GOP figure faces charges of money laundering

The vice chairman and former treasurer of the Massachusetts Republican Party was arrested yesterday on federal money-laundering charges after he allegedly deposited thousands of dollars in drug profits in a Brockton bank for a jailed client.

Lawrence P. Novak, a 54-year-old lawyer who is running for the Brockton City Council on an anticrime platform, was secretly recorded arranging to hide $107,000 for his client, an accused drug dealer, according to an affidavit filed in US District Court in Boston by an Internal Revenue Service agent.

''You need to cleanse the money," Novak allegedly told Scott Holyoke, who is jailed without bail while awaiting trial on federal drug charges, according to the affidavit.

Novak also boasted that he could help Holyoke get his prior state conviction overturned by falsely claiming that the judge who presided over the case never advised him of his rights, according to the affidavit.

After appearing in court briefly yesterday, Novak was released on a $25,000 unsecured bond by US Magistrate Judge Robert B. Collings, who set an Oct. 3 hearing date in the case.

Novak, who left the courthouse with his lawyer, Scott Lopez, refused to comment on the charges. ''On the advice of counsel, I can say nothing," he said.

But the charges against Novak immediately sent ripples through the state's Republican establishment, prompting Governor Mitt Romney to call for him to step aside until his case is resolved.

''The charges against Larry Novak are very troubling, and Governor Romney believes that it's appropriate while these charges are pending for Mr. Novak to step aside as vice chairman of the state party," said Romney's communications director, Eric Fehrnstrom.

Ron Kaufman -- the state GOP's national committeeman, who beat back a spirited challenge for his position from Novak eight years ago -- agreed with Romney that Novak should leave his post for the good of the party.

''Politics is about serving, and when you hurt the system, it's time to leave the system," Kaufman said. ''Larry should clearly resign and step aside until this thing works its way out."

Novak, while popular among many longtime rank-and-file Republicans, is hardly close to the current Republican Party leadership. Romney backed another candidate, Jeanne Kangas, to be the party's vice chair in January 2004, although the 80-member state committee supported Novak.

Novak lost a bid last year to unseat incumbent state Senator Robert Creedon Jr., a Brockton Democrat who won with 67 percent of the vote.

In the late 1990s, while Novak was serving as party treasurer, the Republicans were accused by several small businesses of failing to pay their bills. A number of GOP politicians said checks written by Novak on behalf of the party had bounced.

Tim O'Brien, executive director of the Massachusetts Republican Party, said, ''We were all shocked to learn of the charges that were brought against Mr. Novak, and it's something that we will be following very closely."

Party officials, informed of Novak's legal problems about 4 p.m. yesterday, were scrambling to determine what latitude the party's by-laws allow for dismissing an executive. GOP chairman Darrell W. Crate, who was in New York yesterday, was scheduled to conduct an 8:30 p.m. conference call with Republican Party executive committee members to discuss what actions to take.

Polly Logan, a member of the party's committee, said she was stunned by the news. She said the GOP should not strip Novak of his vice chairmanship unless he's convicted of the charges.

''I can't believe it; he has been wonderful," Logan said. ''He's been a pillar of the state committee. I would think the party will stand behind him. I think perhaps he's the victim of a setup."

In campaign brochures sent to Brockton voters this week, Novak, who is running for councilor at large, is billed as ''the tough, smart, strong leader we need to fight crime."

A quote from Novak on the brochure reads: ''We need to target repeat offenders who commit most of the crimes in Brockton and we need to prevent criminals from loitering and selling drugs in our parks and neighborhoods."

But the affidavit filed in court yesterday by IRS Agent Lauren Youngquist alleges that Novak had schemed with Holyoke to move the $107,000 in drug profits out of a safe deposit box so federal investigators wouldn't find it.

Holyoke began cooperating with agents from the IRS, the Drug Enforcement Administration, and the FBI after he was questioned about Novak. Telephone calls and jailhouse visits between the pair were secretly recorded over the past several months.

An undercover IRS agent posing as Holyoke's aunt accompanied Holyoke's mother to Novak's office and home on Candy Lane in Brockton yesterday and gave Novak the cash, according to the affidavit.

Novak was arrested at his home later after he deposited $77,000 in a client trust fund account at Eastern Bank in Brockton and converted the rest into bank checks and money orders.

Federal agents later raided his home, seeking more evidence.

US Attorney Michael J. Sullivan said, ''I know there are a number of jokes about lawyers, but the fact of the matter is the profession demands extremely ethical conduct and lawyers' work should be beyond reproach."

While Novak is charged only with money laundering, Sullivan said that the investigation is continuing and that more charges could result from the allegations that Novak had also advised Holyoke to file false affidavits in court in a bid to get his prior state convictions overturned.

During a July 31 jailhouse conversation, Novak, according to the affidavit, said he'd been successful in vacating prior convictions of other clients by focusing on cases heard by judges who are no longer on the bench.

''So if the judge is off the bench, basically you can do whatever you want?" Holyoke asked.

''That's absolutely right," said Novak, according to the affidavit, adding, ''Because nobody's there to defend his record."