As part of our mission to detect fraud, waste and abuse the Office of the Inspector General conducts civil and criminal investigations. Many of these cases lead to prosecution or are referred to different agencies for further action. Other cases or reviews have resulted in cost recovery for the Commonwealth. Recent cases are highlighted below.
Joint OIG Investigation Results in Bribery, Conspiracy Convictions for Two Former Roxse Homes Employees, May 2016
- Two former employees of a housing development in Roxbury pleaded guilty in federal court for conspiring to rent subsidized apartments to ineligible individuals in exchange for bribes. On May 2, Ismael Morales of Jamaica Plain, a former maintenance technician at Roxse Homes in Boston, pleaded guilty to one count of conspiracy and seven counts of bribery. On May 11, Mathis Lemons of Brockton, the former assistant property manager at Roxse Homes, pleaded guilty to the same eight counts.
On March 16, 2016, a Suffolk County grand jury returned an indictment alleging that former Boston Housing Authority employee Alfred G. Davis used his position as the director of elder services to steal thousands of dollars that were intended to benefit senior citizens. The charges resulted from a joint investigation by the OIG, the Boston Police Department’s Anti-Corruption Division, and the Office of the Inspector General for the U.S. Department of Housing and Urban Development. The Suffolk County District Attorney’s Office is prosecuting the case.
Update: Massachusetts Bay Community College Submits Corrective Action Plan, March 2016
On January 21, 2016, the Office wrote to the interim president of Massachusetts Bay Community College (MBCC) detailing misconduct by two employees of the school’s Facilities Department. The letter also described management failures and inadequate controls in the Facilities Department that allowed the two men to work on private landscaping contracts during their MBCC work hours using the school’s equipment.
As a result of an extensive investigation, the Office found evidence that John Virgilio, MBCC’s institutional maintenance foreman, and his father Federico Virgilio, a maintenance employee, conducted private business as Virgilio’s Landscaping during their MBCC work hours. They performed landscaping, site preparation and similar work for private clients using an MBCC dump truck and trailer. At times, John Virgilio directed another MBCC employee whom he supervised to work on these private jobs during that employee’s MBCC work hours. The Office also found evidence that the two men falsified time sheets and took other steps to avoid being detected.
The investigation also revealed that their supervisor failed to adequately oversee the Department’s employees and property, allowing the men to misuse school property and receive overtime for hours they did not work. Evidence further indicated that John Virgilio ordered supplies using MBCC’s accounts and then diverted those supplies to his landscaping business. The investigation further revealed that John Virgilio either sold or gave away equipment belonging to MBCC without the college’s knowledge or permission. John Virgilio was able to divert supplies and dispose of MBCC’s equipment because the MBCC’s Facilities Department lacked needed controls to safeguard the college’s resources and assets.
The Office has asked MBCC to review the findings and recommendations in its letter and provide the OIG with a corrective action plan by March 31, 2016.
In response, on March 31, 2016, MBCC submitted a detailed corrective action plan addressing the issues and concerns the Office identified during its investigation. MBCC conducted an internal investigation and took disciplinary action against three employees, which resulted in their separation from the college. MBCC also requested that the Norfolk County District Attorney’s Office file criminal charges against two of these employees and provided the Office’s letter to the State Ethics Commission to determine whether any employees violated M.G.L. c. 268A. In addition MBCC conducted an internal employee training and developed several policies and procedures to strengthen its internal controls. Some of the policy enhancements included the development of an Equipment and Resource Usage Policy; reissuance of its Surplus Property Policy; updates to its Overtime Policy for the Facilities Department; and an update to the policy concerning the use of college vehicles and equipment. MBCC also changed its procedures for ordering, receiving and approving payments for supplies in order to create a clear segregation of duties.
ISAU’s Review Identifies Over $985,000 of Free Tolls Provided to MassDOT Employees, Retirees and Unaffiliated Entities, March 2016
The Office’s Internal Special Audit Unit (“ISAU”) reviewed the Massachusetts Department of Transportation’s (“MassDOT” or “Department”) oversight of free E-ZPasses and Massachusetts Turnpike Authority (“MTA”) cards, which the Department issued. This review found that MassDOT forfeited over $985,000 in toll revenue between November 1, 2009 and August 31, 2015, by allowing certain employees, retirees and other unaffiliated entities to travel on state toll roadways (including the Tobin Memorial Bridge and toll tunnels) for free. Nearly 850 current employees and retirees have free access to toll roads. In some cases, free E-ZPasses belonging to deceased persons were used after reported dates of death of pass holders. Moreover, MassDOT could not identify the location, assignment or ownership of eighty-five free E-ZPasses at the time of this review.
The Department distributed most of the free E-ZPasses and MTA cards before MassDOT’s creation in 2009; however, the ISAU determined that MassDOT does not have a business need to provide retirees or employees (other than toll collectors) with this benefit. Similarly, the ISAU could not find any collective bargaining agreements that required MassDOT to offer these benefits. After the ISAU began this review in 2013, MassDOT deactivated the free E-ZPasses assigned to unaffiliated entities. It also discontinued the MTA cards distributed to 600 retired employees. The ISAU recognizes the Department for these actions. MassDOT, however, continues to allow nearly 850 employees and retirees to use these devices. Free E-ZPasses and MTA cards cost the state transportation revenue. The ISAU therefore recommends that the agency eliminate all free E-ZPasses and MTA cards that were the subject of this review.
- Following a two-week trial, a Suffolk Superior Court jury convicted Edward A. Scigliano IV, a District Chief for the Boston Fire Department, on all 10 counts of procurement fraud and larceny filed against him. Scigliano, 46, of Kingston, used his position to orchestrate two schemes to illegally enrich himself by having one vendor pay more than $32,000 towards his personal credit card bills and another vendor “swap” items out of purchase orders and replace them with $17,000 in merchandise for his personal use. The OIG and the Boston Police Department’s Anti-Corruption Division conducted the initial investigation and assisted the Attorney General’s Office and the Massachusetts State Police with the prosecution.
Investigation into the Abuse of Disability Parking Placards, February 2016
The Inspector General’s Internal Special Audit Unit (“ISAU”) performed a follow up to the Office’s 2013 investigation into the misuse of disability parking placards (“placards”). The ISAU’s investigation found the ongoing misuse of placards across every Boston neighborhood it surveilled. In addition to people who used placards belonging to someone else, the ISAU found individuals using purchased, cancelled and expired placards. The ISAU also identified gaps in state law and the placard application that leave the Registry of Motor Vehicle's ("RMV") placard program vulnerable to fraud and abuse.
During the investigation, the ISAU identified seventy-seven drivers regularly using disability parking placards that belonged to someone else in order to park at a meter all day for free. The Office conducted targeted surveillance in conjunction with the Massachusetts State Police, who cited twenty-three of these drivers for placard misuse. The RMV imposed a $500 fine on each driver and suspended twenty-two of the drivers’ licenses for thirty days (one case is still open). The RMV also suspended one placard holder’s license for thirty days.
The investigation also identified some placard holders whose general job duties involve walking and standing for long periods of time, which contradict the mobility limitations required to obtain a placard. The Office analyzed what placard abuse could cost the city of Boston. If just 10% of drivers who park at meters in Boston regularly are misusing placards, this translates into approximately $1.8 million in annual lost revenue for the city.
The Office made several recommendations to combat placard abuse, including recommending that the RMV work with the Legislature and other stakeholders to update and revise the state’s placard laws. The Office also recommended the RMV (1) revise the placard application to comply with state law; (2) work with cities and towns to enforce placard laws; (3) educate the healthcare community on the impact of placard abuse; (4) create a process for municipalities to promptly report abuse; and (5) ensure its electronic records concerning placards are accurate and up-to-date.
Update: In response to the ISAU’s report, the RMV met with the Placard Abuse Task Force to review the ISAU’s recommendations. The RMV also modified its process for reporting a placard lost or stolen. Specifically, when a placard holder reports a placard lost or stolen, he must now certify that law enforcement has not confiscated the placard. Additionally, the RMV reported that it is developing a new procedure for law enforcement to inform the RMV when a placard is confiscated. The RMV will also consult with the Medical Advisory Board regarding the RMV’s processes for (1) renewing temporary placards; and (2) reviewing applications that list arthritis as the qualifying disability. Finally, it is assessing the ISAU’s remaining recommendations in order to (1) prioritize improvements to its process for issuing placards; (2) enhance its database of medical providers; (3) improve the design of placards; and (4) develop law enforcement training for identifying and citing placard misuse.
OIG’s Investigation Into MassDOT’s Paving Contracts Leads to Financial Recovery, January 2016
The Office investigated the Massachusetts Department of Transportation’s (“MassDOT” or “Department”) process for performing mandated price adjustments on commodities used in paving projects. The investigation identified payment errors, including an overpayment of $179,856 to a long-time paving contractor. The Office examined evidence indicating the contractor detected the overpayment, but did not return the funds to MassDOT. Based on the Office’s investigation, MassDOT was able to recover $116,424 from the contractor.
The investigation also uncovered weaknesses in MassDOT’s oversight of paving contracts. Despite having fairly robust internal procedures, MassDOT does not consistently enforce those policies. As a result, the agency does not always perform monthly price adjustments for liquid asphalt and diesel fuel used in paving projects, although required by state law. Further, payment documentation for the contracts the Office reviewed contained errors that affected the prices MassDOT paid contractors. Specifically, 44% of the documentation for asphalt pricing and 79% of the documentation for diesel fuel pricing was inaccurate. Additionally, the Office identified significant delays in MassDOT’s closing of paving contracts. Some contracts remained “open” up to five years after contractors already completed paving work.
Although the Office only reviewed a relatively small sample of the Department’s paving contracts, it found these multiple issues. This indicates that MassDOT has a more widespread, systematic problem with a potentially large financial impact to the Department. The Office recommends that MassDOT recoup any remaining balance due from contractors, strengthen contract management practices and verify that employees follow state law, contract terms and Department policies.
Update: In response to the report, MassDOT created a working group to review the Office's findings and assess whether the Highway Division follows its current policies. The working group also conducted price-adjustment training for Highway Division employees, developed a workflow tool to track price adjustments on open contracts and explored the potential for increased staffing.
Review of the Framingham Housing Authority, September 2015
On August 31, 2015, the Office wrote to the Framingham Housing Authority’s (FHA) Board of Commissioners regarding the significant internal control weaknesses and oversight deficiencies at the authority. The Office made recommendations and requested that the Board of Commissioners submit a written corrective action plan.
On September 24, 2015, the newly appointed Executive Director for the FHA responded to the Office’s findings by outlining corrective actions to address the weaknesses, deficiencies and concerns this Office identified. Specifically, the Executive Director stated that the FHA is (1) updating its vehicle and internal control policies to create additional oversight by the Board of Commissioners; (2) updating all of its procurement policies; (3) creating a procurement office to track purchase orders and expenditures; (4) reviewing its fuel management and usage policies and practices; (5) introducing more stringent management practices and asset controls; and (6) seeking anti-fraud training. This Office believes that these corrective actions are important steps forward to decrease the FHA’s vulnerability to fraud, waste and abuse.
For more information see: Inspector General's Letter to Framingham Housing Authority Board of Commissioners, August 2015
Marshfield Housing Authority Board of Commissioners Submits Corrective Plan, March 2015
In October 2014, the OIG wrote to the Marshfield Housing Authority (MHA) Board of Commissioners regarding the alleged misuse of a credit card by MHA’s former maintenance supervisor. After a review of that allegation and other allegations, the OIG found significant internal control weaknesses and oversight deficiencies at the MHA. The OIG made recommendations and requested that the Board of Commissioners submit a written corrective action plan. In March 2015, the Board submitted a plan that is a step forward in decreasing the Marshfield Housing Authority’s vulnerability to fraud, waste and abuse.
For more information see: Inspector General Letter to Marshfield Housing Authority Board of Commissioners, October 2014
Bribery Charges Lead to Sentencing, February 2015
An investigation by the OIG, along with the U.S. Department of Housing and Urban Development’s Office of the Inspector General, led to the conviction of Charles Feeney, the former facilities director of two Somerville non-profit organizations, for soliciting bribes from a general contractor working for the two organizations.
On February 17, 2015, Feeney, 60, of Billerica, was sentenced by U.S. Senior District Judge Mark L. Wolf to six months in prison with three years of supervised release, and was ordered to pay $142,927 in restitution. In May 2012, Feeney pleaded guilty to two counts of soliciting bribes. The U.S. Attorney’s Office prosecuted the case.
For more information see: Former Non-Profit Facilities Director Sentenced to Federal Prison on Bribery Charges, February 2015
OIG Assisted in Case Leading to $1.3 Million Settlement with Verizon New England Inc., December 2014
Verizon New England Inc. (Verizon) agreed to pay the state more than $1.3 million to settle allegations that the firm had overcharged the Commonwealth for telecommunications services between September 2006 and October 2012. The settlement also requires Verizon to offer refunds to cities and towns affected by the alleged overbilling. The Office of the Inspector General assisted in investigating the case.
OIG, State Police and RMV Joint Investigation of Abuse of Disabled Persons Parking Placards Resulted in Driver Penalties, March 2014
On November 20, 2013, the OIG issued a report on an investigation into misuse of disabled persons parking placards. As a result of the investigation, the Registry of Motor Vehicles (RMV) imposed $500 fines on 13 drivers the OIG identified as abusing disabled persons parking placards. In addition, the RMV imposed a 30-day license suspension on 12 of the 13 drivers.
OIG Probe Leads to Indictment of the Former CFO of the Merrimack Education Center, December 2013
On December 17, 2013, a federal grand jury voted to indict Carl A. Nystrom, the former chief financial officer of the Merrimack Education Center (MEC), a non-profit corporation headquartered in Chelmsford, with mail and wire fraud in connection with obtaining fraudulent public pensions for employees of the non-profit. Inspector General Glenn A. Cunha said, “Mr. Nystrom’s leadership role at the non-profit organization put him in a position to ensure that MEC followed the law. Instead, the indictment alleges, he chose to disregard state pension law and approve the misappropriation of funds.”
The indictment was the result of a joint investigation by the OIG, the Internal Revenue Service, the Federal Bureau of Investigation, the U.S. Attorney's Office and the Attorney General's Office. The case is being prosecuted by the U.S. Attorney's Office.
OIG Combined Investigation Regarding Chelsea Housing Authority Executive Director Leads to Sentencing, July 2013
An Inspector General combined probe with the Massachusetts State Police, the Federal Bureau of Investigations, and the Office of the Inspector General for HUD, resulted in the former Chelsea Housing Authority Executive Director Michael E. McLaughlin being charged in federal court with falsely reporting his salary in annual budgets required by the U.S. Department of Housing and Urban Development (HUD) and the Massachusetts Department of Housing and Community Development. The Department of Justice, Office of Carmen M. Ortiz, United States Attorney for the District of Massachusetts, charged McLaughlin on January 23, 2013.
On July 17, 2013, U.S. District Court Judge Douglas Woodlock sentenced Michael McLaughlin to 36 months in federal prison after he pled guilty to four counts of falsifying documents in order to hide his actual salary from state and federal officials from 2008 to 2011. McLaughlin’s prison sentence will be followed by two years of supervised release. In addition, McLaughlin must pay a $4,000 fine.
For more information on McLaughlin’s plea, see the U.S. Department of Justice’s Press Release at http://www.justice.gov/usao/ma/news/2013/February/McLaughlinMichaelplea.html.
Also, see the OIG's Letter to Joseph Connarton, Executive Director, PERAC & David Pickering, Board Administrator, Chelsea Retirement Board, Regarding the Compensation & Retirement Benefits of Michael McLaughlin, Executive Director of the Chelsea Housing Authority, Nov 2011
OIG Investigation Regarding Plymouth County Bid-Rigging Leads to Settlement, April 2012
An Inspector General investigation of attempted bid-rigging allegations resulted in Attorney General Martha Coakley reaching a settlement with Former Commissioner Timothy McMullen and Edward Burgess the owner of Capeway Pest Management to pay $7,500 each in penalties and costs. In December 2010 the Office concluded an investigation into a complaint concerning the quote process for the pest control contract that was to be awarded by the Plymouth County Commissioners. The pest control contract involved pest control services for seven Plymouth County buildings, including the Plymouth County District Attorney’s Office, the Brockton Superior Court, three District Courts, the Plymouth County Registry of Deeds, and the Plymouth County Commissioners’ Office. The Office found that collusion and bid rigging occurred in the procurement of the contract. The Office referred the case to the Attorney General’s Office.
Results of Pension Fraud Investigations, February 2012
The Inspector General's Office (OIG) has committed substantial resources to uncover and eliminate pension fraud within the Commonwealth, working with other law enforcement agencies including the United States Attorney's Office, the Federal Bureau of Investigation and the Boston Police Department. The results of these combined investigative and prosecutorial efforts are both noteworthy and significant.
- The OIG's investigation of Charles Bradshaw Lincoln (Lincoln) became a catalyst for pension reform in the Commonwealth. Lincoln was a former Lieutenant for the City of Brockton Police Department. During Lincoln's last three years of employment at the Brockton Police Department he also served as the Director of Security for the Plymouth County House of Correction. During Lincoln's last three years of employment, he inflated his pension by abusing his sick leave in order to hold two full-time public safety positions. Lincoln was employed by Plymouth County for only three years and his contribution to its retirement system was minimal. Notwithstanding his marginal participation, he receives approximately $63,000 annually from that system for the rest of his life. By contrast, Lincoln was required to work almost thirty two years in the Brockton retirement system to qualify for an annual pension of approximately $76,000.
- Lincoln's pension assessment from Plymouth County is approximately 83% of the Brockton assessment, despite his minimal involvement in the County system. During Lincoln's last three years of employment, he used 222 days of sick leave at the Brockton Police Department. On 148 of those days, while claiming to be sick for his police shift, he put in a full day at the Plymouth County Sheriff's Department.
- In June 2009, the Massachusetts Legislature amended M.G.L. c.32, §5 (Retirement Systems And Pensions - Superannuation Retirement), by adding a new subsection [i.e. §5(e)]. This new subsection of the law was designed by the Legislature to prevent pension abuse similar to that found in the Lincoln case from occurring in the future.
- After the Boston Globe reported widespread pension abuse in the Boston Fire Department in 2008, the OIG joined an investigation with the United State Attorney's Office, the Federal Bureau of Investigation and Boston Police Department. As a result of the investigation two firefighters were indicted by a Federal Grand Jury in October of 2009.
- During the investigation of the Boston Fire Department accidental disability pension matter, the Massachusetts Legislature amended M.G.L. c.32, §7 and inserted new language which abolished the so called "king for a day" rule.3 Presently, it is unlawful for a subordinate to take his superior's place temporarily, sustain injury, and seek a disability based on his superior's higher salary.
Cognos Case Summary, February 2012
The Massachusetts Office of the Inspector General (OIG) had an instrumental role in the investigation that resulted in the prosecution and conviction of former Speaker of the House Salvatore F. DiMasi and lobbyist Richard McDonough in 2011. Staff of the Inspector General's office initiated the case, which began in mid-October 2007 with an inquiry into the faulty procurement of $13 million in software from the firm Cognos. The case ended in September 2011 with the sentencing of DiMasi and McDonough to federal prison for eight and seven years respectively.
The OIG investigated two contract awards - a $4.5 million software purchase by the Department of Education in 2006 and a $13 million purchase of performance management software by the state, funded by a March 2007 emergency bond bill. Several elements of the Cognos case that played a prominent role at DiMasi's trial were first uncovered by the Inspector General's staff. For example, the OIG established that:
- Cognos had paid DiMasi's law associate, Steven J. Topazio, $125,000 beginning in April 2005 and ending in March 2007, immediately after the bond bill was approved;
- Topazio performed no work in exchange for the $125,000;
- The language directing the state to buy performance management software was inserted in the bond bill at DiMasi's request.
OIG Investigation of Kickbacks Leads to Indictment
A joint investigation between this Office and several federal agencies, led to the indictment of Charles Feeney of North Billerica for soliciting, demanding, and accepting kickbacks. Feeney allegedly awarded a general contract to renovate a building for the Walnut Street Center to a contractor with the stipulation that a subcontract for electric work would be awarded to his company. In total, the indictment alleges that Feeney received more than $180,000 from the contractor. If convicted, he faces up to 10 years imprisonment, to be followed by up to three years of supervised release and a $250,000 fine on each count.
OIG Investigation of Chapter 40B Leads to Millions in Cost Recovery for Massachusetts Towns
Following investigations into Chapter 40B affordable housing developments, four towns have negotiated settlements for monies owed to them by developers under the profit limits set by the law. The Town of Berkley received a settlement of $275,000. In an agreement between the Town of Acton and Crossroads Development LLC, the developer will do work for the Town in lieu of paying the $750,000 owed to the Town. Additionally, the Town of Wakefield received a $500,000 settlement and the City of Braintree received a settlement of $2.3 million.
OIG Investigation of Municipal Employees Leads to Prison Sentences
As a result of an investigation by this Office, two employees of the Haverhill Highway Department—James and Kevin Flaherty—were convicted of larceny and other charges in connection with a scheme to use city personnel, material, and equipment on private contracting jobs. James Flaherty pled guilty and was sentenced to two years in jail and to pay what he owes in unpaid taxes. His son, Kevin, was also sentenced to two years in jail and forced to pay restitution and do 200 hours of community service.
An investigation by this Office and the Essex County District Attorney’s Office led to a guilty plea by former Methuen School Department Business Manager Joseph Salvo to embezzlement by a municipal officer of municipal property and larceny over $250.00. He used school credit cards to purchase items for personal use. He was sentenced to six months imprisonment.
Haverhill Retirement Board Decision Regarding an Employee's Pension Upheld after a Massachusetts Office of the Inspector General, Massachusetts State Police and Massachusetts Attorney General's Office Joint Investigation, July 2011
OIG Investigation of Illegal Sewer Connection Leads to Fine
The Office investigated claims that a former Lowell City Councilman illegally connected a building he was developing in Chelmsford to the Lowell Sewer. After investigating, the Office concluded that the sewer line was not authorized/approved by the City of Lowell, was not connected in accordance with the City of Lowell’s Code of Ordinances: §§ 272-30 to 33, and was done in furtherance of a scheme by former City Councilman Alan Kazanjian to keep construction costs at a minimum while defrauding the City of Lowell and Town of Chelmsford rate payers.
After this Office investigated and issued a letter, the Councilman agreed to pay the City the $3,149 sewer connection fee and a fine of $15,000.
OIG Investigation of Bid-Rigging Leads to Prison Sentence
Following an investigation by this office, Methuen contractor Christopher Medungo was sentenced to one year imprisonment and 200 hours of community service for 12 counts of bid-rigging. It is estimated that he received approximately $95,545.00 as a result of manufactured contracts.