Misused Funds : HUD Investigators Poring over CHA Spending Records

Investigators for the Department of Housing and Urban Development are on site at the headquarters of the Chelsea Housing Authority this week and are expected to remain as long as it takes to unravel the questionable financial dealings of former CHA Executive Director Mike McLaughlin.

HUD officials claim that as much as $3.5 million in Federal funding scheduled for capital projects out of a total of $9 million received by the CHA was diverted to fund operational costs instead by McLaughlin.

That practice is illegal, according to HUD officials.

McLaughlin apparently used Federal capital funds to plug gaps in operational funding to pay himself his more than $360,000 a year salary as well as that of his traveling partner, Linda Thibedeau who he also employed at the CHA at $100,000 a year.

A Boston Globe report which appeared in Tuesday’s edition attempted to make the case that the misused Federal funding was expropriated by McLaughlin one way or another in order to enrich himself.

In addition, the Globe piece made the claim that the city of Chelsea might have had a deal with McLaughlin to pick up trash from the authority.  The CHA is expected to pay a trash fee like every other non-owner occupant in the city.  The fee is based upon the estimated tonnage collected by the city contractor.  That collection, and the disposal of what is collected, comes at a cost; a cost that city officials have long said shouldn’t be borne by local taxpayers.

From 2003-2011 the CHA paid the city $530,000 for trash pick-up and disposal.

Records reveal the city did in fact pick up the CHA’s trash, at a market level price and that a Chelsea receiver initiated that contract which was continued from year to year as a matter of fact.

City manager Jay Ash again reiterated that the city of Chelsea has had in the past and continues to have no say whatsoever in the running and management of the CHA.

“I can’t be and won’t be adding speculation to what was going on during an investigation to which I am not a party,” Ash told the Chelsea Record.

He said it was his understanding that HUD was responding to one of many audits conducted by the government and which apparently have uncovered spending practices that weren’t consistent with the law.

What he was referring to is the alleged use of Federal funds meant to provide for new boilers, major repairs and rehabilitation of residential CHA housing units being used instead to fund operational costs that couldn’t otherwise be met at budget time.

Another housing authority official questioned about the practice said Chelsea wasn’t the only city to use capital funds to cover operational deficits.

“I’m pleased that the authorities continue to perform audits and investigations to determine the extent to any wrongdoing and mismanagement.  It’s critical they find out all they can and then make sure that procedures are observed or otherwise established to make sure they don’t happen again.  In the meantime, I remain pleased that both the new board and the new CHA administration are taking their own initiatives to restore the integrity of the housing authority,” Ash added.

McLaughlin resigned in disgrace last year.

In recent months a number of McLaughlin’s associates and perhaps McLaughlin himself have appeared before a Grand Jury looking into wrongdoing in the CHA.

The revelation of McLaughlin’s bloated salary has caused Congress to set maximum wage and compensation packages for housing authority executive directors.

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