Former Chelsea housing chief pleads guilty; outlandish salary sparked federal probe

By Milton J. Valencia, Sean P. Murphy and Martin Finucane, Globe Staff

Former Chelsea Housing Authority chief Michael E. McLaughlin pleaded guilty today in federal court in Boston to four counts of deliberately concealing his ­inflated salary from state and federal regulators from 2008 until he was forced to resign in 2011.

McLaughlin, who has been criticized for allegedly building his own power and income at the expense of the poor people he was supposed to help, appeared late this morning in US District Court in Boston.

The disgraced official has entered into a plea agreement that calls for him to cooperate with federal investigators and help them prosecute others, poten­tially allowing him to avoid jail time. But the plea agreement, made public Friday, did not identify any other potential targets.

US District Judge Douglas P. Woodlock today accepted McLaughlin’s plea to falsifying a record in the jurisdiction of a federal agency. The judge slated sentencing for May 14.

Boston Globe reports on his mammoth salary sparked outrage and investigations.

Outlining the government’s case for the judge, Assistant US Attorney Theodore Merritt said McLaughlin made around $77,000 when he took over the 900-unit authority in 2000. By 2011, his salary had reached $366,000, Merritt said.

Merritt said McLaughlin forged budgets to misreport his salary, the authority routinely approved his budgets, and the authority was doing well, so the authority wasn’t audited by federal officials.

Asked by Woodlock what McLaughlin’s motive was, Merritt said it was money. He said McLaughlin’s pay was fifth highest in the country for housing chiefs. The others in the top 5 included the housing heads in Los Angeles and Philadelphia, much larger communities than Chelsea, which has about 35,000 residents.

“His motive was to conceal ... what was seen as an excessive amount of salary,” Merritt said.

“That’s what happened?” the judge asked McLaughlin.

“Yes, Your Honor,” he said.

The judge ordered McLaughlin to surrender his passport and restrict his travel to New England.

Under federal guidelines, if he does not adequately assist investigators, McLaughlin could be sentenced to 12 to 18 months in federal prison, with some portion of the time to be served in a halfway house or under house arrest.

But if he provides “substantial assistance” to federal prosecutors, helping them “in the investigation or prosecution of another person who has committed a criminal offense,” he may do less time or none at all. Prosecutors also agreed not to use any information he provides against McLaughlin himself.

Lieutenant Governor Timothy P. Murray has acknowledged being questioned under oath about his ties to McLaughlin. Many Chelsea Housing Author­ity employees and politicians in the Merrimack Valley have told the Globe that they attended Murray fund-raisers that McLaughlin helped to organize, even though as a federal employee, he was prohibited from most political activity.

Murray has denied knowing that McLaughlin was collecting donations on his behalf and has said he was fooled by the housing authority head as were many other people.

McLaughlin, 67, of Dracut, deliberately under­reported his annual salary by up to $164,000 a year in mandatory ­reports to state and federal housing regulators.

McLaughlin resigned in late 2011 after the Globe reported his outlandish salary. By 2011, McLaughlin was making $360,000 a year, according to an analysis by the newspaper. The Globe also determined he was in line for one of the largest pensions in state history, up to $278,000 a year.

Andrea Estes of the Globe staff contributed to this report.