DiMasi, 3 associates, plead not guilty to corruption charges

The four are free on $10,000 bond. The next court date is scheduled for July 24.

The former speaker is accused of orchestrating a scheme that allowed him to pocket tens of thousands of dollars in payments from a Burlington software firm while he was using his powerful office to help the company win state contracts.

The 33-page indictment, handed down Tuesday, portrayed a band of longtime friends and associates, led by DiMasi, successfully plotting -- over golf, at Democratic fund-raisers, and in incriminating e-mails that even referred to the speaker as "Coach" -- to steer two contracts to Cognos worth $17.5 million.

DiMasi is alleged to have pushed state officials to approve the larger of the two contracts -- a $13 million deal for software called "performance management," which was awarded in 2007. He is also accused of making sure the legislature approved funding for that contract and another one -- a $4.5 million deal for the state Department of Education, which was awarded in 2006.

The indictment alleges the group began conspiring to steer contracts to Cognos in December 2004, months after DiMasi took over as speaker.

Joseph Lally, a former Cognos vice president who was working as an independent sales agent, applied pressure and cash to the cause, according to the indictment. Cognos and Lally paid hundreds of thousands of dollars to DiMasi friend and lobbyist Richard McDonough and to Richard Vitale, DiMasi's former campaign treasurer and accountant, allegedly because it would help them win state business.

All four allegedly received significant payouts along the way, $57,000 in the case of DiMasi, much of it in monthly installments. The others received huge sums when the contracts were signed by the state, according to the indictment.

DiMasi, Lally, McDonough, and Vitale face up to 20 years for each of seven counts of mail and wire fraud and up to five years of conspiracy.

A fifth recipient of Cognos cash, Steven Topazio, DiMasi's law associate, was not indicted and appears to be cooperating with authorities. The indictment alleged that Topazio received $5,000 a month from Cognos -- for doing no legal work -- and handed $4,000 of each payment to DiMasi.

"It's about time we got business like this," DiMasi told Topazio, according to the indictment. Topazio was not identified in the indictment, referred to only as P.A., or private attorney. The Globe, in stories in July and October, reported that Topazio was on the Cognos payroll and collected $125,000 over two years.

The indictment also raises questions about the role of Governor Deval Patrick's administration in awarding the $13 million contract. It portrays the administration as bowing to pressure from DiMasi and his associates. Patrick and his aides have denied playing any role, blaming a Romney administration holdover, Bethann Pepoli, for steering the contract to Cognos.

But according to the indictment, McDonough contacted a Patrick official directly a few months before the contract was awarded in August 2007. McDonough allegedly told Patrick's deputy chief of staff, David Morales, the contract "was important to the speaker and wanted to make sure it went to the right vendor."

The Globe reported last week that around the same time a former state official, contacted by state employees who complained that undue pressure was being applied by Lally to approve the contract, visited Henry Dormitzer, then a deputy to Administration and Finance Secretary Leslie Kirwan. Dormitzer relayed the employees' concerns to Morales, according to two former state officials.

The indictment alleged that DiMasi and the others arranged to have Cognos pay the $5,000 a month retainer to Topazio. Topazio and DiMasi shared office space and Topazio paid DiMasi referral fees. According to Topazio, those referral fees made up all of DiMasi's legal income in the past few years.

Lally, the indictment said, arranged to have Topazio paid as local counsel for the company even though Topazio, a criminal defense and personal injury lawyer, protested that he lacked the experience to do such work. But no one ever asked Topazio to actually do legal work, the indictment says.

The indictment also describes the $250,000 third mortgage Vitale gave DiMasi on his North End condo on June 22, 2006, a week after Vitale formed WN Advisors, the company that received a total of $600,000 in consulting fees from Lally. The indictment did not say how DiMasi benefited from the loan, if at all.

Lally left Cognos in February 2006 to start his own software sales firm. But before he left he told someone at Cognos "never to cancel the contract with Topazio, who was a friend to 'Sal'." But in a June 2006 e-mail, a Cognos official told Lally he was "getting questions as to who he is and what he has done for us. Considering the nature of this relationship, I can't answer those questions."

Lally allegedly responded: "Do I need to talk to someone? I would not cancel this, it could affect MASSDOE," referring to the Education Department contract, which wasn't signed yet.

DiMasi was arraigned nearly four years after his predecessor, Thomas M. Finneran, was arraigned on federal felony charges. Finneran was charged with lying about his role in a legislative redistricting plan that diluted the power of minority voters. He vowed to fight for "my name and my reputation" and called the charges "false."

But 18 months later, facing the possibility of nearly two years in federal prison, Finneran pleaded guilty, saying he "shamed" himself when he lied. He was sentenced to 18 months of unsupervised probation and ordered to pay a $25,000 fine.