As previously discussed, the Audit, Oversight and Investigations Division (“Division”) investigates possible criminal and civil misconduct in the use of public funds and property, and recommends improvements to internal and financial controls to prevent the misuse of government assets. In this role, the Division receives, reviews and processes complaints addressed to the Office. In some instances, these complaints lead to comprehensive investigations, while in other instances the Division may forward the complaint to the appropriate oversight, regulatory or prosecutorial agency. The Division forwards complaints to other agencies if, for instance, a preliminary investigation reveals that the complaints are outside of the Office’s jurisdiction. In addition to complaints, the Division’s investigations arise from many other sources, including anonymous tips; information developed during the course of other reviews and activities; and requests for assistance from other investigative agencies, including local authorities, federal agencies, the state police and prosecutorial agencies.
In 2018, the Division responded to over 1,124 unique complaints from public employees, private citizens, municipalities, and other public and private entities. The Division also investigated and reviewed a wide range of alleged wrongdoing, including bribery, illegal gratuities, embezzlement, forgery, larceny, false claims, tax fraud, procurement fraud, and time fraud and abuse. The Division’s work crossed diverse areas of government, including administration, human services, libraries, municipal authorities, pensions, tax collection, transportation and whistleblower protections.
Below is a representative sample of the Division’s work from 2018:
A. Methuen Officials Violated State and City Rules to Approve Police Contract
Following calls and complaints to its fraud hotline, the Office conducted an investigation into Methuen officials’ negotiation and approval of the city’s most-recent contract with its police supervisors.
The Office found that the contract’s terms would significantly raise salaries for the 26 sergeants, lieutenants and captains on Methuen’s police force; some salaries would increase by more than 100 percent. For example, police captains’ average salary would increase more than 180 percent from the prior contract, to $432,295 per year. The captains’ salaries would surpass those of top law enforcement officials for Massachusetts and major cities across the country.
|Methuen Police Captain (Estimated)||$432,295|
|Los Angeles Police Commissioner||$371,076|
|Chicago Police Superintendent||$260,004|
|Massachusetts State Police Colonel||$241,845|
|Boston Police Commissioner||$238,846|
|New York City Police Commissioner||$226,366|
*The first year of the Superiors' contract was 2017.
The investigation further revealed that the contract’s unprecedented pay increases would have far exceeded the police department’s budget. After the raises came to light, Methuen’s mayor signed a memorandum of understanding (“MOU”) that outlined somewhat smaller raises for superior officers, but still well above the level the department’s budget could support. As a result of the MOU, city officials had issued layoff notices to 50 patrol officers, about half of the police department’s uniformed staff.
Finally, even though the Mayor had been paying the superior officers the salaries outlined in the MOU, the City Council never approved the MOU as required under local and state law.
The Office concluded that the former mayor and the Methuen City Council likely violated state laws, failed to comply with their own municipal rules and breached their fiduciary duties to the residents of Methuen. Specifically, the Office found that:
- city officials failed to analyze the financial impact of the contract as mandated under city rules;
- the City Council voted to approve the contract on the same day it was introduced, violating the City Charter and City Ordinance;
- the City Council improperly invoked a procedural rule in order to allow councilors with conflicts of interest to vote on the contract;
- City Councilors and the former mayor neglected their obligations as public officials to exercise care and due diligence on behalf of Methuen’s residents.
The Office recommended that the City Council take steps to rescind the police superiors’ contract, including contacting the State Ethics Commission as well as consulting with legal counsel as to the validity of the contract and the MOU. After the Office issued the letter, Methuen stopped paying the superior officers based on the MOU and reverted to payment based on the prior contract.
B. Charter School Board Overpaid Former Executive Director at Least $100,000 and Failed to Oversee Her Use of Leave Time
The Office investigated the payments and benefits a Boston-based charter school gave to its former Director, Karmala Sherwood. The Office found that the Board of Trustees (the “Board”) of the Helen Y. Davis Leadership Academy (“DLA”) paid Ms. Sherwood $100,000 for sick time that she could not have accrued or carried over from year to year.
The Office also found that between 2011 and 2017, the Board more than doubled Sherwood’s base salary and gave her benefits, such as no-cost health insurance, that it did not offer other DLA staff. Further, in 2017 the Board paid Sherwood $386,000 in salary, benefits and payouts: this represented 11.3% of the school’s tuition revenue for the year.
The Office concluded that, while the Board did not act in bad faith, it did not act in the school’s best interest with respect to Sherwood’s sick leave, compensation package or consulting arrangement. Similarly, Board members did not appreciate their role as stewards of the school’s finances or their obligations to actively oversee the executive director. In October 2018, the Office issued a letter that recommended corrective actions to strengthen the Board’s stewardship of the school and protect public funds.
C. Fall River Mayor Indicted on Tax Fraud and Wire Charges
The Office conducted a joint investigation with the United States Attorney’s Office, the FBI, the Internal Revenue Service, and the United States Department of Housing and Urban Development into the alleged tax fraud and wire fraud by Fall River Mayor Jasiel Correia.
In 2012, Mayor Correia founded SnoOwl, which was supposed to create an application designed to connect local businesses with their target consumer market. In approximately January 2013, Mayor Correia began seeking individuals to invest in SnoOwl in return for equity in the company. Allegedly, Mayor Correia falsely represented that he was a successful tech entrepreneur who previously sold another app for a large profit, that investment funds would be used to develop the application. He also allegedly stated that he would not take a salary or otherwise draw compensation from SnoOwl.
The investigation found evidence that seven individuals invested a total of $363,690 in SnoOwl. However, rather than using the investment funds to develop the app as Mayor Correia certified in signed agreements with investors, it is alleged that Mayor Correia used at least $231,447 – approximately 64 percent of the money invested – to fund a lavish lifestyle, burgeoning political career and other business ventures. Mr. Correia allegedly used the investment funds to buy tens of thousands of dollars of luxury items, including a Mercedes, jewelry and designer clothing; to pay for personal travel and entertainment, including tens of thousands of dollars on airfare, hotels, restaurants, casinos, and adult entertainment; to pay down personal student loan debt; to fund his political campaign; and to make charitable donations in his own name.
Mayor Correia allegedly concealed the theft of funds from investors by providing false positive updates on SnoOwl’s status and refusing to provide the company’s financial records, which would have revealed his fraud. In addition, Mayor Correia allegedly concealed his ill-gotten gains from the IRS when filing his 2013 and 2014 individual tax returns.
In 2015, Mayor Correia announced his candidacy for mayor of Fall River. Mayor Correia promoted his stewardship of SnoOwl to Fall River voters as one of his primary qualifications for mayor.
By May 2017, Mayor Correia was aware that SnoOwl was the subject of a federal investigation, and instructed an accountant to file amended 2013 and 2014 personal tax returns. Because the accountant relied on false information from Mayor Correia, the amended returns classified SnoOwl as a sole proprietorship, instead of a partnership, a critical distinction for tax purposes. As a result, Mayor Correia was not assessed any tax liability for any of the investor money that he took for himself, and he actually received a refund from the IRS in June 2017.
In October 2018, Mayor Correia was arrested and charged with wire and tax fraud. Specifically Mayor Correia was indicted on nine counts of wire fraud and four counts of filing false tax returns in federal court in Boston. Mayor Correia is presumed innocent until proven guilty.
II. Human Services
Former DDS Employee Indicted for Overtime Fraud
Following a call to the Office’s fraud hotline, the Office and the Attorney General’s Office conducted a joint investigation that led to the indictment of a former employee at the Department of Developmental Services (“DDS”). Katelynn Sullivan, a former Developmental Service Worker II at a group home for adults with intellectual disabilities, allegedly stole more than $42,000 over an 18-month period between August 2015 and February 2017.
The employees of the group home where Ms. Sullivan worked are DDS employees, and are paid by the Commonwealth. The investigation found evidence that, between July 2015 and February 2017, Ms. Sullivan allegedly obtained unauthorized access to the DDS timekeeping system and entered 1,428 overtime hours that she had not actually worked.
The indictments included one count of larceny over $250 and one count of submitting a false claim. Ms. Sullivan was arraigned in Suffolk Superior Court on February 4, 2019. She is presumed innocent until proven guilty.
Former Ashburnham Library Director Pled Guilty to Embezzlement
Following a joint investigation by the Office and the Worcester District Attorney’s Office, the former director of the Stevens Memorial Library in Ashburnham pled guilty to embezzling over $53,000 from the library. The investigation found evidence that between March 2010 and July 2014, Cheryl Paul-Bradley stole money from the library by making cash withdrawals from a library bank account and by forging and cashing checks written on that same account.
In January 2018, Ms. Paul-Bradley pled guilty to one count of embezzlement by a municipal official, two counts of forgery and two counts of cashing forged checks. A Worcester Superior Court judge ordered Ms. Paul-Bradley to serve three years of probation and to forfeit her municipal pension. Ms. Paul-Bradley is also prohibited from acting as a fiduciary in any capacity and was ordered to pay restitution of $19,556 to the town of Ashburnham.
IV. Municipal Authorities
A. Former Public Officials Indicted on Larceny Charges
The Office conducted a joint investigation with the Massachusetts Attorney General’s Office and the Marion Police Department, in cooperation with the towns of Carver, Marion and Wareham. That investigation led to a statewide grand jury indicting the two former top officials of the Carver, Marion, Wareham Regional Refuse Disposal District (“District”) on larceny charges. The indictments charge the District’s former executive director with stealing more than $610,000 in District funds, and the District’s former board chairman with stealing almost $65,000 in District funds.
According to the indictments, the District’s former executive director, Ray Pickles, allegedly stole more than $610,000 over the course of six years. Investigators found evidence that Mr. Pickles allegedly was the sole signatory on two District bank accounts, from which he wrote checks to himself that he then cashed.
The indictments also allege that Mr. Pickles secretly established an account in the District’s name at two other banks. Mr. Pickles allegedly deposited checks intended for the District into these secret accounts, from which he made payments on his personal credit cards and withdrew cash for personal use. In addition, Mr. Pickles allegedly overcharged the District by submitting invoices for services he did not perform. He is also charged with using District funds to pay for fuel for his boat. He faces six counts of larceny.
The investigation also found that Robert Tinkham allegedly received compensation from the District for inspections he did not perform while serving as the chairman of the District’s board. According to the indictment, the payments came from District accounts to which Mr. Pickles had exclusive access and totaled approximately $65,000. He faces one count of larceny and one count of presenting a false claim.
The defendants are presumed innocent until proven guilty.
B. Ratepayer Cost Burden: The Expense of Municipal Light Plant's Sick Leave Payout
The Office reviewed the sick-leave policies at 40 municipal light plants in Massachusetts, including the plants’ policies for paying employees for unused sick leave. The Office found that for some light plants, employees’ accrued sick leave represents a significant financial liability that ultimately is borne by their communities’ ratepayers.
Over a six-year period, for example, 26 light plants paid approximately $10.7 million to 219 employees for unused sick leave, an average of more than $49,000 per employee. Three communities’ light plants accounted for $9.2 million (85 percent) of that total.
Paid to employees for unused leave time
Paid to employees for unused sick time
Total sick-leave payouts made by the Taunton, Reading and Westfield light plants
Highest single sick-leave payout
Average payment for unused sick leave
The Office also found that light plants’ sick-leave policies vary widely, from paying employees for 100 percent of their unused sick time when they leave the plant to no payouts to departing employees. In contrast, the state generally pays its employees for 20 percent for their unused sick time, and only upon retirement. Paying 100 percent of any unused sick leave creates an undue burden on ratepayers and light plant budgets, detracting from their ability to spend funds efficiently and in the best interest of the ratepayers. Also, certain light plants pay employees at the end of each year for 100 percent of any unused sick leave.
In its report, the Office recommended changes to light plant policies to bring them in line with either state or local rules on sick leave. The Office urged municipal officials to take an active role in overseeing the light plants in their communities, including conducting thorough reviews of light plant expenditures. Lastly, the Office recommended legislative measures, including requiring periodic audits and reporting leave balances.
Former Lobbyist Pled Guilty in Pension Fraud Case
In 2017, the Office worked with the Attorney General’s Office on the prosecution of Richard McDonough, a former lobbyist, for filing a false claim in connection with his pension application to the Massachusetts State Retirement Board.
Mr. McDonough’s pension eligibility was based on his claim that he worked full-time at the Merrimack Special Education Collaborative (“MSEC”), a public entity, from 2003 to 2008. An investigation by the Office revealed evidence that Mr. McDonough did very little work for the public entity. He did not have an office at any of MSEC’s facilities or a telephone number associated with the public entity. The Office’s investigation further revealed that during the years Mr. McDonough was listed on MSEC’s payroll as a full-time employee, he was simultaneously earning up to $1.1 million a year as the principal of his lobbying firm, McDonough Associates. Mr. McDonough’s lobbying clients included the Merrimack Education Center, a private non-profit corporation associated with MSEC.
Mr. McDonough submitted his retirement application on February 24, 2009, claiming that he had retired from MSEC on December 31, 2008. The State Retirement Board paid Mr. McDonough a pension of approximately $2,400 a month until the Office notified the Board about its findings concerning Mr. McDonough. All told, the State Retirement Board paid Mr. McDonough $96,516.39.
In response to the Office’s work, the State Retirement Board voted to rescind Mr. McDonough’s membership in the state retirement system and to seek repayment of $10,852.55, which is the difference between the contributions in Mr. McDonough’s retirement account when he retired ($86,194.30) and the amount the Board paid him in pension benefits ($96,516.39). Mr. McDonough has appealed the State Retirement Board’s decision to the Division of Administrative Law Appeals (“DALA”). That appeal is pending.
Also as a result of the Office’s investigation, Mr. McDonough was indicted for defrauding the state pension system. On March 21, 2018, he pled guilty to one count of presenting a false claim in connection with his pension application. A state judge declined to enter a guilty finding and continued the matter without a finding for two years. The judge ordered Mr. McDonough to pay $10,852.55 in restitution to the State Retirement Board but stayed that order pending the resolution of the DALA appeal and Mr. McDonough’s payment of federal fines and restitution in connection with a prior criminal conviction in federal court.
VI. Tax Collection
Former Blandford Tax Collector Guilty of Stealing Taxpayers' Money
The Division and the Attorney General’s Office conducted a joint investigation into alleged misconduct by Leann Thompson, who served as the tax collector for the town of Blandford from 2002 to 2011. The joint investigation found evidence that Ms. Thompson used various methods to misappropriate money paid to the town and to conceal her improper actions. Evidence indicated, for instance, that Ms. Thompson received tax payments in cash but never deposited the funds into the town’s bank account. Ms. Thompson also used other taxpayers’ funds and escrow checks to conceal her conduct.
Following the investigation, a Hampden County grand jury indicted Ms. Thompson for one count of embezzlement by a public official, one count of using an official position to secure an unwarranted privilege and one count of larceny over $250. The indictment alleged that Ms. Thompson stole more than $150,000.
Ms. Thompson subsequently entered an Alford plea - maintaining her innocence but admitting that there was sufficient evidence for a judge or jury to find her guilty – on all counts in the indictment. In March 2018, a state judge ordered Ms. Thompson to serve two years of probation and to pay restitution of $13,093.96, which represents the taxpayer funds she used to pay her own tax bills. Ms. Thompson is also prohibited from holding a job in the public sector and handling company finances while on probation.
Third Set of Indictments Brought Against Former MBTA Procurement Official
A joint investigation with the Attorney General’s Office led to 13 criminal charges against a former buyer for the Massachusetts Bay Transportation Authority (“MBTA”), as well as criminal charges against two MBTA vendors, in connection with several alleged procurement fraud schemes.
In March 2017, a statewide grand jury indicted Timothy Dockery, a former buyer for the MBTA. The indictment alleged that Mr. Dockery had engaged in several illegal arrangements with vendors to defraud the MBTA and enrich himself. For instance, the indictment alleged that Mr. Dockery committed larceny with an MBTA vendor who submitted approximately $38,000 in false invoices to the MBTA – and that the pair split the proceeds. Mr. Dockery is also alleged to have received illegal gratuities from three MBTA vendors, including over $60,000 in cash; luxury box seats and high-end tickets to professional sporting events and concerts worth over $23,000; and about $8,000 in free meals and custom-printed items for a limousine company that Mr. Dockery and his wife own. The statewide grand jury also indicted William Sheridan, a private contractor for the MBTA, for allegedly participating in procurement fraud schemes with Mr. Dockery.
In June 2017, a statewide grand jury charged Mr. Dockery with accepting a bribe from a supplier and engaging in illegal activities with another vendor, thereby defrauding the MBTA and enriching himself. Specifically, the grand jury issued additional indictments alleging that Mr. Dockery solicited and received a $5,000 cash bribe from a supplier of flooring tiles in exchange for awarding a $32,500 contract to the supplier. The indictments further alleged that Mr. Dockery engaged in procurement fraud by fabricating information in the MBTA’s procurement file to justify awarding a $200,000 contract for bus radiator repairs on MBTA buses. Mr. Dockery also allegedly received illegal gratuities, including free auto repairs, a hotel gift card, lunches and dinners in exchange for assistance in securing contracts with the MBTA.
In February 2018, a Suffolk County grand jury indicted Mr. Dockery on two additional illegal gratuities charges involving more than $200,000 in kickbacks from Mr. Sheridan and the building of an in-ground pool at Mr. Dockery’s private residence. Overall, the three sets of indictments charge Mr. Dockery with 13 counts of criminal conduct involving six different MBTA vendors over several years, including receiving more than $300,000 in bribes and gratuities.
The Criminal Bureau of the Attorney General’s Office is prosecuting this case in Suffolk Superior Court with assistance from the Division. Mr. Dockery is presumed innocent until proven guilty.
VIII. Whistleblower Protections
Town of Newbury Paid Office Whistleblower Over $523,000, including attorney fees, for violating the Massachusetts Whistleblower Act
In 2018, a Superior Court judge ordered the town of Newbury to pay over $523,000, including attorney’s fees, to a former employee who was subjected to retaliation for filing a complaint with the Office. In his ruling, the judge found that the plaintiff had engaged in protected whistleblower activity when he reported alleged violations of state law to the Office. In his complaint to the Office, the former employee had raised concerns regarding the town’s assignment of moorings to private businesses, as well as possible certain conflicts of interest related to appointments made to a town task force. The Office investigated the complaint and issued a report in 2011. The report documented improper activities and conflicts of interest in awarding moorings in Newbury.
In July 2018, the Town of Newbury paid over $523,000 to the whistleblower.