Investigation Ongoing at Housing Authority

November 10, 2011
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Federal, state and local officials are continuing to investigate the dealings of the Chelsea Housing Authority, its board of directors, and especially its former executive director Michael McLaughlin after it was revealed last week that McLaughlin had been receiving a $360,000 a year salary, in addition to sick time, vacation and future pension rights.

The pension rights alone are estimated to be $280,000 a year according to state pension officials.

State officials have instructed the Chelsea retirement board that no money under any circumstances can be paid to McLaughlin while the case is under investigation. In addition, Governor Deval Patrick temporarily froze state funding to the agency because McLaughlin allegedly underreported his pay to the state. The attorney general’s office is investigating whether McLaughlin broke any laws.

McLaughlin was forced to resign by Patrick, who said he was boiling, after learning that McLaughlin was receiving the highest salary in the nation for heading a city housing authority. Patrick also called for the resignation of the entire CHA board.

As a result of Patrick’s demand, all five members of the CHA’s board have resigned and City Manager Jay Ash is now advertising for replacements who will all be scrutinized by the city council.

Ash, like most Chelsea public officials and residents said he was horrified by McLaughlin’s abuse of power. He said it was one of the worst incidents of its kind in the history of the city. Although Ash said that the Chelsea Housing Authority is its own entity separate from the city of Chelsea, he took the blame for not watching over the authority more closely.

“This is a travesty. I am furious. Twenty years of pursuing higher ideals have been called into question by McLaughlin’s obscene contract that he was able to keep a secret from federal and state auditors, city elected and appointed officials and a great many within the authority itself,” Ash said.

“How did he hide these wrongful acts from all of us? How did he do it? And what do we lose because of it? We lose everything we’ve worked so hard for during the past two decades. I’m bitter and I’m disappointed. I will do everything I can to make sure this never happens again,” Ash added.

Some members of the city council led by Council President Marilyn Vega-Torres are calling for the governor to place the CHA in receivership.

“I was amazed and disappointed by the news about Mike McLaughlin,” Vega-Torres told the Record. The governor has taken the request under consideration.

Last week, after it was revealed in the Boston Globe that McLaughlin had pocketed $360,000 in pay for the year and he was asked to resign, he did so.

What followed defies comprehension.

McLaughlin called a CHA board meeting. But before that meeting was held, the CHA accountant, James McNichols determined that McLaughlin was owed $200,000 for sick pay and vacation and authorized the cutting of checks in that amount, an authorization the CHA board approved. McNichols is also a McLaughlin family friend.

McLaughlin subsequently cleaned out his office and after leaving from Chelsea, cashed an $80,000 check.

The remaining checks made out to him cannot be negotiated.

“They will not be honored,” said a state housing official.

In the meantime, a temporary replacement, Albert Ewing, has been named by the state to head the authority.

With the investigation ongoing, it is expected that there will be further revelations, some which may grow increasingly personal, according to those familiar with the investigation.

Some insiders allege that it is likely to come out that McLaughlin’s private social life became intertwined with his role as CHA executive director and one of its employees.

In addition, investigators are apparently searching through CHA contracts, and the contract given by McLaughlin to McNichols. Also, All CHA recent hires and the circumstances of the hiring process are being looked at closely by investigators in order to determine whether or not the hiring process was free of favoritism and insider influence.

The CHA is an independent authority.  As such, the CHA is not a City agency.  The city manager has the responsibility of appointing four of the five board members.  After that, though, the responsibility ends.  Neither state nor federal law requires housing authorities to report to municipalities.  Thus, the city receives no audit reports, financial statements or budget documents.  The City has no hiring or firing powers, does not contribute any recurring revenue towards any housing authority activity and is not party to any decision making of the housing authority.

However, approximately 1400 families live in Chelsea in CHA housing units throughout the city.

A tour of those housing developments earlier in the week by the Record photographer and reporter revealed relatively well maintained exteriors free of broken windows and grafitti and CHA employees going about their work despite the furor swirling around the troubled agency once thought to be among the finest in the United States and touted by HUD as a high achieving agency.

“What Mike McLaughlin has done to this city is all about exploitation,” said Ash. “McLaughlin’s misconduct is inexcusable. No one should be allowed to take advantage of the system the way he has. What he did makes all of us look bad. It places Chelsea in a very bad light. I am fully cooperating with investigative efforts aimed at unraveling what McLaughlin did. He pulled the wool over our eyes. We can never let this happen again,” said Ash.


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