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Department of Justice
U.S. Attorney’s Office
District of Massachusetts

Friday, June 20, 2014

Former Executive Director Of Chelsea Housing Authority Sentenced For Rigging Inspection Process

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BOSTON – The former Executive Director of the Chelsea Housing Authority (CHA) was sentenced in federal court today for his role in rigging the inspection process for federally-funded housing units.

Michael E. McLaughlin, 68, of Dracut, who is already serving a three-year prison term for falsifying records to conceal his $360,000 salary as Executive Director, was ordered by U.S. District Judge Douglas P. Woodlock to serve an additional 12 months in prison and pay a $3,000 fine for his conviction for conspiring to defraud the United States and the U.S. Department of Housing and Urban Development (HUD) by impairing, impeding, and defeating the proper operation of HUD’s physical condition assessment.

Pursuant to federal regulations, to determine whether a public housing authority is meeting the standard for its residents of conditions that are “decent, safe, sanitary, and in good repair,” HUD’s Real Estate Assessment Center (REAC) is required to “provide for an independent physical inspection of a public housing authority’s property or properties that includes, at a minimum, a statistically valid sample of the units in the CHA’s public housing portfolio to determine the extent of compliance with the standard.” REAC inspections are conducted by independent contractors who have received training from REAC on the inspection protocol and regulations, and have been certified. Once certified, an inspector is given an inspector number and with a password can access the secure REAC server which contains data on all public housing authorities and also later enables the inspector to generate a random sample of units at the scheduled date of the inspection.

From 2006 through November 2011, McLaughlin conspired with his Assistant Director, James Fitzpatrick, and Bernard Morosco, whom they hired as a consultant for the REAC inspection process in those years. Morosco, himself a certified REAC inspector who had access to the secure REAC database, identified in advance the units of the CHA that would be randomly selected to be inspected by the assigned HUD REAC inspector on the day of the inspection. Morosco then provided to McLaughlin and Fitzpatrick a list of those units to be inspected sufficiently in advance of the inspection so that they could organize and direct REAC “SWAT” Teams of CHA employees to concentrate on ensuring that any needed repairs would be made to those identified units. When the REAC inspectors conducted the inspections in 2007, 2009 and 2011, the units that were randomly selected were the same as the ones provided in advance by Morosco.

The trial of Fitzpatrick and Morosco has yet to be scheduled.

United States Attorney Carmen M. Ortiz and Christina Scaringi, Special Agent in Charge of the U.S. Department of Housing and Urban Development, Office of Inspector General, made the announcement today.

The case is being prosecuted by Assistant U.S. Attorneys S. Theodore Merritt of Ortiz’s Public Corruption and Special Prosecutions Unit and Brian Perez-Daple of Ortiz’s Major Crimes Unit.

Updated December 15, 2014