Former Massachusetts State Senator Pleads Guilty to Wire Fraud

WASHINGTON -    Bernard Joseph Tully, a former Massachusetts state senator, has pleaded guilty for devising a scheme to defraud a Boston-area businessman out of approximately $18,000 by falsely representing that Tully and his co-conspirator were using the funds to bribe public officials.   Unbeknownst to Tully, the businessman reported Tully’s overtures to the FBI.

The guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division, U.S. Attorney Carmen M. Ortiz for the District of Massachusetts and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.

Tully, 84, of Dracut, Mass., pleaded guilty yesterday before U.S. District Judge Patti B. Saris to one count of wire fraud.   According to court documents, Tully formerly served as the city manager for Lowell, Mass., from approximately 1979 to 1987.   Prior to serving as city manager, Tully was a state senator representing Lowell and other areas.

According to information presented at the plea hearing and in court documents, the Massachusetts Registry of Motor Vehicles (RMV) determined in early 2009 that it needed to discontinue its lease for the Lowell RMV, due to lack of funds. According to court documents, Tully became aware of the possible closure of the Lowell RMV and contacted the Boston-area businessman who owned the space where the Lowell RMV was housed.    Tully told the businessman that if he paid Tully, Tully would ensure a state senator would find money in order to keep the RMV in the space owned by the businessman.   Later, according to court documents, Tully again contacted the businessman and told him that he need to pay Tully so that Tully could pay the public official, otherwise the RMV would have to move out of the space.  

On July 3, 2009, the RMV announced it was closing the Lowell office as well as other RMV offices on July 23, 2009.   Tully and a co-conspirator subsequently visited the businessman and told him that he would need to pay $20,000 to keep the RMV in Lowell.   The businessman agreed that he wanted the RMV to stay, and Tully said he would start making telephone calls while his co-conspirator said he would talk to the public official.  

On July 15, 2009, the businessman gave the co-conspirator a $5,000 check, which the co-conspirator cashed and gave a portion of the funds to Tully.   On July 17, 2009, the businessman received a 90-day extension on the lease from the RMV to Oct. 31, 2009.   

Thereafter, according to court documents, the businessman had a series of meetings and telephone conversations with Tully and his co-conspirator about securing another lease extension from the RMV.   During these conversations, Tully and his co-conspirator falsely represented to the businessman that they needed additional money to make payments to various public officials in exchange for their official acts to secure the RMV’s continued presence in the businessman’s building.   Between November 2009 and March 2010, the businessman, while cooperating with the FBI, paid Tully and the co-conspirator approximately $18,000 as bribe payments designed to secure the official assistance of various public officials.

In fact, Tully and his co-conspirator never paid any money to any public officials.   According to court documents, Tully admitted in a May 2010 interview with FBI agents that he received approximately $12,000 in cash and checks from the businessman, and that he split the money with his co-conspirator.   Tully also admitted that he had heard about the RMV’s plan to move the Lowell office out of the businessman’s office building from people who worked in the office, and that the businessman had contacted him for assistance.    Tully admitted that he spoke with friends of friends of the Lowell legislative delegation about obtaining a lease extension and preventing the move of the Lowell RMV.

Tully admitted that he told the businessman that he was “throwing money around” at elected officials, but in actuality he did not.   He admitted that he did this to give the businessman the impression that he, Tully, was influencing the legislative delegation.

Sentencing is scheduled for Dec. 1, 2011, at 3:00 p.m.   According to the plea agreement, the government has agreed not to seek punishment beyond home confinement, 36 months of supervised release, a fine to be calculated under the U.S. Sentencing Guidelines and restitution of $18,000.  

The case was investigated by the FBI, with assistance from the Massachusetts Inspector General’s Office and the Lowell Police Department.   It is being prosecuted by Senior Litigation Counsel William M. Welch II and Kevin Driscoll of the Criminal Division’s Public Integrity Section, with assistance from the U.S. Attorney’s Office, Public Corruption Unit.

Former Member of Virginia House of Delegates Sentenced to 114 Months in Prison for Bribery and Extortion

WASHINGTON – Phillip A. Hamilton, a former member of the Virginia House of Delegates, was sentenced today to 114 months in prison after he was previously convicted of soliciting employees of Old Dominion University (ODU) for a paid position in exchange for introducing a budget amendment to fund the position, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney Neil H. MacBride for the Eastern District of Virginia.

“Phillip Hamilton traded on his influence in one of the oldest legislative bodies in the United States for a paid position at Old Dominion University, netting himself approximately $80,000 over two years,” said Assistant Attorney General Breuer.  “Today he learned that betraying the trust of Virginia’s citizens and his fellow legislators has a much higher price.  For his acts of bribery and extortion, he will now spend 114 months in prison – an example to public officials and the electorate that the Justice Department will vigorously pursue those who abuse their public office.  The Criminal Division’s Public Integrity Section and our partners in the U.S. Attorneys’ Offices are committed to rooting out self-dealing by public officials and holding them accountable when they misuse their positions for personal gain.”

“Today is a sad day in the history of the Commonwealth,” said U.S. Attorney MacBride. “Phil Hamilton used his powerful influence as a 20-year state legislator to extort officials at ODU and became the first elected legislator in Virginia to be convicted of selling his position for personal gain. We hope his conviction and sentence will serve as a reminder to every elected official in the Commonwealth that they must uphold the public’s trust or face similar consequences.”

U.S. District Judge Henry E. Hudson also ordered Hamilton, 59, to serve two years of supervised release following his prison term and directed him to self surrender to authorities on or before Sept. 19, 2011.  Hamilton was convicted by a jury in Richmond, Va., on May 11, 2011, of one count of federal program bribery and one count of extortion under color of official right. 

Hamilton was elected in 1988 to represent the 93rd District in the Virginia House of Delegates, which includes Newport News and James City County, Va.  As part of his duties, Hamilton sat on the Elementary & Secondary Education Subcommittee of the Virginia House Appropriations Committee.

According to the Jan. 5, 2011, indictment and evidence presented at trial, from August 2006 through February 2007, Hamilton solicited employees of ODU for a position as director for the ODU Center for Teacher Quality and Educational Leadership.  The center’s objective was to train teachers for success in urban school environments.  During this period, Hamilton simultaneously introduced a budget amendment that would establish and fund the center, including his salary as the director.

According to an email that Hamilton sent to an ODU official on Dec. 21, 2006, which was admitted as evidence at trial, Hamilton stated that the current budget did not include any funding for the center, his retirement payments from another source were being reduced in May 2007, and he would need to supplement his current income.  Evidence at trial showed that an ODU official assured Hamilton in December 2006 and January 2007 that if ODU obtained funding from the Virginia General Assembly for the creation of the center, then Hamilton would have a job at the center.  During this same period, in January 2007, Hamilton introduced a budget amendment in the House of Delegates to appropriate $1 million in fiscal year 2007-2008 (July 1, 2007 – June 30, 2008) for a “Center for Teacher Quality and Educational Leadership.”  The amendment passed the full committee unanimously. 

On Feb. 24, 2007, after a conference between the Virginia house and senate that resulted in an amendment to appropriate $500,000 to ODU for the center – for which Hamilton voted in favor - the budget bill was passed.  The next day, according to evidence at trial, Hamilton and ODU officials exchanged emails about Hamilton receiving the director job.  Approximately three people applied in response to a job posting for the position; however, none of them were interviewed.  Hamilton, who was awarded the job, never submitted an application.

In June 2007, Hamilton and an ODU official signed an employee contract indicating, among other things, that Hamilton would direct the center and seek continual funding for the center.  The contract also stated that Hamilton would be paid $40,000 per year.  From approximately July 2007 through July 2009, Hamilton collected approximately $80,000 from ODU.

Evidence at trial showed that Hamilton took numerous steps to conceal this arrangement, including telling ODU officials not to mention his name in connection with the center to members of the Virginia Senate Finance Committee; advising an ODU official to tell a Virginia senate staffer that the official, and not Hamilton, was the director of the center; and unsuccessfully attempting to persuade ODU leadership not to release incriminating emails in response to a Freedom of Information Act request that ODU had received.

The case was prosecuted by Trial Attorney David V. Harbach II of the Criminal Division’s Public Integrity Section and Supervisory Assistant U.S. Attorney Robert J. Seidel Jr. of the Eastern District of Virginia.  The case was investigated by the FBI.  

Former Speaker of the Massachusetts House of Representatives and Lobbyist Convicted on Corruption Charges

Salvatore Dimasi And Beacon Hill Lobbyist Convicted by Federal Jury Today in Corruption Case

BOSTON, MA—A federal jury today convicted SALVATORE F. DiMASI, former Speaker of the Massachusetts House of Representatives and a Beacon Hill lobbyist and close friend, of a scheme to deprive the Massachusetts citizens of his honest services by accepting bribes. In its verdict the jury found that DiMasi improperly used his power and influence to enable a software company to obtain multi-million dollar procurements from agencies of the Commonwealth of Massachusetts.

Following a six-week trial, and three days of jury deliberations, DiMASI, 65, of Boston and RICHARD W. McDONOUGH, 66, of Foxboro were convicted by a federal jury in Boston of one count of conspiracy, three counts of honest services mail fraud and three counts of honest services wire fraud and one count of extortion under color of official right (Hobbs Act). Co-conspirator, JOSEPH P. LALLY, 50, of North Reading, previously pleaded guilty and is awaiting sentencing. Chief Judge Mark L. Wolf scheduled sentencing for DiMASI and McDONOUGH on August 18, 2011.

RICHARD D. VITALE, 66, of Boston, who was charged as a co-conspirator, was acquitted of all charges. VITALE was DiMASI’s accountant and financial advisor, as well as a long-time close friend.

United States Attorney Carmen M. Ortiz said, “Public service and elected office is not a right or an entitlement—it is a privilege that comes with the public’s expectation of truthfulness and honesty. Today, justice has been served and the culture of corruption has been dealt another blow.”

Ortiz concluded, “The citizens of Massachusetts put extraordinary trust in Mr. DiMasi, and he betrayed that trust when he chose to conspire with his friends to use his office in order to line his pockets, and theirs. Today, Mr. DiMasi and Mr. McDonough paid the price for their decision to abuse their influence for their own personal gain.”

“In response to allegations of illegal activity by Mr. DiMasi, the FBI and the Massachusetts Office of the Inspector General initiated an investigation. Whenever honest and effective government administration is undermined by corrupt public officials, the FBI will turn its focus on those responsible,” said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation—Boston Field Division.

“Unfortunately, this is the third time over past year that Massachusetts elected public officials have been convicted of graft-related offenses. These elected officials used their public office to illegally tilt the playing field to their personal advantage and for self-enrichment,” added DesLauriers. “These crimes seriously erode and indeed undermine our democratic institutions and the public’s expectation of honest government—investigating them is a top criminal investigative priority of the Boston Division of the FBI.”

LALLY was an Area Vice-President of Sales for the State and Local Government Division of Cognos ULC (Cognos), a Canadian software company that sold business intelligence and performance management software and related services which targeted Massachusetts government agencies as potential customers. LALLY left Cognos and formed his own company, Montvale Solutions, LLC which was licensed to resell Cognos software to agencies in Massachusetts. McDONOUGH was a lobbyist hired by LALLY and a close friend of DiMASI. According to testimony during trial, when DiMASI became Speaker of the House in 2004, income from his outside law practice decreased significantly. In December 2004, McDONOUGH, DiMASI and LALLY arranged to have money funneled to DiMASI through a law associate of DiMASI’s, Steven Topazio, with whom DiMASI had a fee sharing arrangement. Over the next two years, although Topazio was given no work nor asked to perform any services, he was paid $5,000 per month by Cognos as arranged by the defendants.

Through this sham arrangement, DiMASI was paid $65,000 over the course of the two year period in exchange for taking official actions that would benefit Cognos, LALLY and McDONOUGH. Such actions included securing legislative funding for two Cognos software contracts with the Commonwealth of Massachusetts worth $17.5 million.

The evidence also showed that DiMASI lobbied Massachusetts Governor Deval Patrick, and members of his Administration, in an effort to get the Cognos contract executed. After the Boston Globe wrote a series of articles in 2008, questioning the Cognos contracts, DiMASI suggested that Topazio “loose his check register” that showed the Cognos payments. DiMASI also lied to his press secretary about his knowledge of the Topazio payments from Cognos and LALLY’s connection to Cognos.

DiMASI and McDONOUGH each face up to 20 years in prison to be followed by five years of supervised release and $250,000 fine on each of the six counts of mail and wire fraud; up to 20 years in prison to be followed by five years of supervised release and $250,000 fine on the extortion under color of official right count; and up to five years in prison to be followed by three years of supervised release and a $250,000 fine on the conspiracy count.

The case was investigated by the Federal Bureau of Investigation, with the assistance of the Massachusetts Inspector General’s Office. The case is being prosecuted by Assistant United States Attorneys S. Theodore Merritt and Anthony E. Fuller of Ortiz’s Public Corruption Unit and Kristina