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Corruption case against DiMasi detailed

US prosecutors depict workings of a scheme to defraud the public

THE SPEAKER’S DEFENSE Lawyers for Salvatore DiMasi had said the federal case 'never crystallizes [allegations] into a coherent theory.' THE SPEAKER’S DEFENSE
Lawyers for Salvatore DiMasi had said the federal case "never crystallizes [allegations] into a coherent theory."
By Andrea Estes
Globe Staff / December 28, 2009

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Federal prosecutors, in a series of recent court filings, have painted their most detailed portrait to date of the elaborate schemes they say former House speaker Salvatore F. DiMasi and three associates cooked up to profit from his speakership.

The allegations, which come six months after DiMasi and his associates were indicted on corruption charges, depict how DiMasi could have taken bribes from a software firm in return for helping the company win multimillion-dollar state contracts. Using phrases like “quid pro quo bribe,’’ and “concealed conflict of interest,’’ prosecutors call the case “a classic scheme’’ to defraud the public and enrich the defendants.

DiMasi, they charge, “used his official position as speaker of the House to arrange for the passage of legislation in order to obtain financial benefits for himself and his co-conspirators.’’

The court filings respond to objections by defense lawyers who, soon after the indictment last June, called the initial allegations unduly vague, ill-defined, and not fully explained.

DiMasi and the other defendants are charged with steering two contracts worth $17.5 million to Cognos, a Burlington firm, in exchange for hundreds of thousands of dollars in payments, including $57,000 for DiMasi. Also indicted were DiMasi’s friend and former accountant Richard Vitale; DiMasi’s friend and Cognos lobbyist Richard McDonough; and Cognos’s former sales agent, Joseph Lally.

Defense lawyers argue that their clients did nothing wrong and that the money paid to DiMasi and the other defendants represented legitimate legal, consulting, or lobbying fees.

In court papers filed this month, prosecutors for the first time offered their theory about a $250,000 line of credit that Vitale extended to DiMasi in the spring of 2006. The credit line, first disclosed by the Globe last year, was secured by a third mortgage on DiMasi’s North End condo.

Although DiMasi had already allegedly begun to collect payments from Cognos in 2005 - funneled through his law associate Steven Topazio - the prosecutors wrote, “this extra revenue was not sufficient for DiMasi’s financial well-being.’’

To supplement those payments, prosecutors allege, Vitale did two things. They say he provided DiMasi the $250,000 credit line, and made him a silent partner in a real estate management firm, Genesis Management Group LLC. A few months after the company was formed, it won a $1.4 million contract to operate the state’s 900,000-square-foot Transportation Building.

Prosecutors allege Genesis partners tapped DiMasi because they believed he could help the company win government contracts. Though DiMasi allegedly assigned a staffer to help Genesis secure work, prosecutors say they found no evidence that DiMasi or his aide ever succeeded or shared in any profits.

Nevertheless, they wrote, the charges related to Genesis should remain in the case because they show a second way in which DiMasi and Vitale allegedly conspired to profit from his position.

Though the Genesis information was not sufficient to bring additional charges or add new defendants, the allegations are helpful “to fully explain the chain of events that unfolded as part of the charged conspiracy, to show the nature of the illegal relationship between Vitale and DiMasi, and to explain some of their motives and conduct,’’ wrote Assistant US attorneys Theodore Merritt and Anthony Fuller.

Vitale made sure DiMasi was taken care of financially in the spring of 2006, prosecutors argued, because Vitale himself was about to benefit from DiMasi’s ties to Cognos. Shortly after he formed a company, WN Advisors, in June 2006, Vitale was given a consulting contract by Lally, Cognos’s independent sales agent. Lally paid WN Advisors $600,000, allegedly for no other reason than because Vitale was close to DiMasi.

“The allegations and evidence raise a fair inference that the timing of Vitale’s participation was not just a coincidence,’’ prosecutors wrote. “Rather, it was a way for him, as DiMasi’s friend and creditor of sorts, to also become enriched through the Cognos deal.’’

In their motions to dismiss the case filed last month, defense lawyers argued that the charges were overly vague.

“While the indictment contains many page of factual allegations, it never crystallizes them into a coherent theory’’ to prosecute their clients, wrote Thomas Kiley and Martin Weinberg, the lawyers for DiMasi and Vitale, respectively.

Defense lawyers also challenged the so-called honest services fraud law that federal authorities are using to prosecute DiMasi and the others. They say the 28-word law, which makes criminal “a scheme or artifice to deprive another of the intangible right of honest services,’’ is so broad as to be meaningless and does not apply in this case. The law has been used in recent years to go after politicians and business leaders.

Prosecutors defended their use of the honest services fraud statute.

“A multitude of courts have had little difficulty proclaiming the conduct alleged here a violation’’ of that law, prosecutors wrote.

The motions to dismiss are pending before the judge in the case, Chief Judge Mark L. Wolf.

Perhaps more important to the defense lawyers is an expected decision by the US Supreme Court, which has agreed to review unrelated cases challenging the honest services fraud statute. The defense team hopes the law is scrapped or severely limited.

Prosecutors, meanwhile, brought additional charges several months after the original indictment to make sure the case survives if the court somehow invalidates the law.

In a superseding indictment handed down in October, prosecutors charged DiMasi with extortion under the Hobbs Act, which prohibits public officials from accepting payments in return for official acts. That charge carries a penalty of up to 20 years in federal prison.

The new charges, prosecutors said, were added for “legitimate precautionary reasons’’ and to “bolster the government’s case’’ in light of the Supreme Court cases.