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Witness says DiMasi denied payments

But associate says they quarreled over money

By Milton J. Valencia
Globe Staff / May 13, 2011

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Once attorney Steven J. Topazio signed a deal with Cognos, the Burlington software company seeking state contracts, he provided his longtime friend Salvatore F. DiMasi with referral fees, as he had done each time the former House speaker sent clients his way, Topazio testifed yesterday.

But when Topazio received a lump-sum payment of $25,000 in back pay from Cognos in fall 2006, DiMasi wanted it all, so badly that they argued for the first time over money, according to the testimony in US District Court in Boston.

“I didn’t feel I owed it to him,’’ Topazio said during DiMasi’s public corruption trial. But, he added: “I didn’t want to fight with him. I got a lot of business from him. . . . I wasn’t going to bite the hand that feeds me.’’

Topazio said that he had funneled a total of $65,000 to DiMasi over two years in what prosecutors have called a kickback scheme.

Yet he also described an about-face by DiMasi in summer 2008, after the Globe began investigating the former speaker’s ties to Cognos and the $17.5 million it won in state contracts. Concerned about the spotlight, DiMasi began insisting to Topazio that he had received no Cognos money from him and asked him to fudge his check register, even to lose a part of it, Topazio testified yesterday.

DiMasi said that he had never seen a contract, according to Topazio, and that Cognos was not his client and he knew nothing about Topazio’s deal.

Topazio asked, “How could you say Cognos was not your client,’’ he testified. “Your best friend Dickie McDonough referred the case to me, and I had been paying [DiMasi] referral money.’’

The pointed testimony came in the second week of DiMasi’s trial, and it provided another direct financial link between DiMasi, who was speaker at the time, and the software company. Topazio’s account was part of prosecutors’ case that DiMasi tried to cover up his involvement.

The testimony came on the same day former state representative Lida Harkins said that, at DiMasi’s behest, she told the state’s education commissioner at the time to submit a proposal for data-collection software, the same type produced by Cognos.

DiMasi also told Harkins, she testified yesterday, to tell the commissioner that he would “make sure Bobby DeLeo put it in the budget.’’ Robert A. DeLeo, the current House speaker, was at the time chairman of the House Ways and Means Committee, which oversees state finances. One of his aides is expected to testify Monday.

DiMasi, McDonough, and Richard Vitale, another longtime friend of the former speaker, face charges including conspiracy, honest services fraud, and mail and wire fraud in allegedly using the power of the speaker’s office to help Cognos win the contracts in exchange for secret payments.

A fourth defendant, former Cognos salesman and vice president Joseph P. Lally Jr., has pleaded guilty and agreed to cooperate with authorities in exchange for a reduced sentence.

Defense lawyers have already sought to portray Lally as a liar who will testify to anything to escape jail time. Previous testimony has portrayed Lally as a central player in the alleged scheme.

The state awarded a $4.5 million contract to Cognos in spring 2006 for education software and a $13 million contract in 2007 for an enterprise license allowing broad use of the company’s product.

Harkins, a former assistant majority leader and onetime chairwoman of the Committee on Education, testified yesterday that she had recognized the need for business intelligence software that would serve as a database for the state’s school systems.

At a meeting in the speaker’s office, she told the jury, DiMasi directed her to encourage Commissioner David Driscoll to propose a data-collection system, and told her the speaker would ensure it got funded.

Harkins testified that she could not recall the date of the encounter, but court records and e-mails obtained by the Globe indicate a meeting in 2005. Driscoll sent e-mails in October that year saying he had spoken with Harkins. That same month, a $925,000 pilot project was awarded to Cognos. The next year, the software contract was expanded to $4.5 million by a House Ways and Means Committee budget amendment.

Driscoll said in an October 2005 e-mail that he was awarding the pilot project to Cognos and that “I believe we can get [DiMasi’s] support’’ for the funding.

Topazio testified yesterday that DiMasi did not indicate that he knew of Cognos when the speaker told him in December 2004 that McDonough and Lally would be contacting him about a new client, which turned out to be Cognos.

For two years, Topazio paid DiMasi $4,000 in referral fees from every $5,000 monthly retainer he received from the company. The payments continued, except for a brief lapse in between contracts, until spring 2007.

In summer 2008, Topazio testified, he called DiMasi into his office after a series of Globe stories exposed the speaker’s connections to Cognos. Topazio said he showed him a check register listing payments from the company and money in turn paid to the speaker. DiMasi denied any knowledge of his deals with the firm, Topazio said.

“This is the contract . . . you told me to sign,’’ Topazio said he told him.

Milton Valencia can be reached at mvalencia@globe.com.