Blue State Graft Watch: Former Massachusetts House Speaker Sal DiMasi Convicted of Extortion, Fraud

A federal jury last week convicted former Massachusetts Speaker of the House Sal DiMasi of seven of nine charges against him in a scheme to steer lucrative state contracts to a software firm in exchange for payments to the state lawmaker and some of his colleagues.

Government prosecutors accused DiMasi and two associates of scheming to use his clout to steer two state contracts worth a combined $17.5 million to the software firm Cognos in exchange for payments, with DiMasi pocketing $65,000.

The defense argued the payments were legal referral fees.

Lobbyist Richard McDonough was also found guilty of six counts of fraud and conspiracy, but the jury cleared DiMasi’s other associate, accountant Richard Vitale, on all counts.

A fourth man, former software salesman Joseph Lally, pleaded guilty before the trial and testified against the others.

The complex case went to the jury late Monday after more than five weeks of testimony and a lengthy set of jury instructions from the judge.

DiMasi crony Richard McDonough also managed to land himself a no-show job on the public payroll while still working as a private lobbyist.

McDonough arranged for a client to give him a no-show, no-work job on a public payroll, allowing him to get medical benefits and a state pension he was not entitled to, said Inspector General Gregory W. Sullivan.

“It was literally a no-show job,’’ Sullivan wrote yesterday to the State Board of Retirement. “Mr. McDonough’s purported full-time employment at this public agency is a sham.’’ His pension defrauds the state retirement system, Sullivan said.

He asked the Retirement Board to review the $31,000-a-year lifetime pension, which McDonough started collecting in 2008 as the Globe was scrutinizing his involvement in a questionable effort to steer multimillion-dollar state contracts to a Burlington software firm in exchange for cash.

To qualify for the pension, McDonough had a lobbying client, the Merrimack Education Center of Chelmsford, put him on the payroll of a related organization, the Merrimack Education Collaborative, which provides education and treatment services for special-needs students from 10 school districts.

McDonough was described in internal records as the Education Collaborative’s director of public affairs and government relations from 2003 to 2008. But virtually no one knew McDonough was on the payroll, not the co-executive directors nor any of the employees. He had no desk, no phone, and no work product, according to Sullivan.

The job appears to be a paperwork maneuver that allowed McDonough to receive public benefits while remaining a private lobbyist. He collected the same lobbying fees as before, but the Education Collaborative classified the payments as an employee’s salary so that they counted toward increasing McDonough’s pension.

Commonwealth treasurer Steve Grossman is working to suspend DiMasi's $59,422 annual pension when the retirment board meets at the end of this month.

DiMasi becomes the third consecutive Massachusetts House speaker to resign while facing criminal charges. Thomas Finneran stepped down in 2004 before pleading guilty to obstruction of justice and Charles Flaherty, who resigned in 1996 before pleading guilty to felony tax evasion.