DiMasi's ally gets scrutiny from AG
Coakley starts inquiry into accountant's work; Grand jury questioning financial transactions
The state attorney general has launched an investigation into the financial dealings of House Speaker Salvatore F. DiMasi's personal accountant, according to multiple government officials, in a move that escalates the level of scrutiny of the profits and influence of DiMasi's close cadre of friends.
A grand jury convened by Attorney General Martha Coakley is initially focused on Richard Vitale, DiMasi's accountant and former campaign treasurer, who received large payments from business interests seeking contracts and legislation on Beacon Hill, said the government officials, speaking on the condition of anonymity. At the time, Vitale had given DiMasi an unusual $250,000 third mortgage on his North End condominium at a below-market rate.
Politically, Coakley's investigation comes at a sensitive time for DiMasi, who has repeatedly sought to quell challenges to his authority in the House of Representatives as questions of his ethics - and word of resulting investigations - swirl around Beacon Hill.
Coakley became involved in the probe after Secretary of State William F. Galvin determined in May that Vitale had collected $60,000 from a group of ticket brokers who were pushing legislation that would deregulate their industry. Vitale refused to report the payments as lobbying fees, prompting Galvin to refer the matter to Coakley for possible criminal prosecution.
Since that referral, the state inspector general reported two weeks ago that Vitale had collected $600,000 from Burlington software company
One payment, for $500,000, was sent to Vitale on the same day the state wired Cognos $13 million for a contract. If the same-day payment was a so-called success fee, it would violate a state prohibition on such payments to lobbyists.
A spokesman predicted that any investigation will clear Vitale.
"Richard Vitale is an established accountant and businessman with an impeccable record in the community," said George Regan, a public relations consultant.
DiMasi's spokesman, David Guarino, declined to comment on the grand jury investigation yesterday, as did Donald Stern, a lawyer for the ticket brokers and James Holzman, the owner of Ace Ticket and a leader of the ticket brokers group.
Likewise, neither Coakley nor any of her aides would comment. State law prohibits prosecutors from publicly discussing grand jury proceedings.
The FBI, according to state and federal officials, has made some initial inquiries into the awarding of two contracts to Cognos, a $4.5 million education contract in 2006 and a $13 million statewide technology contract in 2007.
Inspector General Gregory Sullivan, who has an ongoing investigation, has already revealed that Cognos and its independent sales agent made $1.8 million in unreported payments to Vitale, DiMasi's former law associate Steven Topazio, and Richard McDonough, a Cognos lobbyist and close friend of DiMasi's.
According to Sullivan, Vitale received $600,000 from the Cognos sales agent, Joseph Lally, as he was pitching the two big contracts to state officials.
The State Ethics Commission has also been collecting records and issuing summonses since the summer, according to several state officials. In addition, Galvin initiated an investigation last week into the failure of Topazio and Vitale to report what Sullivan described as lobbying fees from Cognos or Lally.
He is also considering bringing perjury charges against McDonough, asserting that he underreported his lobbying income. McDonough has refused to discuss the matter, but said in a written statement that he had "fully complied with all of the disclosure requirements."
Last week, Alan Cote, head of Galvin's Public Records Division, wrote Cognos's lawyer asking him to make sure Cognos does not "remove, destroy, or otherwise manipulate any record or document pertaining in any way to lobbying or lobbyists In Massachusetts."
"We're concerned because of the apparent discrepancy in their records," said Galvin. "We want to make sure nothing is either inadvertently or deliberately not available to us."
The investigations follow Globe reports that detailed how Vitale and other close associates of DiMasi's received large payments from Cognos. DiMasi has denied interceding on Cognos's behalf and has said he was unaware of what his friends were doing.
But a key state official has told investigators that she believed that DiMasi wanted the $13 million contract to go to Cognos. An emergency bond bill that paid for the $13 million contract sailed through the Legislature in a week, and money for the education contract was provided in a House budget amendment.
In addition, several state officials have said Lally boasted that he was friends with DiMasi and could get financing for Cognos contracts inserted into state budgets. DiMasi repaid the loan to Vitale in May after the Globe reported Vitale's work for the ticket brokers. If Vitale was lobbying for Cognos when he gave DiMasi the loan, he may have violated the law that prohibits lobbyists from giving anything of value to a public official.
Neither Lally nor Vitale has agreed to explain what exactly he did for $600,000. Regan has called Vitale's relationship with Lally a "private business matter" that does not need to be disclosed publicly.
The inspector general's office reported earlier this month that Cognos or Lally paid Vitale and two other associates of DiMasi more than $2 million in lobbying fees, $1.8 million of which was never reported to Galvin's office, which regulates lobbyists.
McDonough, Sullivan found, received $1.45 million from Cognos and Lally, but failed to report $1.1 million.
He also found that Topazio was on Cognos's lobbying payroll for two years. Topazio, a personal injury and criminal defense lawyer who shares a downtown law office with DiMasi and shares income with DiMasi in the form of referral fees he pays to the speaker, collected a $5,000-a-month retainer from April 2005 until March 2007, according to a state official. Topazio's payments stopped the same month the Legislature and governor approved an emergency bond bill that paid for the $13 million technology contract.
That contract has since been canceled by the state, and Cognos's corporate parent, 