Former Haverhill DPW Director and Son Sentenced for Defrauding Haverhill Benefit Their Own Personal Business
Today, Superior Court Judge David Lowy sentenced James Flaherty to serve two years in the House of Correction, with six months to serve, and the balance suspended for two years on the charge of Larceny over $250. Judge Lowy indicated in Court that he would recommend to the Essex County Sheriff that James Flaherty serve his sentence under home confinement. One the charge of Filing False Tax Returns, Judge Lowy ordered that James Flaherty serve three years of probation to run concurrent with his House of Correction sentence. During his probation, Judge Lowy ordered that James Flaherty cooperate with the Department of Revenue (DOR) to determine the amount of taxes owed to the state, and he also must file true and accurate tax returns while on probation.
Judge Lowy sentenced Kevin Flaherty to two years in the House of Correction, with four months to serve, and the balance suspended for two years on the charge of Larceny over $250. On the charge of Presentation of False Claims, Judge Lowy ordered that Kevin Flaherty serve three years of probation. As a condition of his probation, Kevin Flaherty must pay restitution in the amount of $856.97 to the City of Haverhill, and he must perform 200 hours of community service.
The case follows an in-depth, joint investigation conducted by inspectors from the state Inspector General's Office (IG) and State Police assigned to the Attorney General's Office. Investigators discovered that over several years, the Flaherty's improperly used their public positions to benefit their own private business interests.
The Haverhill Highway Department is a municipal agency with approximately 30 employees that is in charge of street paving, tree trimming, and general maintenance of the city's roads. James Flaherty was a superintendent at the Highway Department until his retirement in April 2007. Kevin Flaherty was a foreman at the Highway Department until he was terminated on June 12, 2007. In addition to his work at the Highway Department, James Flaherty owned two private businesses, JM Flaherty & Sons, a paving company, and JM Flaherty Construction, a home building company.
In August 2002, the IG's Office received an anonymous letter alleging that James Flaherty was using Highway Department employees to work on his private paving jobs during city hours. The letter also alleged that James Flaherty was stealing paving materials from the Highway Department yard.
Between 2004 and 2006, James Flaherty used city-owned paving materials during the paving season to complete his private paving jobs. Kevin Flaherty was heavily involved in his father's paving and construction businesses. Kevin Flaherty directly participated in the theft of city-owned paving materials for his father's business, regularly driving a private dump truck into the Highway Department and loading it up with asphalt material used for the private pay jobs.
Unlike the Flaherty's, other similarly situated paving contractors had to pay for the material. Kevin Flaherty also charged the City for new and replacement parts for his private vehicles, including a special shuttle door on a dump truck used by the Flahertys' for their private paving jobs.
On January 31, 2007, the IG's Office and State Police jointly executed search warrants at the Highway Department Office and James Flaherty's Haverhill home where evidence of the misconduct was seized.
On July 29, 2007, an Essex County Grand Jury returned indictments against the Flaherty's. They were arraigned on July 18, 2007, in Essex Superior Court in Salem where they both pled not guilty and were released personal recognizance.
Additionally, James Flaherty failed to report many of his paving jobs and resulting income to the state between 2003 and 2005 and signed state income tax returns for each of these years under the penalties of perjury. Prior to trial he agreed to plead guilty to the tax charges.
The trial of James and Kevin Flaherty began on May 20, 2009, and lasted nine days. The jury deliberated for approximately three hours before returning guilty verdicts on June 2, 2009. Today, both men were sentenced in Essex Superior Court.
The case was prosecuted by Assistant Attorneys General David Waterfall and Marc Jones, both of Attorney General Martha Coakley's Corruption and Fraud Division, and was investigated by Massachusetts State Police assigned to the Attorney General's Office. Investigators from the Inspector General's Office and the Massachusetts Department of Revenue also assisted with the investigation.