcerated in federal prison throughout the case and requested a 36-month continuance, which Magistrate Gary Wilson summarily rejected. Hoopes expressed concern that the federal prison system might refuse to release McLaughlin for Massachusetts court appearances, potentially resulting in a failure-to-appear warrant.

Wilson believed such complications could be resolved and suggested the AG’s Office would likely refrain from issuing a warrant. Prosecutor Edward Beagan disagreed with this assessment.

“I’m not sure about that,” he stated in response to Wilson’s warrant assurance. “It may be the only way to get the defendant back to court.”

This discussion was deferred to a future date.

A pre-trial conference was scheduled for Oct. 24, with a tentative trial date set for May 27, 2014. No plea agreement was mentioned in the record.

Sidebar –

This Friday, Sept. 13—an ironically unlucky day—former CHA Director Michael McLaughlin will report to federal prison at a location still to be determined.

McLaughlin will serve the three-year sentence imposed on July 17, which Federal Judge Doug Woodlock upheld this week by denying a stay of sentence pending appeals. Such a stay would have kept McLaughlin out of jail indefinitely.

McLaughlin’s attorneys filed an appeal last week, asserting they expect to prevail at the U.S. Appeals Court. They contend that obvious errors occurred when CHA attorneys functioned as de facto prosecutors and questioned key witnesses, including former McLaughlin associate and CHA accountant James McNichols.

Woodlock disagreed, issuing a brief ruling Tuesday denying the stay request.

Also Tuesday in federal court, prosecutors unsealed a secret March 2013 interview with McNichols in which he finally admitted to repeatedly lying before Grand Juries and investigators.

The interview transcript reveals that McNichols had been instructed by McLaughlin to blame deceased CHA attorney Walter Underhill for orchestrating the entire scheme involving destroyed time cards and solicitation of political contributions.

McNichols maintained this account until earlier this year, believing that loyalty and silence would allow McLaughlin’s political connections to resolve the situation.

“The only benefit that I thought that I might get from it (by lying) was that Mike was a powerful guy that knew a lot of people,” the unsealed March 2013 testimony stated. “He had been investigated before. He told me that. And he said I’ve been investigated before and the people are going to come in and do all this and if you keep your mouth shut we’ll survive the investigation and all this other stuff. And I thought that—foolishly I thought that if I went along with the story that at some point…all this was going to go away and I was going to be okay.”

McNichols had sworn on his father’s grave to remain loyal to McLaughlin, and McLaughlin in turn promised he would “never roll” on McNichols.