But HUD, which runs a $7 billion housing program nationally, relies on auditors who are paid by local authorities to tell HUD if federal funds are being misspent.
In Chelsea, auditor Martin Scafidi raised no alarms. Annual independent audits produced since 2003 by Scafidi, a certified public accountant, contained little that was critical of the Chelsea agency. In an interview last year, Scafidi said he was among those “betrayed” by McLaughlin.
McLaughlin’s reign at the housing agency abruptly ended last year when the Globe first reported McLaughlin’s $360,000 annual salary, among the highest in the country. Even New York City’s housing chief, who oversees almost 20 times more public housing, is paid only $200,000.
Auditor Scafidi lost his job in the fallout, and his replacement, Michael Guyder of Hurley O’Neill & Co., quickly found problems with Chelsea’s construction spending. Last month, Guyder reported that in 2011, the Chelsea Housing Authority may have used as much as $356,000 in federal capital funds for ordinary operational costs, such as trash collection, freeing up money in the operational budget for higher salaries for McLaughlin and seven lieutenants, who were paid salaries ranging from $95,000 to $103,000.
Another newly hired accountant, Richard Conlon, found another serious problem: double-billing two government agencies for the same expense. In 2007 the agency accepted payment from HUD for $180,000 for an electrical upgrade to one of its state-funded developments, even though the state had already covered that cost. HUD has told Chelsea it wants that money back.
Hebert, the HUD housing specialist, will have many expenses to question, based on a monthlong Globe investigation that included examination of more than 11,000 payments from federal funds over nine years, more than a dozen audits, hundreds of pages of board of commissioners meeting minutes and other documents obtained under the state public records act.
The biggest beneficiary of McLaughin’s creative accounting appears to be McLaughlin himself. Hired in 2000 at a salary of $77,500, McLaughlin’s pay, by the time he was forced to resign last year, was $360,000, not counting three checks totalling $334,997 that he wrote to himself on the day he resigned for what he said was unused sick, vacation, and personal time. State officials managed to stop payment on two of the checks totaling $198,883 before McLaughlin could cash them.
If McLaughlin had been paid in line with state guidelines, his annual pay would never have topped $160,000, and his pay for his 12-year tenure would have been $1 million less than the $2.7 million he received in salary.
Another major beneficiary was McLaughlin’s close friend, deputy, and traveling companion, Linda Thibodeau, who was paid more than $820,000 from 2002 to 2011, when she was forced to resign after a housing specialist appointed by the state concluded that Thibodeau had few duties.
Based on an examination of McLaughlin and Thibodeau’s cellphone records, the Globe reported last year that McLaughlin did not go to Chelsea at all on almost half the working days in 2011, spending 47 weekdays in Maine and Florida with Thibodeau and another 21 work days at out-of-state conferences, usually with Thibodeau.
McLaughlin’s son Matthew also appeared to benefit, at least indirectly. Michael McLaughlin paid directly from the federal capital fund more than $165,000 to Roca, a Chelsea nonprofit social service agency that had newly hired Matthew, in 2006. Matthew McLaughlin was hired as a $65,000-a-year project director overseeing services to his father’s agency that included painting, furniture moving, raking leaves, and other odd jobs.
Two months after Matthew McLaughlin’s hiring, the Chelsea Housing Authority signed the first of three contracts awarded to Roca for maintenance work at the authority. Matthew McLaughlin cosigned a formal letter to his father thanking him for his support. “You and your staff are incredibly helpful,” the letter said.
McLaughlin also used the federal capital fund to make substantial payments for trash collection to Chelsea City Hall, though city and authority officials could not produce a contract requiring the payments. Though technically independent, McLaughlin benefitted from good relations with the city since the city manager names four of his five board members who are then confirmed by the City Council.
McLaughlin paid more than $530,000 to the city from 2003 to 2011 for trash service, accounting for about 10 percent of Chelsea’s total trash-hauling payments even though authority residents represent just 5 percent of the population.
Sean Murphy can be reached at firstname.lastname@example.org.