Sheriff demands cash in exchange for promotions

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A Boston Fox News undercover operation was told repeatedly by Middlesex County Sheriff’s employees that Sheriff James DiPaola demanded and received stacks of cash from employees looking for favors or promotions.

The investigation was prompted by allegations of a former high-ranking official in the department who told Fox, “As an employee, I saw numerous people that were in management level positions giving cash, giving him envelopes with cash in them. Giving him birthday cards with cash in them.” The former employee made the statement under oath.

One employee described a typical cash-raising gathering: “I’ve been to 4-5 parties. I’ve seen the money counted, $2,100 in one case, $2,300 in another, and handed to the sheriff. He’d put it in his top left hand pocket and then smoke a cigar like it was normal business.”

“You go to someone’s house. They put a party together, there’d be 20, 30, 40 people there. Everybody would give cash,” the employee said

Fox talked to nearly a dozen current and former employees, who all told the same story. They all asked for anonymity out of fear of retribution.

A number of the employees admitted to giving cash at the parties, often in the thousands of dollars. One said that two of his fellow workers, that he considers friends, each forked over more than $3,000.

When confronted by Fox, DiPaola denied ever taking any cash for personal use.  “No, I do not,” DiPaola said. “I have no idea what would motivate someone to say that.”

Besides the developing scandal over the pay-for-play cash bribe allegations, DiPaola was recently under investigation on another controversy.

After easily winning his re-election on Nov. 2, the Boston Globe reported that DiPaola was exploiting a legal loophole in the law, which allowed him to collect his sheriff’s salary and a $98,000 pension at the same time. After the pension controversy was widely reported, DiPaola resigned on Nov. 20.

He was found in a Maine hotel room six days later with a single gunshot wound through the head in an apparent suicide.

Officials say that despite DiPaola’s suicide, the case may not be over. If department officials are found to have paid for their promotions, the attorney general’s office could take legal action taken against them.

Boston Fox Undercover

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Boston ex-councilor sues to regain seat after being ousted for bribery conviction

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Ex-city councilor, Chuck Turner, who was convicted of bribery in October 2010, has filed a complaint with the U.S. District Court seeking a temporary restraining order to halt the action the city council took on Dec. 1 to remove him from office.

Turner was caught on videotape taking a $1,000 bribe from a local businessman turned FBI informant, for agreeing to help secure a liquor license. After the incident, he lied three times to the FBI about it. The sting was part of an operation targeting corrupt politicians. Turner is scheduled to be sentenced on Jan.25.

Turner’s lawyer, Chester Darling, said the city had no authority to remove him from office, and said that council members relied on a flawed reading of the law. “It was a disgrace what happened up there. They had no authority to remove him,” Darling told The Boston Herald.

The motion also seeks to halt the scheduled special election in February to fill his vacant seat.

Turner was re-elected to office in 2009 for a two year term which runs through Dec.31, 2011. The city council voted 11-1 to remove him, following his felony conviction. The expulsion was the first time in the city council’s 100 year history that anyone had been voted off the council.

Another prominent Boston politician, former state senator Diane Wilkerson, was sentenced on Thursday to 3 ½ years in prison after pleading guilty to eight counts of attempted extortion, as part of the same FBI sting. Wilkerson took $23,500 in bribes from the same FBI informant for her help in securing a liquor license and for her influence to get an approval for a real estate development project.

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Former Mass. senator sentenced to 3 ½ years for corruption

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Dianne Wilkerson, the first black woman elected to the Massachusetts Senate, was sentenced on Thursday to 3 ½ years in prison , after pleading guilty to eight counts of attempted extortion for taking $23,500 in bribes from a Boston business owner, Ronald Wilburn, who was cooperating with the FBI.

Former Mass. state senator Dianne Wilkerson was taped on eight occasions taking bribes from an FBI informant.

Wilkerson was a high profile member of the state Senate, where she served for nearly 16 years. She resigned in Oct. 2008 following her arrest on the bribery charges.

Wilkerson was infamously videotaped by FBI agents stuffing a roll of cash into her bra, on one of eight occasions that she received the bribes.  Wilkerson took the bribes in exchange for her help in securing a liquor license for a nightclub and to intercede on a property development deal.

After her sentencing, Wilkerson told the press that the government’s action against her was “the most corrupt and outrageous abuse of the justice system.” Although she said she accepted her sentence, she added “My acceptance can’t negate the despicable actions of the government and its collaborators.”

U.S. District Judge Douglas Woodlock handed down the sentence, also noting her conviction on tax evasion charges in the 1990’s and repeated violations of state campaign finance and ethics laws. Prosecutors earlier promised that they would recommend no more than four years of prison time, in exchange for the guilty plea.

The Boston Democrat said she wasn’t motivated by money and always worked hard to serve her constituents.

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Mass. commissioner of probation resigns amid corruption scandal

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State Probation Commissioner John J. O’Brien resigned abruptly on Friday, amid ongoing criminal investigations by state and federal authorities that he regularly handed out important agency jobs to reward political patrons.

O’Brien, 53, quit to avoid appearing in a termination hearing scheduled for Tuesday. His lawyer, Paul Flavin, said O’Brien was being made a scapegoat in the hiring scandal and that “numerous individuals from every branch of government make, receive and take into considerations recommendations.”

Resigned while being investigated by the FBI and Massachusetts state prosecutors for fraud, extortion and bribery

The hearing was scheduled to follow up on the investigative work by special counsel Paul F. Ware, appointed by the Supreme Judicial Court, to look into allegations of corruption in the Probation Department. Ware’s report, issued in November, provided a critical and damaging assessment that the hiring practices of the department were riddled with fraud and “systemic corruption.”

Sources said that O’Brien resigned to avoid answering questions that might incriminate him a criminal proceeding, which is almost a certainty. A federal grand jury is examining evidence and considering fraud and extortion charges. Massachusetts Attorney General Martha Coakley, has assigned a team of prosecutors to collect evidence against O’Brien and others in the department.

During the investigation, O’Brien was subpoenaed by Ware to testify under oath about department practices, and initially agreed. Afterwards, O’Brien cancelled his appearance citing his Fifth Amendment rights against self-incrimination.

The report said that important jobs were handed out as rewards to campaign donors, after politicians sent letters of recommendation to O’Brian asking him to intercede on the applicant’s behalf. Thousands of phony job interviews were held to create the illusion of an open hiring process, even though jobs had been already committed to the politically connected.

O’Brien’s troubles began with a Boston Globe investigative report that on May 24 that told of pay-to-play arrangements rewarding political donors using departmental jobs, and rampant fraud throughout the organization from weak fiscal oversight. O’Brien was suspended shortly thereafter amid calls for his firing or resignation.

Three of O’Brien’s chief deputies were also suspended without pay, leaving the 2000-plus employee department with no senior management. Those executives were former chief deputy Elizabeth V. Tavares, deputy commissioner Francis M. Wall and the department’s chief lawyer, deputy commissioner Christopher J. Bulger.

The investigation claimed Tavares was “at the heart of perpetuating the sham selection process” and passed along O’Brien’s favored candidates to a hiring committee that was already told who it should hire.

The report accused Wall of collecting political campaign contributions on state time, and on state property. Bulger was accused of knowing about the hiring corruption, and not taking any action to stop it.

O’Brien was a 29-year employee of the agency, starting at the Suffolk Superior Court, and working his way up through the ranks.

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Liberty Mutual settles bid-rigging lawsuits

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Insurance giant Liberty Mutual has agreed to pay $5.5 million to New York and $2 million to Connecticut, in a settlement agreement over charges that it had rigged bids and paid contingent commissions to agents who illegally steered business to the insurer’s products.

The charges were part of lawsuits filed by former New York Attorney General Elliot Spitzer and Connecticut Attorney General Richard Blumenthal against a group of insurance companies and brokers in 2006 as part of a nationwide investigation into illegal sales practices in the insurance industry.

The lawsuits alleged that Liberty Mutual paid secret commissions to brokers that steered business to it, even though its quotes were not the lowest available. The practice directly increased the cost of insurance to thousands of customers.

Liberty Mutual was also accused of providing “fake” bids to brokers to insure that other companies, agreed to in advance, would win a contract. The lawsuit said that one such bid allowed American International Group to increase its premium by 20 percent with an existing customer.

Other companies, including Marsh & McLelland, St. Paul Travelers, and Aon Corp. have already reached settlement agreements with authorities.

The company blamed the conduct on two former “rogue” employees. “Unfortunately, two former lower-level employees seriously violated our trust and our standards of conduct in their quotation activity,” the company said. Both employees resigned before the 2006 lawsuit was filed.

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Ex-car czar to pay $10 million settlement with N.Y. over bribes

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New York attorney general and soon-to-be governor, Andrew M. Cuomo, announced today a settlement with Steven L. Rattner, the Obama administrations former car-czar, over an investigation and charges that he engaged in a kickback scheme involving the New York Common Retirement Fund.

Rattner will pay a fine of $10 million fine and will be barred from doing business with any New York pension fund for five years. Sources said that Cuomo was previously seeking a $26 million penalty.

Rattner was accused of paying Hank Morris, an aide to former state comptroller Alan G. Hevesi, for his help in securing business from the $135 billion fund. Morris pleaded guilty earlier this month to providing illegal access to the fund.

Officials said that Morris also arranged for Rattner to funnel $50,000 in campaign contributions to Hevesi’s reelection campaign for state comptroller through third parties, to conceal the true identity of the donor. After making the illegal donations, Quadrangle’s state pension monies under management increased from $100 million to $150 million.

Cuomo also charged Rattner with providing special favors to the brother of a senior pension fund official. The brother, a Hollywood producer, was helped by Rattner in securing distribution of a low-budget film called Chooch, through a DVD company owned by Quadrangle. Rattner also helped the brother secure a deal with IFC, a cable outlet partly owned by Quadrangle. Rattner was also a member of IFC’s board of directors.

“I am gratified that we have been able to reach an agreement in this case, as it resolves the last major action of our multi-year investigation,” Cuomo said in a statement. “The state pension fund is a valuable asset held in trust for retirees and supported by taxpayers. Through the many cases, pleas and settlements in this investigation, I believe we have been able to help restore and protect the integrity of the state pension fund.”

Rattner, who had been openly critical of Cuomo over the charges, said “I am pleased to have reached a settlement with the New York attorney general’s office, which allows me to put this matter behind me. I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult. I respect the work of the attorney general and his staff to ensure that the New York State Common Retirement Fund operates properly and in the best interests of New Yorkers.”

Before founding Quadrangle, Rattner was a reporter for The New York Times and an investment banker for Lazard in New York. When he was appointed to the auto czar post in February 2009, he listed his net worth on federal disclosure firms as between $188 million and $608 million.

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Businessman latest to plead guilty in Detroit City Hall corruption scandal

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Andrew Park, 46, is the latest figure in the Kilpatrick city hall corruption scandal to plead guilty to charges in Detroit U.S District Court. Property developer and businessman Park, admitted to hiding income totaling $898,000 from three companies controlled by him: Asian Village, Pangborn Technovations Inc. and Security Communication Alert Network.

Park’s tax evasion charges were a byproduct of an FBI investigation of business dealings with former mayor Kwame Kilpatrick’s high school buddy, Derrick A. Miller.  After Kilpatrick was elected mayor in 2002, he appointed Miller as his chief aide and subsequently chief information officer. Miller resigned in 2007 to start his own firm.

In 2008, FBI agents raided the home of Park taking records and computers, looking for evidence of payments to Miller. Investors in a failed real estate development, Asian Village, told authorities that they believed Park was paying bribes to Miller for his help in steering money and business to Park and his ventures. The city helped fund the Asian Village project, providing a $2.75 million loan from the General Retirement System Fund.

In another transaction involving Miller, Park’s company Security Alert Communication Network was given a $4 million city contract to install security cameras in downtown Detroit using federal funds from the U.S. Department of Homeland Security. His company was paid in full, but failed to complete the project.

Prosecutors say that Park failed to report income from the ventures, and then claimed that the receipts were loans. The unpaid tax amounts to over $300,000. In addition to the taxes, he faces up to $100,000 in fines and five years in prison.

Miller was charged last week as part of group of city hall insiders, including Kilpatrick, Kilpatrick’s father, Bernard, close friend Bobby Ferguson, and former Detroit water chief Victor Mercado. The U.S Attorney’s office announced a 38-count indictment against the men, charging them with extortion, bribery and fraud.

Kilpatrick resigned from office in 2008 after being charged with 10 felonies, including perjury, misconduct in office and obstruction of justice. He pleaded guilty to lesser charges and served 99 days in jail, but was sent back for violating the terms of his parole.  He is currently serving time in federal prison in Milan, Michigan.

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