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Public Document

®1|^ Ol0mm0n£tiBaltl| ai ^a0sacI|U0Btts

Report of the

Attorney General

for Fiscal Year 1999

(Ending June 30, 1999)

4v^

)F THIS Document Approved by Philmore Anderson III, State Purchasing Agent.
Publication Number 18522-300-800-12/00-5.03-Docuprint

TOM REILLY

ATTORNEY GENERAL

Tfit CommonweaCtfi of Massachusetts

office oft/k Attorney QemraC

One !AshBurton Tiace

"Boston, 9AA 02108-1698

In accordance with the provisions of Section 1 1 of Chapter 12 of the Massa-
chusetts General Laws, I hereby submit the Annual Report for the Office of the
Attorney General. This Annual Report covers the period from July 1, 1998 to
June 30, 1999.

Respectfully submitted,

Thomas F. Reilly
Attorney General

TABLE OF CONTENTS

ASSISTANT ATTORNEY GENERAL APPOINTMENTS i

BUDGET OVERVIEW vi

EXECUTIVE BUREAU 1

Executive Bureau Overview 1

Children's Protection Project 1

External Relations 1

Information Technology Division 3

Human Resource Management 4

Operations 6

Western Massachusetts Division 8

BUSINESS AND LABOR PROTECTION BUREAU 14

Unemployment Fraud Division 14

Fair Labor and Business Practices Division 23

Insurance Fraud Division 50

Medicaid Fraud Control Unit 60

CRIMINAL BUREAU 73

Appellate Division 75

Criminal Investigations Division 85

Environmental Crimes Strike Force 86

Economic Crimes Division 89

Financial Investigations Division 114

High Tech and Computer Crimes 1 17

Public Integrity Division 121

Safe Neighborhood Initiative 133

Special Investigations and Narcotics Division 145

FAMILYAND COMMUNITY CRIMES BUREAU 153

Victim Compensation and Assistance Division 156

TABLE OF CONTENTS

GOVERNMENT BUREAU 159

Administrative Law Division 162

Trial Division 172

Environmental Protection Division 182

PUBLIC PROTECTION BUREAU 197

Civil Investigations Division 201

Civil Rights and Civil Liberties Division 205

Consumer Protection and Antitrust Division 219

Public Charities Division 234

Chief Prosecutor 249

Regulated Industries Division 259

OPINIONS 281

Opinion No. 98/99-1 281

APPOINTMENTS

FiscalYear 1999 (07/01/98

- 06/30/99)

OFFICE OF THE Ar lORNEY GENERAL

ATTORNEY GENERAL, TOM REILLY (14)

FIRST ASSISTANT ATTORNEY GENERAL, DEAN RICHLIN (14)

ASSISTANT ATTORNEYS GENERAL:

AnnAckil

JohnBigelow(91)

Lael Chester

Richard Allen (68)

Crispin Bimbaum

John Christin, Jr.

Dorothy Anderson

William Bloomer (17)

John Ciardi

David Andrews

Kristi Bodin (68)

Peter Clark

Barbara Anthony (88)

Edward Bohlen

Jeffrey Clements

Luz Arevalo

John Bowen

Edward Colbert (81)

Frederick Augenstem

John Bowman

Richard Cole

Lori Balboni (84)

David Breen

Joanna Connolly

Deborah Banda (74)

Kevin Brekka

Rosemary Connolly (23)

Thomas Bamico

Matthew Brock

Patricia Correa

Christopher Barry-Smith

George Brooks

Arlie Costine-Scott

Jason Barshak

Matthew Buehler

Pierce Cray

Mary Elizabeth Basile (7) Margaret Bulger (59)

John Crimmins

Judith Beals (93)

Brian Burke

Maurice Cunningham (57)

R. David Beck (21)

Barrando Butler (52)

William Daggett

Annette Benedetto

Eric Carriker

Norman D' Amours (12)

Matthew Berge

James Caruso, Jr.

Pamela Dashiell

Aime Berlin

Pamela Castrucci (58)

Leslie Davies

Edward Berlin (69)

Eileen Cenci (91)

George Dean

William Berman (52)

RanjanaChand (11)

Edward DeAngelo

APPOINTMENTS

Linda Del Castilho
Gerald D'Avolio, Jr.
Stephen Dick
Michael Dingle
Kristen Dionisi (24)
Elisabeth Ditomassi (51)
William Duensing (52)
William Dunnirvine (56)
Henry Eaton
Deborah Ecker (80)
David Edmonds (60)
Anne Edwards (15)
Stanley Eichner (66)
F. Henry Ellis, III
Barbara Fain
Jennifer Ferreira (55)
Daniel Field (3)
Freda Fishman
Francis Flaherty, Jr.
Elizabeth Ann Foley (5)
Mary Freeley
Cynthia Gagne
Rosemary Gale (89)
Rosalyn Garbose (82)
Rafael Garcia
Dana Gershengom (26)
Bonny Gilbert (5)

Suzanne Glick Gilfix
Gregory Gilman (83)
Salvatore Giorlandino
I. Andrew Goldberg
Richard Gordon
Eliot Green (20)
Leslie Greer (52)
Mary Griffin (65)
John Grossman
John Grugan
Irene Guild
Daniel Hammond
Heidi Handler (50)
Nancy (Betsy) Harper
Sarah Hartry
Katherine Hatch
Christian Hatfield (63)
Ladonna Hatton
Richard Hecht
Michael Hering
Lee Hettinger (77)
R. Scott Hill-Whilton
John Hitt

Audrey Huang (94)
Pamela Hunt
Marsha Hunter
Carol lancu

Marcia Jackson
Patrick Johnston
Diane Juliar (72)
Michelle Kaczynski
Judy Zeprun Kalman
Glenn Kaplan
Jamie Katz
Sean Kealy (77)
Carolyn Keshian (80)
Rosa Kim (52)
Mark Kmetz
Michael Kogut
Pamela Kogut
Helen Koroniades
Joshua Krell
Stu Tip Lam
Andrew Latimer
Andrew Lawlor
Kelli Lawrence (25)
EUyn Lazar (53)
Angela Lee
William Lee (81)
Peter Leight
Gerard Leone, Jr. (14)
Martin Levin
Susan Levsen-Reardon
Leonard Lopes

APPOINTMENTS

Kara Lucciola

James Milkey

Susan Paulson (4)

Jacinta Ma (6)

Laura Miller (22)

Anthony Penski

Glenn MacKinlay

Daniel Mitchell

Rebecca Perez

Anita Maietta

Jonathan Mitchell (1)

Judith Phillips

M. Toni Maloney

Margaret Monsell (71)

Mary Phillips

Julie Marcus

AHce Moore (14)

Barbara Piselli

David Marks

T. Gregory Motta

William Porter

Laura Maslow-Armand

Mark Muldoon

Anne Powers (86)

Gregory Massing (70)

Mark Mulligan

Candies Pruitt

William Matlack

Mary Murphy-Hensley (92)

Christopher Quaye

William McAvoy

Vema Myers (78)

Jason Queenin (13)

Catherine McClure (8)

Robert Quinan

Thomas McCormick (54)

Kevin Nasca (62)

Elizabeth Reinhardt

Timothy McDonough

Cathryn Neaves

Juliana Rice

Philip McGovem

Mytrang Nguyen (87)

Shelley Richmond-Joseph

Karen McGuire (64)

James O'Brien (25)

Robert Ritchie

Frances Mclntyre (73)
Rebecca Mclntyre (73)
Beth McLaughlin
Marianne Meacham
William Meade
Elisabeth Medvedow
Pamela Meister
Ramon Melendez (84)
BethMerachnik(18)
Howard Meshnick
Nicholas Messuri

Jean O'Brien
Michelle O'Brien
Thomas O'Brien
Erin Olson
James Paikos (9)
Donna Palermino
Kathryn Palmer
Emily Paradise (25)
William Pardee
Margaret Parks
Lori Parris

Lena Robinson ( 1 0)
Beverly Roby
Anthony Rodriguez
Joseph Rogers
Deirdre Rosenberg
Stua.Emest Sarason
Kurt Schwartz (14)
Pasqua Scibelli
Sharon Scott (76)
Jeffrey Shapiro (12)
Amy Sharff

APPOINTMENTS

Matthew Shea (19)
Timothy Shea (23)
Neil Sherring
Robert Sikellis (61)
Jeremy Silverfme
Adam Simms
Ginny Sinkel
Mark Smith
Johanna Soris
Amy Spector
Richard Spicer (67)
Susan Spurlock
Carol Starkey
Deborah Steenland
Kenneth Steinfield
James Stetson
Catherine Sullivan (16)
Mark Sutliff
James Sweeney
Diane Szafarowicz
Pamela Talbot
Rosemary Tarentino
Neil Tassel
Steven Thomas
Hung Tran (2)
Bruce Trager
Thomas Ulfelder

Margaret Van Deusen (85)
Gina Walcott
Lucy Wall (75)
George Weber (73)
Peter Wechsler
William Weinreb (25)
Karen Wells (14)
Joseph Whalen, III (86)
James Whitcomb
Douglas Wilkins (79)
H. Gregory Williams
Odette Williamson (94)
Jane Willoughby
Howard Wise
John Woodruff
Chi Chi Wu
Charles Wyzanski
Judith Yogman
Karla Zarbo
Catherine Ziehl
Michael Zullas (90)

APPOINTMENTS

APPOINTMENT DATE

TERMINATION DATE

1. 07/27/1998

50.

07/03/1998

76. 02/09/1999

2. 09/01/1998

51.

07/24/1998

77. 02/12/1999

3. 09/09/1998

52.

07/31/1998

78.02/17/1999

4. 09/14/1998

53.

08/14/1998

79. 02/22/1999

5. 10/05/1998

54.

08/31/1998

80.02/26/1999

6. 10/21/1998

55.

09/02/1998

81.03/05/1999

7. 10/26/1998

56.

09/11/1998

82.03/18/1999

8. 11/04/1998

57.

09/18/1998

83. 03/19/1999

9. 11/09/1998

58.

10/16/1998

84.03/26/1999

10.11/23/1998

59.

10/19/1998

85. 04/07/99

11.11/30/1998

60.

10/30/1998

86. 04/30/1999

12. 12/01/1998

61.

11/06/1998

87.05/21/1999

13.01/07/1999

62.

11/13/1998

88.05/31/1999

14.01/20/1999

63.

11/23/1998

89. 06/10/1999

15.01/23/1999

64.

11/30/1998

90.06/11/1999

16.03/22/1999

65.

12/15/1998

91.06/18/1999

17. 04/02/1999

66.

12/18/1998

92. 06/24/1999

18.04/13/1999

67.

01/12/1999

93. 06/27/1999

19.04/14/1999

68.

01/15/1999

94.06/30/1999

20.04/15/1999

69.

01/18/1999

21.04/29/1999

70.

01/19/1999

22. 05/03/1999

71.

01/22/1999

23.05/17/1999

72.

01/29/1999

24.06/01/1999

73.

01/31/1999

25.06/14/1999

74.

02/05/1999

26. 06/21/1999

75.

02/06/1999

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EXECUTIVE BUREAU

Executive Bureau Overview

Children's Protection Project

External Affairs

Information Technology Division

Communications

Human Resource Management

Operations

Executive Bureau

EXECUTIVE BUREAU OVERVIEW

The Executive Bureau provides the overall administration, policy-setting, supervision, and training of
staff for the Office of the Attorney General. The Bureau also handles a number of specialized fiinctions,
including the coordination of legislative affairs, community outreach, constituent relations, administrative
and technical support, and all internal and extemal communications activities.

The Executive Bureau is designed to develop and maintain the agency's infrastructure, enabling all
Bureaus to function productively and effectively for the benefit of the citizens of the Commonwealth. The
Bureau consists of the Office of the First Assistant, Human Resource Management Office, Budget Office,
hiformation Technology Division, Operations Division, Extemal Affairs Office, and the Communications
Office. The Regional Office Division, the Office of the Attorney General's Legal Counsel, the Bellotti Law
Library, and Support Services also are housed within the Executive Bureau.

CHILDREN'S PROTECTION PROJECT

One of Attorney General Reilly 's first initiaUves upon taking office in January of 1 999 was the creation
of the Children's Protection Project. Operating within the agency's Family and Community Crimes Bu-
reau, it was established as a cross-bureau initiative to draw upon the multi-jurisdictional expertise and
talents of staff members throughout the office regarding all the issues that affect children. The Project aims
to promote the health, safety and welfare of children in homes, schools and neighborhoods across the
state. It focuses on all areas of child welfare, including labor, consumer protection and criminal law
enforcement, as well as education, training, prevention and early intervention strategies.

EXTERNAL RELATIONS

Another integral component of the Executive Bureau is the Extemal Relations Office, which coordi-
nates office contacts with interest groups, constituents, and elected and appointed officials at all levels of
government. Housed within Extemal Relations are the Offices of Community Partnerships, Community
Relations, Community Liaisons and Intergovernmental RelaUons, all of which deal with the vast constituen-
cies that are involved with and impacted by the Attorney General's Office.

January 1999 -July 1999

EXECUTIVE BUREAU

OFFICE OF COMMUNITY PARTNERSHIPS

Attorney General Reilly created the Office of Community Partnerships to work with Massachusetts
mayors and other urban leaders to address issues that relate to our cities, particularly as they affect the
health and safety of children. The office acts as a direct liaison between the Attorney General's Office and
the state's cities and towns.

In FY99, tlie Office of Community Partnerships canvassed the state's mayors, school superintendents
and other urban leaders in more than 30 cities in an effort to develop an urban agenda that was grounded
in the needs and concerns of those on the front lines of the foremost issues affecting the Commonwealth's
cities.

In this same vein, in March of 1 999 during a statewide summit of urban leaders, the Attorney General
assembled a team of mayors, urban school superintendents and District Attorneys, as well as representa-
tives of the Executive Office of Health and Human Services and the University of Massachusetts. The
goals of the Urban Alliance is to generate ongoing discussion and opportunities for collaboration around
the unique challenges affecting Massachusetts' cities. The Alliance meets regularly to advise the Attomey
General on issues affecting children, schools and cities.

INTERGOVERNMENTAL AFFAIRS

The Intergovernmental Affairs Office acts as the Legislative liaison to the state and federal
government. This Office introduces and tracks legislation and monitors budget issues relevant to
the Office of the Attomey General. In FY99, in conjunction with Intergovernmental Affairs,
Attomey General Tom Reilly briefed the House of Representatives and Senate regarding the
tobacco settlement, and testified before the Health Care Committee. He strongly encouraged them
to use the funds for tobacco control and public health programs. A decision on the settlement is
expected in FYOO.

In March of 1999, the Intergovernmental and Attomey General Reilly testified before the Senate
Committee on Ways and Means to secure a FYOO operating budget. Priorities included the Children's
Protection Project, Central and Southeastern Massachusetts Regional Office expansions, and a High Tech
Crime Unit.

An early legislative priority for the Attomey General was the passage of the April 1 999 "Information
Sharing" Bill which would enable a multi-jurisdicational approach in handling cases involving at risk youth.

EXECUTIVE BUREAU

The law would enable all those involved with youth - social services, educators, law enforcement - to
establish lines of communication and coordinate early intervention programs to identify those with the
greatest chance of falling into the criminal justice system. Throughout his career, Reilly has seen the value in
a coordinated approach in dealing with high risk youth. As Attorney General, Reilly has pledged to bring
the benefits of information sharing to the statewide level.

The Attorney General testified before the Joint Committee on the Judiciary with District Attorneys
Kevin Burke and Ralph Martin and Secretary of Health and Human Services, William O'Leary, in support
of the bill. The bill is currently pending before the House Committee on Ways and Means.

INFORMATION TECHNOLOGY DIVISION

COMPUTER UPGRADES

As the largest public law office in the Commonwealth, the Attorney General's Office has an obligation to
provide the most up-to-date and professional services to the people of the state. In large part, that includes
keeping apace with changes in technology fi-om an internal operations perspective. To that end, the Information
Technology Division has made enormous strides in equipping the agency with upgraded computer resources,
enabling the agency to stay on the cutting edge of law enforcement in the information age.

Computer upgrades began in the early months of 1 999. By fiscal year's end, about one-third of the
agency's computers were upgraded and the internal electronic mail system migration to Lotus Notes was com-
pleted. Also, the Information Technology Division ensured that all computers and systems throughout the
agency were Y2K compliant. All agency computers were also outfitted with high-sp)eed desktop Internet
access, which enabled staff to conduct research from their desktop computers. This provided both conve-
nient and timely disemination of current statutes and case law.

COMMUNICATIONS

The Communications Office spearheads and coordinates all press related matters for the Attorney
General's Office. The chief responsibility of the Communications Office is to operate as a centralized
public voice for the agency. To that end, the Communications Officers work with executive staff and
bureau chiefs to ensure the Attorney General's priorities are reflected in all public materials, including
press releases, advisories, public statements, interviews, and other public appearances and events.

Addressing that need to improve communication within the agency, the Communications Office

EXECUTIVE BUREAU

established protocols for dealing with the media in a consistent and unified manner. The inter-agency
communication system between and among bureaus establishes how best to publicize cases and
initiatives.

WEB SITE

Realizing the value in the broad range and scope of the Internet's audience, work began in FY99
to develop the official web site for the Attorney General's Office. The website will include bureau by
bureau profiles of issues and initiatives. Plans are also in place to provide on-line access to publications,
legal materials, and career opportunities within the Agency. The site is expected to launch in FYOO.

HUMAN RESOURCE MANAGEMENT

The need for a full-service Human Resource Management Office [HRM] was recognized as a top
internal priority in January of 1 999 in order to improve service to existing staff, new hires and applicants.
To that end, HRM brought services to both legal and non-legal staff in a consolidated system that ad-
dressed their needs in a unified and consistent manner. The scope of HRM was also broadened and now
includes new staff orientations, benefits administration, and time and attendance oversight ]

Improved new-hire processing began in Fiscal Year 1 999, which established a consistent forum for the
dissemination of information, policies and procedures for all new staff. Streamlined employee processing
on the first day of employment includes new hire orientation, where office representatives fi-om HRM,
Budget and Payroll, Information Technology, Operations and other pertinent divisions share useful infor-
mation regarding office program and policies.

REVISED PERSONNEL MANUAL

Work began immediately in 1 999 to revise the Attorney General's Personnel Manual and create a
comprehensive policy guide for employees. This reference book aims to provide staff with an easy refer-
ence tool, to help them better understand policies, procedures, and practices. A fmal "Human Resource
Manual" will be completed and issued by Fiscal Year 2000. The new manual will address issues such as
the administration's part-time status policy, the new cancer screening leave allowance, and the improved
personal leave policy.

EXECUTIVE BUREAU

PROFESSIONAL DEVELOPMENT

The Attorney General's Office demonstrated its commitment to meeting the needs of attomeys' pro-
fessional development by offering membership to all Assistant Attomeys General in both the Massachu-
setts and Boston Bar Associations at no cost to employees. In this way, attomeys are encouraged to
pursue other endeavors that will give them the benefit of diverse professional experience both inside and
outside the office.

ANTI-DISCRIMINATION AND SEXUAL HARASSMENT POLICY

In FY99, the Attorney General revised the Office's Anti-Discrimination and Sexual Harassment Policy.
The Office is committed to maintaining a workplace free of discriminatory behavior. To that end, the
Attomey General's Office has established mandatory training sessions that educate and familiarize staff" with the
Office's anti-discrimination and sexual harassment policy. Trainings are designed for both supervisory and non-
supervisory personnel and legal and non-legal staff They further underscore the Administration's pledge to
ensure a safe and productive work environment, while also meeting an inherent obligation of the Attomey
General's Office to take the lead on such important policy matters.

DIVERSITY COMMITTEE

hi addition to this new, proactive policy, the Attomey General has whole heartedly supported and expanded
the efforts of the Diversity Committee, a cross-bureau initiative aimed at raising awareness of diversity, tolerance,
and cultural sensitivity. The Committee's efforts foster a welcoming work environment, where people of
diverse backgrounds are valued and respected.

MINORITY RECRUITMENT

Attomey General Reilly and the Diversity Committee have introduced initiatives and sponsored events
in order to attract and retain employees of diverse backgrounds and experiences. In June of 1 999, the
Committee hosted the first annual Minority Recruitment Reception for minority lawyers in an effort to
attract talent and legal expertise from a wide range of backgrounds and walks of life. The reception,
attended by over 80 prospective employees, resulted in the direct hiring of five new staff attomeys.

EXECUTIVE BUREAU

OPERATIONS

REGIONAL OFFICES

One of the Attorney General's stated missions upon taking office in January of 1 999 was to bring
the services of the Attorney General's Office to every regionof the Commonwealth. Recognizing that
local residents are in the best position to identify and provide valuable input as to solutions to local
problems, work began early in Attorney General Reilly ' s term to secure legislative approval for such
expansion. This legislative support was designed to support the Office's expansion to Southeastern
and Central Massachusetts.

SURVEILLANCE EQUIPMENT FOR MAILROOM

As a precautionary step that unfortunately was necessitated by modem security threats. Attorney
General Reilly instituted a system to centralize mail delivery and x-ray packages prior to distribution to
staff. Equipment was installed in the McCormack Building, the Portland Street Building, and the Western
Massachusetts Office, meeting the need for intensified precautionary measures in public office buildings.

TREASURY INVESTIGATION

In January of 1 999, the Attorney General's Office requested and was granted by the Legislature
supplemental funding to meet the demands of an intensified Treasury investigation related to the theft of
funds from the Unclaimed Check Fund. A matter of weeks into Attorney General Tom Reilly' s administra-
tion, nearly $ 1 0 million was discovered missing from the State Treasury's Unclaimed Check Fund. The
investigation was complex and thus necessitated substantial internal attention, in addition to the need for the
outside services of an accounting firm and a legal team of forensic investigation experts, both of which were
secured in an extremely timely and efficient manner. The prompt intemal response to these fiscal needs
enabled the Attomey General's Criminal Bureau to focus on bringing those responsible to justice and on
recovering as much of the missing funds as possible.

NEW SUPPORT SERVICES PROCEDURES MANUAL

The Attomey General's Office Support Services released a revised Procedures Manual outlining their
role within the agency, from mail processing and distribution, to supply operation and inventory control, to
bulk copying and binding. The guide delineates ever>' service and also delineates the processes that have
been put in to place to ensure that ser\'ices are provided in a timely, efficient and cost effective manner.

EXECUTIVE BUREAU

NEW BUDGET POLICY

Realizing the need for increased controls in the area of budget and finance as a matter of example for
other state agencies and offices throughout the Commonwealth, the Budget Office, under the administra-
tion of the Operations Division, instituted a number of new policies and procedures. This included the
redesignation of specific duties as they relate to the management of the Budget Office.

EXECUTIVE BUREAU

THE WESTERN MASSACHUSETTS DIVISION

The Western Massachusetts Division of the Office of the Attorney General, located in the State Office
Building at 436 Dwight Street Springfield, is a part of the Executive Bureau. The Division is responsible
for all legal matters arising in the four western counties, Hampden, Hampshire, Franklin, and Berkshire
The Division is staffed by 1 0 assistant attorneys general, three civilian investigators, four paralegals, three
Massachusetts State Police Officers, and additional support staff. In addition, two assistant attorneys
general assigned to the Municipal Law Unit of the Administrative Law Division, one assistant attorney
general assigned to the Insurance Fraud Division, one assistant attorney general assigned to the Safe
Neighborhood Initiative (SNI) Program and two investigators assigned to the Medicaid Fraud Unit, are
part of the staff.

The Western Massachusetts Division has defensive and affirmative litigation responsibilities and, addi-
tionally, handles a large number of consumer-related complaints for area residents. The Western Massa-
chusetts Division also takes part in a variety of community -oriented public safety, consumer, and violence
prevention programs such as Springfield College's Consumer Education Forums, AARP Consumer Pro-
grams, Baystate Medical Center Senior Education Classes, TRIAD Training Programs and the Springfield
City-Wide Violence Prevention Task Force. Last year the Office of the Attorney General extended the
Safe Neighborhood Initiative (SNI) Program to Western Massachusetts through a collaboration with the
Northwestern District Attorney's Office, which established an SNI Program in Franklin County. In
addition, efforts are being made towards the establishment of a Department of Justice Weed and Seed
Program in Springfield. This program is being operated in partnership with the United States Attomey's
Office, the District Attomey's Office, and the Hampden County Sheriffs Office.

Additionally, the Attorney General's Municipal Law Unit (MLU) was moved to Western Massachu-
setts during the last fiscal year and the centralization of its fijnctions and personnel was completed this year.
The MLU's primary responsibility is to perform the Attorney General's statutory review of municipal by-
laws and charter amendments to ensure that these laws are consistent with the constitution and laws of the
Commonwealth.

SUMMARY OF DEFENSIVE LITIGATION

In the area of defensive litigation, the Western Massachusetts Division defends the Commonwealth in
administrative law, contract, eminent domain, civil rights, and torts cases.

In FY"99, 66 new cases were assigned. In addition, 33 new cases were assigned to special assistant

EXECUTIVE BUREAU

attorneys general and WMAS assistant attorney general were assigned to supervise the litigation and
handling of those cases. The 60 cases assigned fall into the following categories:

Administrative Law 21(31.8%)

Torts 13(19.7%)

Civil Rights/Employment Discrimination 1 5 (22 . 7%)

Declaratory Judgment 9(13 .6%)

Eminent Domain 2 (3.0%)

Miscellaneous 6 (9.1%)

Total New Cases 66 ( 1 00%)

As of June 30, 1999, there were a total of 1 22 cases open in WMAS.

During FY'99, fifty-seven (57) cases were closed in WMAS. A total of $339,398.00 was paid
through settlements, with a total of $ 1 7 1 ,050.00 paid to claimants in defensive cases and $228,348.00
paid in eminent domain cases.

DEFENSIVE HIGHLIGHTS

The following cases represent the nature and scope of the cases being handled by the WMAS Divi-
sion:

• Judy E. Morris, M.D. v. UNUM Insurance Company of America (and 60 named
defendants, including the Department of Insurance and four of its employees; the
Division of Consumer Protection; [former] Attorney General Scott Harshbarger; a
state senator and the Commonwealth|. U.S. District Court for the District of Massa-
chusetts (Western Division), Civ. Ac. No. 9-30204-FHF. In a 300-plus-page complaint,
the pro se plaintiff alleged a far-ranging conspiracy of private and governmental defen-
dants, the goal of which was to permit the insurance company defendant to unfairly
deprive the plaintiff of disability insurance benefits allegedly owed to her as a result of chronic
fatigue and immune dysfunction syndrome and fibromyalgia On behalf of all Commonwealth
defendants, this Office moved to dismiss the complaint on several grounds: lack of federal jurisdiction
by operation of the Eleventh Amendment, failure to plead RICO (Racketeer Influenced Criminal
Organizations) allegations with the requisite particularity, the immunity of the Commonwealth fi-om
intentional tort claims, and the failure to have presented any negligence-based tort claims to the
Commonwealth in accordance with the Tort Claims Act. The Court dismissed the claims

EXECUTIVE BUREAU

against all defendants, but allowed the plaintiff to file an amended complaint with a more narrow
focus which did not involve the Commonwealth, which the Court indicated was likely immune
from the claims. The amended complaint set out no claims against any Commonwealth defen-
dant.

• Riverplace, Inc. v. Commonwealth of Massachusetts By and Through Its De-
partment of Public Works (Hampden Superior Court, Civ.Ac.No. 96-368). The settle-
ment of this eminent domain case concerning the temporary use by the Commonwealth of
three acres located on the Connecticut River in Springfield resulted in significant savings
to the Commonwealth. The Commonwealth used the land for three years (plus a three-
month holdover period) as a staging area for the reconstruction of Memorial Bridge. The
owner had been awarded $55,000 for the temporary taking but asserted that the loss was
much higher. The plaintiffs appraiser valued the property at $775,000 and concluded
that the fair market rental totaled $265,000. An earlier bank appraisal which valued the
property at $1 .1 million was produced and utilized to increase the alleged fair market
rental to $375,000. Despite these evaluations, the Commonwealth was able to negotiate

a settlement of $45,000 in "new money"' (beyond the original award), which figure
included the Commonwealth's exposure to 5.9 years of pre-judgment interest.

• Nicole Thayer v. Commonwealth of Massachusetts, Massachusetts Highway
Department, and Joseph Superneau, as former Director of District Two Massachu-
setts Highway Department (Hampden Superior Court, Ciy.Ac.No. 97-396) and
Jason M. Rimbold v. Daniel O'Connell's Sons, Inc.; The Commonwealth of Massa-
chusetts, City of Holyoke, and Town of South Hadley (Hampden Superior Court,
Civ.Ac.No. 97-365). These companion cases arose ft-om serious injuries sustained by two
teenagers who fell 30-45' when a section of sidewalk of the "Old County Bridge" col-
lapsed. The bridge, which carried state highway Route 1 1 6 over the Connecticut River,
was slated for demolition after the nearby "New County Bridge" was completed. The
sidewalk had been barricaded, but barriers and warning signs had been removed by
vandals, perhaps as long before the incident as a few months. The plaintiffs sought to
avoid the application of the "defective-way" statute, which immunized the Common-
wealth from liability for injuries sustained upon the sidewalk of a state highway, but the
Court allowed the Commonwealth's motions for summary judgment on that ground.

EXECUTIVE BUREAU

SUMMARY OF AFFIRMATIVE CIVIL CASES

In the area of affirmative litigation, the Western Massachusetts Division prosecutes pro-active ci\al
rights, consumer protection, and criminal cases.

CONSUMER PROTECTION MATTERS

The Westem Massachusetts Division fields thousands of consumer inquiries and complaints. By law,
the Attomey General can only bring an aflfmnative action against a business for violations of the Consumer
Protection law when it is "in the public interest" to do so and cannot litigate on behalf of individual consum-
ers. By effectively using a weekly case intake process in which attorneys, investigators, and a coordinator
participate, potential "public interest" consumer protection cases are identified, reviewed, investigated,
and screened-in for further development and litigation. Individual consumer cases are referred to Local
Consumer Programs for mediation and resolution. An assistant attomey general acts as the coordinator
between the Attomey General's Office and the Local Consumer Protection Offices in the four westem
counties in order to provide oversight in the handling and resolution of consumer cases. During FY'99, the
Division referred at least 85 complaints to the local consumer programs. This figure does not include
"walk-ins" who are also sent to the local consumer program. The local consumer programs referred at
least four cases to the Division involving a pattern of unfair or deceptive trade practices for evaluation by
our office.

As a result of the intake of matters from various sources, between June 1 , 1 998 and June 30, 1 999,
33 consumer protection investigations were opened. In FY'99, an average of nine actual court cases
were open at any given time, two of which were Superior Court 93 A Consumer Protection Act cases. In
FY'99, one consumer civil litigafion case was closed.

The Westem Massachusetts Division estimates that the staff assisted 1 0,000 callers and 350 people
who had made written requests for assistance or information. Approximately 29% of the callers sought
written information and over 2,000 brochures or information sheets were distributed to members of the
public who had requested consumer information and/or assistance. In addition, through consumer educa-
tion efforts in the community, investigators assigned to the unit participated in numerous consumer-oriented
programs, training sessions and seminars, and distributed over 14,000 consumer-protection pamphlets.

EXECUTIVE BUREAU

AFFIRMATIVE CIVIL CASE HIGHLIGHTS

• Commonwealth v. Echo Hill Townhouse Condominium Trust, et. al, Hampshire
Superior Court, C. A. 98-073. This was a housing discrimination case in which an Hispanic
mother of two young children was told that she could not rent a condominium apartment in '
Amherst because the condominium association bylaw prohibited young children from the
complex. After the Massachusetts Commission Against Discrimination found probable cause

that the mother was discriminated against, the Commonwealth sued the Trust, the Trustees in
their fiduciary capacities, and the management company, Congate Enterprises. The trustees
thereafter sued their counsel, who intum, countersued Congate. The mother subsequently
brought an action against several of the defendants in United States District Court. The Com-
monwealth and the mother had settled v^ith Congate for $20,000 in damages (which included
$5,000 paid by the property owners while the case was still under the jurisdiction of MCAD).
Following numerous depositions arising from the counter-claims and cross-claims, the Com-
monwealth reached a global settlement of both the state and federal actions in which the mother ,
received $20,000 in additional damages. |

SUMMARY OF CRIMINAL LITIGATION

In the area of criminal litigation, the Western Massachusetts Division investigates and prosecutes a
variety of cases, ranging from bank fraud, public integrity, credit card fraud, and attomey defalcation to
narcotics and illegal weapons cases. Many of these cases involve complex and labor-intensive investiga-
tions. In some cases, appropriate dispositions that did not involve prosecution were reached. Nine cases
for which process had ensued (seven indictments, two District Court complaints) were resolved. Numer-
ous additional cases were investigated but closed without prosecution.

CRIMINAL CASES

• Commonwealth v. Louis Dukette, Hampden County Superior Court No. 98-1697-
98. This insurance fraud case arose out of an accident that took place at Brightside, Inc.,
Holyoke, in April 1996. The defendant claimed to have fallen down a flight of stairs and
to have been paralyzed from the waist down as a result. He was hospitalized and then
underwent rehabilitation at the Weldon Center. He claimed that he was confined to a
wheelchair and that he was totally disabled. Brightside paid workers' compensation
benefits to him and contacted a private investigator, who placed the defendant under surveil-
lance. His claims of paraplegia were found to be fraudulent and his benefits were terminated.

EXECUTIVE BUREAU

He appealed to the Division of Industrial Accidents. At a subsequent conference, he and his
attorney were shown videotapes which had been taken by the private investigator. He with-
drew his claim for benefits. The Commonwealth thereafter indicted the defendant on charges of
larceny and filing a false claim. The defendant pled guilty to a term of six months to be served in
the Hampden County House of Correction, which term was suspended for two years on
condition of payment of $7500 in restitution.

• Commonwealth v. Pino, Santiago & Rivera District Court, Springfield Division, Nos.
981 7CR 003927, 3926, 3924. In this insurance fraud case, the defendants claimed to have
been involved in an automobile accident. Investigation revealed that the accident never took
place. The defendants entered into a submission on the criminal charges. Each defendant was
ordered to pay restitution in the amount of $6,000.00. Defendant Rivera's case was continued
without a finding, and defendants Santiago and Pina were placed on probation for a period of
four years.

• Commonwealth v. Hernandez. Hampshire County Superior Court, Nos. 96-2487,
2488. On October 23, 1998, the defendant pled guilty to trafficking in cocaine, 14 to 28
grams, and was sentenced to a three years to three years and one day term, to be served
at MCI Cedar Junction.

• Commonwealth v. Wickham, Franklin County Superior Court Nos. 98-027-028. In this
case, a landlord was charged with presentation of false claims to the Commonwealth and
larceny over $250 as a result of scheme in which he co-habitated with a Section 8 tenant and
fi^udulently collected $24,000 from the Franklin County Regional Housing Authority. The
defendant pled guilty and the Court sentenced him to serve a term of probation, with a special
condition that he make $24,000 restitution.

BUSINESS AND LABOR
PROTECTION BUREAU

Unemployment fraud division

Fair Labor and Business Practices Division

Insurance Fraud Division

Medicaid Fraud Control Unit

BUSINESS AND LABOR PROTECTION BUREAU

Business and Labor Protection Bureau

The Business and Labor Protection Bureau, which was created in April of 1 995, consists of the Fair
Labor and Business Practices Division, the Insurance Fraud Division, the Medicaid Fraud Control Unit
and the Unemployment Fraud Division. The common goal of the four divisions is to eliminate fraudulent
activities in the marketplace with an eye toward leveling the playing field in the economic sector for busi-
nesses and individuals alike.

The combining of these four divisions as part of a coordmated Bureau allows for the sharing of inves-
tigative and legal resources. This coordination results in greater efficiency and productivity and, thus,
provides the Office with increased opportunities to detect fraud by businesses which in the past have
shown a propensity to disregard multiple statutory obligations.

The Bureau maintains its own in-house educational and training programs to supplement office wide
efforts with sessions and materials specifically geared to the types of cases assigned to its four divisions. A
Deputy Bureau Chief and a Chief Prosecutor assist the Bureau Chief in adopting and implementing consis-
tent legal policies and procedures throughout the Bureau.

The Bureau' s primary oflSces are located at 200 Portland Street, Boston and 1 65 Liberty Street, Springfield.

UNEMPLOYMENT FRAUD DIVISION

INTRODUCTION

WTien operating at fiill capacity, the Unemployment Fraud Division ("UFD") is comprised of 1 1 , full-
time staff members: a division chief, managing attorney, four assistant attorneys general, two investigators,
a paralegal, an office manager, and an administrative assistant. The UFD enforces the provisions of the
Massachusetts Employment Security Law pursuant to its authority under Massachusetts General Laws
Chapter 1 5 1 A, Section 42A. The UFD primarily receives its referrals from the Division of Employment
and Training ("DET') for actions involving employer tax fraud and larceny of unemployment benefits.

The UFD also generates its own independent actions. Through cross references from other divisions
in the Business and Labor Protection Bureau, the UFD targets complex and sophisticated schemes involv-
ing various combinations of employment security fraud, prevailing wage, and workers' compensation
violations. This interdisciplinarv' effort has been instrumental in the UFD's investigation and successful
prosecution of egregious violators. Strong interagency communication and collaboration between the

BUSINESS AND LABOR PROTECTION BUREAU

UFD and the DET, and between the UFD and other federal and state agencies has been a key ingredient
to the UFD's success.

During Fiscal Year 1 999, the UFD was especially active. In addition to significantly increasing the
number of cases addressed in court and of cases closed and returned to DET from Fiscal Year 1 998, the
UFD's staff recovered and retumed an impressive amount of restitution to the coffers of the Commonwealth's
Unemployment Trust Fund. Specifically, the UFD addressed 4 1 5 cases in District and Superior Courts
throughout the Commonwealth, closed and retumed 1 85 cases to the DET, and recovered $ 1 ,028,869.7 1
in restitution owed to the Commonwealth.

HIGHLIGHTED EFFORTS & SIGNIFICANT ACTIVITIES

EMPLOYMENT SECURITY FRAUD

• Commonwealth v. Weylu's Palace, Weylu's Too, Weylu's Wharf, and Weylu's
Woburn, Boston Municipal Court - Rick Chang of Lynnfield, president and owner of
Weylu's Palace, Weylu's Too, Weylu's Wharf and Weylu's Woburn, pled guilty to
nineteen counts of knowingly failing or refusing to pay employer tax contributions
totaling nearly $160,000.

Chang, who has declared bankruptcy and whose Chinese restaurant chain is now defunct, failed
to pay unemployment taxes for 1 9 quarters between January 1 993 and March 1 999. Chang
was ordered to serve 20 days of a one-year sentence in jail, with the balance of his sentence
suspended for a three year probationary period. In addition to his commitment, Chang must
pay $36,000 in restitution to the Division of Employment and Training.

• Resolution of three Lincoln Elementary School Construction Cases: During
fiscal year 1999, the Unemployment Fraud Division resolved three cases of fraudulent
employment practices by corporate officers and companies involved in the construction
of the Lincoln Elementary School in Brookline between 1992 and 1994. Five companies
were originally indicted by a Suffolk County Grand Jury in a number of violation areas,
including unemployment tax, worker's compensafion, and prevailing wage. The three
cases resolved this fiscal year were:

• Commonwealth y. Lawrence Craffey & Quinn Construction Co., Suffolk Supe-
rior Court - Lawrence Craffey, Sr. of Brockton pled guilty to three counts of Failure to

BUSINESS AND LABOR PROTECTION BUREAU

Provide True and Accurate Payment Records, one count of Failure to pay the Prevailing Wage
and one count of Workers' Compensation Fraud.

Craffey worked as an "unofficial" subcontractor to Jeffrey Construction, which was an
official subcontractor on the Lincoln Elementary School project in Brookline. Craffey
paid his carpenters between $10 and $12.50 per hour for prevailing wage jobs that were
designated at a rate of $30.79 per hour. Craffey also failed to keep payroll records or to
provide workers' compensation insurance for any of his employees.

In addition to a 90-day commitment in the House of Correction, Craffey 's sentence
included a period of debarment from public works projects and three years of probation.

• Commonwealth v. David A. Horton & H. M. Horton Co., SufToIk Superior Court

- Walpole contractor H. M. Horton Company and its sole corporate officer David A.
Horton of Norwell pled guilty to four counts of fraudulent employment practices, includ-
ing: Worker's Compensation Fraud, Failing to Produce True and Accurate Records and
Making False Statements to Avoid or Reduce Unemployment Contributions.

Horton under reported the number of employees working for Horton Company during the
construction of the Lincoln Elementary School in Brookline. He also failed to report the accu-
rate amount of payroll to his insurance carrier and therein avoided the payment of premiums and
proper coverage for employees working on the construction site.

Horton was sentenced to three years probation, ordered to pay a total of $8,397.97 in restitu-
tion and a $5,000 fine. Both he and Horton Company were debarred from public works
projects for a term of three years.

• Commonwealth v. Peter S. Davidson, Wayne A. Kimball, and Davidson Form
Construction, Suffolk Superior Court - Rowley Contractor Davidson Form Construc-
tion, president Peter S. Davidson of Ipswich, and vice president Wayne A. Kimball of
Wakefield, pled guilty to five counts of fraudulent employment pracfices, including:
Failure to Pay the Prevailing Wage to Employees and Failure to Keep True and Accurate
Payroll Records.

The violations occurred between 1992 and 1993 while Davidson Form Construction
was a subcontractor on the Lincoln Elementary School in Brookline. Davidson paid

BUSINESS AND LABOR PROTECTION BUREAU

workers $7.89/hour less than the prevaiHng wage. Davidson Construction kept payroll
records that did not accurately reflect employees' hours, pay and job classifications.

Davidson and Kimball were each sentenced to six months probation, ordered to pay
$22,000 in restitution, a $500 fine, and were debarred from public works projects for the
probationary period.

• Christine Dalton v. PET, Massachusetts Appeals Court - Petitioner Christine
Dalton of South Boston appealed a determination by the Division of Employment and
Training that she was ineligible to receive extended retraining benefits for her failure to
file an application timely with the provisions of General Laws c. 151 A, sec. 30. After
ftill briefing and oral argument, the Massachusetts Appeals Court affirmed the decision of
the lower court (South Boston District Court) to uphold the DET determination.

• National School Bus Service, Inc. v. DET, Massachusetts Appeals Court - Peti-
tioner National School Bus Service ("National") appealed the decision of the Boston
Municipal Court to affirm the Division of Employment and Training Review Examiner's
and Board of Review's determination that National was not entitled to "successor" status
within the meaning of General Laws c. 1 5 1 A, sec. 1 4(n)( 1 ). National argued in its brief that it
should have been entitled to "successor" status when it was awarded a contract with Boston
Public Schools to provide transportation service for its students. This matter has been briefed
by both parties and awaits a hearing date.

• Commonwealth v. Bridget Hickson, Suffolk Superior Court - Bridget Hickson of
Dorchester pled guilty to larceny over $250 and uttering counterfeit checks. Hickson had
intentionally cashed stolen Division of Employment and Training checks. Hickson was
sentenced to three months in the House of Correction, suspended for one year, and was
ordered to continue her drug treatment program.

• Commonwealth v. Alvin Snow, Roxbury District Court - Alvin Snow of Newton
pled guilty to a larceny charge. He was sentenced to eighteen months in the House of
Correction, eight months to be served concurrent with his then-current sentence, with the
remaining 10 months suspended for two years and full restitution of $2,986. Snow
served eight months, subsequently violated his probation, and was committed for the
remaining 10 months. The restitution order was remitted upon his being re-committed.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Albert Gallo, Boston Municipal Court - Albert Gallo of
Swampscott admitted to sufficient facts on 22 felony counts of unemployment fraud.
Gallo failed to pay employer taxes for 22 quarters between 1992 and 1997. The case was
continued without a finding for three years, with an order to pay restitution to the Divi-
sion of Employment and Training in the sum of $99,700.17, at a rate of $700 per month.

• Commonwealth v. Douglas Lyman, Boston Municipal Court - Douglas Lyman,
President, Treasurer, Clerk and Director of Pediatric Care of America, pled guilty to six
counts of failure to pay unemployment tax between 1995 and 1996 after a bench trial
began in this matter. The case was continued without a finding for 22 months, with an
order to pay restitution to the Division of Employment and Training in the sum of
$19,800, at a rate of $900 per month, with a Duquette alternative sentence of six years
committed in the House of Correction, full restitution and interest.

• Commonwealth v. Rosier Herode, Roxbury District Court - Rosier Herode of
Dorchester admitted to sufficient facts on 17 felony counts of unemployment fraud.
Herode failed to correctly report his earnings for a period of nine months while receiving
unemployment benefits. The case was continued without a finding for six months with
an order to pay restitution in the sum of $3,000 to the Division of Employment and
Training. Two days following the issuance of the Court Order, Herode paid the fiill
restitution amount.

• Commonwealth v. Air Balance, Inc., Boston Municipal Court - Charles A. Corlin,
Jr. of Burlington admitted to sufficient facts on 12 counts of failure to pay employer tax
contributions. Corlin, as president of Air Balance, Inc., failed to pay employer taxes for
12 quarters between 1992 and 1998. The case was continued without a finding for two
years with an order to pay restitution in the amount of $21,716 at a rate of $500 per
month.

• Commonwealth v. Jeffrey T. Derby, Lowell District Court - Jeffrey Derby of
Dracut admitted to sufficient facts on eight counts of larceny of unemployment benefits.
Derby admitted to working in self-employment at Derby's Auto from October 1996 to
January 1997 while collecting unemployment benefits. The case was continued without a
finding for one year with an order to pay restitution in the sum of $5,558 to the Division
of Employment and Training.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Michael Calore and Joseph Calore, Boston Municipal Court -

Michael Calore of Exeter, R.I., and Joseph Calore of Wakefield, R.I., each admitted to
sufficient facts on five counts of failure to pay employer tax contributions. Michael
Calore, president, and Joseph Calore, treasurer, of both C.F.S. Air Cargo, Inc. and Calore
Express, Inc., failed to pay unemployment tax for 5 quarters between 1994 and 1995.
The case was continued without a finding for three years with an order to pay restitution
to the Division of Employment and Training, joint and several, in the sum of $41,463 for
C.F.S. Air Cargo and $7,595 for Calore Express.

PRISONER CROSS MATCH INITIATIVE

The Unemployment Fraud Division, in collaboration with the Division of Employment and Training and
the Department of Corrections, has continued its successful identification, investigation and prosecution of
state prisoners who fraudulently collect unemployment benefits while incarcerated. The UFD initiated this
interagency effort in fiscal year 1 998, by facilitating the creation of a computer CROSS MATCH program
between the DET and the DOC. Since the inception of this program, over 20 present or former prisoners
have been caught and prosecuted. Among those prosecuted in fiscal year 1 999 were:

• Commonwealth v. Stanley Duval, Brockton District Court - Stanley Duval of
North Easton admitted to sufficient facts on eight counts of unemployment fraud. With
the assistance of a girlfriend, Duval fraudulently collected $ 1 . 1 04 in unemployment
benefits between March and May 1 997 while incarcerated at the Plymouth County House
of Correction. The case was continued without a finding for one year with an order to
pay restitution to the Division of Employment and Training in the sum of $1,104. A
Duquette alternative of a guilty finding with a six month commitment at the House of
Correction and full restitution was also imposed.

• Commonwealth v. Raymond Soraghan. Haverhill District Court - Raymond
Soraghan of Groveland pled guilty to 12 counts of unemployment fraud. With the assis-
tance of his father, Soraghan fraudulently collected $1,182 between December 1996 and
March 1997 while incarcerated at the Essex County House of Correction. Upon his
guilty plea, Soraghan was sentenced to six months in the House of Correction, suspended
for six months, with an order to pay restitution to the Division of Employment and
Training in the sum of $1,182. Six months following the issuance of the Order, Soraghan
paid the full resfitution amount and his probation was terminated by the Court.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Joseph Papaleo, Worcester District Court - Joseph Papaleo of
Clinton pled guilty to nine counts of unemployment fraud. With the assistance of a
girlfriend, Papaleo fraudulently collected $900 between May and June 1997, while
incarcerated at the Worcester County House of Correction. Upon his guilty plea, Papaleo
was sentenced to one year in the House of Correction, suspended for one year, with an
order to pay restitution to the Division of Employment and Training in the sum of $900.

SPECIAL PROJECTS

CASE EVALUATIONS

Each of the Unemployment Fraud Division's open cases and investigations in inventory was reviewed I
and evaluated by the staff Cases are either moving forward in the criminal process, or are being returned j
to the Division of Employment and Training pursuant to the Memorandum of Understanding between the
UFD and the DET. In the last year alone, the UFD has closed and returned to the DET 1 85 cases.

LARCENY DEFAULT EVALUATIONS

Each of the Unemployment Fraud Division's larceny cases that have been on default for five or mor
years was reviewed and evaluated by staff investigators. Additional attempts to investigate and locate t
whereabouts of missing defendants, to determine whether default warrants were still outstanding, and to'
correspond with any counsel of record were made. Pursuant to the Memorandum of Understanding
between the UFD and the DET, larceny cases that have been on default five or more years must be closed
and returned to the DET.

TRAINING AND EDUCATION

DET TRAINING OF UFD STAFF

During fiscal year 1 999, Unemployment Fraud Division staff attended a comprehensive training given
by the Division of Employment and Training. This training was organized at the request of the UFD to
ensure continued successfiil invesfigation and prosecution of the Division's cases. This hands-on training
covered: ( 1 ) the Unemployment Insurance Program, Policies and Procedures; (2) the Unemployment
Benefit Payment Control Process; (3) the Tax Audit Process; and, (4) the Employer Tax Process.

BUSINESS AND LABOR PROTECTION BUREAU

UFD TRAINING MANUAL

Unemployment Fraud Division staff drafted and compiled a comprehensive UFD Policy and Training
Manual. In addition to providing a general overview of the UFD and its statutory authority for the pros-
ecution of unemployment fraud matters, this Manual includes detailed information on: the roles and re-
sponsibilities of the UFD staff; the DET's laws and procedures; the prosecution of employer tax and
larceny cases; sample pleadings, court forms and internal division forms; courtroom protocol; legal re-
search; GAG personnel information; and the special grand jury process.

DIVISION STATISTICAL SUMMARY

MONIES COLLECTED BY UFD

July 1998

$ 188,766.33

August

42,567.33

September

66,462.75

October

57,632.64

November

66,336.44

December

68,832.21

January 1999

42,224.66

February

100,774.55

March

62,528.47

April

28,831.60

May

57,347.67

June

46,565.06

Total Monies:

$1,028,869.71

DET CASE REFERRALS RECEIVED BY UFD

Larceny Referrals

Tax Referrals

July 1998

August

September

October

November

BUSINESS AND LABOR PROTECTION BUREAU

December

January 1999

February

March

April

May

June

Total Referrals:

CASES PENDING AS OF JUNE 30, 1999

Criminal Employee Claims

Criminal Employer Claims

Other*

Total Pending Cases

CASES ON DEFAULT AS OF JUNE 30, 1999

Criminal Employee Claims

Criminal Employer Claims

Other*

Total Defaults

CASES CLOSED AND RETURNED TO DET

Criminal Employee Claims

Criminal Employer Claims

Other*

Total Closed Cases

6
0
6
4
1
1

_0
23

330

369 (505 Defendants)

57
756

166

266

185

BUSINESS AND LABOR PROTECTION BUREAU

COMPLAINTS ISSUED

Criminal Employee Claims 12 (130 counts)

Criminal Employer Claims 43 (341 counts)

Other* L (12 counts)

Total Complaints Issued 56 (483 counts)

* Includes employer tax and/or employee fraudulent claims cases independently developed and/or
specially referred.

FAIR LABOR & BUSINESS PRACTICES DIVISION

INTRODUCTION

The Fair Labor and Business Practices Division ("FLBP") is comprised of the Division Chief, Manag-
ing Attorney, Westem Massachusetts Deputy Managing Attorney, Director of Safety, 1 0 additional assis-
tant attorneys general,24 inspectors, one financial investigator, seven hodine/intake members, two parale-
gals, an outreach coordinator and six support personnel. FLBP staffs full-time offices in Boston and
Springfield as well as satellite offices in Fall River, Worcester and Pittsfield.

FLBP is responsible for enforcing the Massachusetts wage and hour laws, including the prevailing
wage, minimum wage, overtime and nonpayment laws as well as the child labor and workplace safety
laws. In addition to investigating and prosecuting or civilly citing offenders for these violations, FLBP
investigates and prosecutes offenders for workers' compensation and unemployment fraud violations in
instances where violation of these laws are combined with violation of the wage and hour laws. Often
times employers who do not pay their employees also fail to contribute to the Unemployment Compensa-
tion Trust Fund and/or fail to provide workers' compensation. Such potential violations are checked in
every FLBP investigation and, to the extent instances of these types of fraud are discovered, they are
included in any prosecutions FLBP subsequently pursues. FLBP also staffs a Bid Protest Unit that arbi-
trates public construction bid disputes through office hearings.

FLBP investigated 5,955 complaints during fiscal year 1 999. Prosecutions and debarments increased
significantly over last year's efforts. The majority of cases that were not prosecuted were resolved suc-
cessfiilly with full restitution paid to the complainants. During the fiscal year, a total of $3,607,579 in owed
wages was collected for employees as a direct result of FLBP's efforts.

BUSINESS AND LABOR PROTECTION BUREAU

Since the Spring of 1 998. FLBP's Inspectional and Legal Staffs have been assigned to specific geo-
graphical areas determined by court jurisdictions. The Inspectors work proactively in their districts at least
one day a week. The AAGs prosecute cases in the same courts on a regular basis. This allows the
respective courts and surrounding communities to become more familiar with the FLBP staff who serve
their districts and also enables the FLBP to create a better public awareness of the work it does, the
assistance it can offer, and the laws it enforces.

HIGHLIGHTED EFFORTS & SIGNIFICANT ACTIVITIES

CIVIL ENFORCEMENT IMPLEMENTATION TEAM

On November 5, 1 998 significant new amendments to the wage and hour laws took effect enhancing
criminal penalties for violations of certain of the wage and hour laws and at the same time gave the Attomey
General the alternative authority to issue civil citations for such violations.

Pursuant to this new legislation, FLBP can now issue a citation to an employer who does not pay its
employee wages, overtime or the minimum wage, fails to pay the prevailing wage or fails to provide true
and accurate certified payroll records. This citation can require the employer to comply with the law, pay
restitution to the employees, and/or pay a civil penalty.

FLBP created a team responsible for developing policies and protocols to achieve effective and effi-
cient implementation of the new law. To provide guidance to employers and employees, the team also
issued an advisory summarizing the new legislation and advising employers and employees of their rights
and responsibilities thereunder.

CENTRAL ARTERY/TUNNEL ENFORCEMENT TEAM

The Division's Central Artery/Tunnel ("CAyT') Enforcement Team continues to focus on monitoring
wage compliance at the country's largest public construction project. The team is responsible for investi-
gating and prosecuting or civilly citing employers for violations of the wage and hour laws, primarily those
involving failure to pay the prevailing wage, as well as other criminal offenses. The team continues to work
with other divisions within the Office of the Attomey General, as well as with the Massachusetts Highway
Department in their education and enforcement efforts. Members of the team directed by the Division
Chief, include two assistant attomeys general, four inspectors and one paralegal.

BUSINESS AND LABOR PROTECTION BUREAU

PREVAILING WAGE ENFORCEMENT TEAM

FLBP created a Prevailing Wage Enforcement Team in June of 1 998. The team is comprised of eight
Inspectors whose primary responsibilities are the proactive enforcement of the Massachusetts prevailing
wage law. The Prevailing Wage Enforcement Team investigates referrals, anonymous tips and employee
complaints received by FLBP. The Prevailing Wage Enforcement Team also conducts unannounced site
inspections at numerous public construction projects throughout the Commonwealth. During this fiscal
year, the team conducted over 350 site inspections throughout the Commonwealth.

BID UNIT

The Attorney General's Office serves to provide a fair and accessible forum for the resolution of
public construction bidding disputes. The Attorney General's main enforcement efforts in this area are
undertaken by the Bid Unit, a unit within the Fair Labor and Business Practices Division. Efforts under-
taken in Fiscal Year 1999 included: (i) the receipt and resolution of filed bid protests, (ii) the receipt of
telephone calls fi-om the public contracting community seeking assistance concerning the public bidding
laws, (iii) the receipt and resolution of appeals from the Commonwealth's contractor pre-qualification
process, and (iv) the education of public contract participants (e.g. architects, contractors, municipal and
public agency officials). During Fiscal Year 1 999, the Attorney General resolved bid protests for public
construction contracts ranging in cost from $ 1 1 thousand to $90 million.

The Division's bid enforcement efforts also include an educational component that provides public
contracting participants with necessary information regarding the public bidding laws. The Bid Unit's
educational approach is multifaceted, so that the effect of the educational initiative may be maximized. An
example may be found in the availability of the written bid protest decisions which continue to be compiled
and made available at the Francis X. Bellotti Library of the Attorney General's Office, located at One
Ashburton Place in Boston. Also, the bidding seminars which the Division sponsors or participates in
provide the substantive and procedural information necessary to properly solicit or submit public construc-
tion bids. Such proactive efforts serve many usefiil purposes, not the least of which is to decrease the
number of filed bid protests.

The receipt of, and response to, telephone inquiries and correspondence also serves an educational
function. During Fiscal Year 1999, over 3,000 telephone calls concerning public bidding questions were
received and answered by the Bid Unit. The Bid Unit's telephone support has become an established and
important resource for contractors, as well as awarding authorities. Telephone support and assistance also
provides a significant prevention tool, often delivering the information necessary to prevent (or quickly

BUSINESS AND LABOR PROTECTION BUREAU

remedy) a violation of the public bidding laws.
SAFETY

FLBP investigates reports of fatalities and serious injuries that occur at the workplace. FLBP inspec-
tors work in cooperation with representatives from the United States Occupational Safety and Health
Administration (OSHA), the Massachusetts Department of Public Health's Fatality Assessment and Con-
trol Evaluation Program, the State Police Crime Prevention and Control Unit, local police and fire depart-
ments, and other federal, state and local agencies.

In addition, the Division investigates all reports of serious injuries and safety complaints that occur in
the public sector. The Division retains statutory authority to enforce safety standards in municipal and
county workplaces.

The following investigations were conducted during FY99:

Service Industries 9

Constmction 1 7

Manufacturing 1 5

Public Employees 9

Fatalities ii

TOTAL 61

CHILD LABOR

The Massachusetts Child Labor Laws protect workers under the age of 1 8. No other workplace!
safety laws acknowledge the special vulnerabilities of young workers. The laws allow young workers to
optimize their educational opportunities by restricting the number of hours minors of certain ages may
work. Hazardous tasks and equipment are prohibited in recognition of the increased rate of workplace
injury among teenaged workers. In addition, the permitting process creates a structure for school super-
intendents who issue permits to review the intended employment to ensure that it is safe, is consistent with
the child labor laws, and serves the general welfare of the minor.

FLBP investigates reports of child labor violations, conducts site inspections and educates employers
about their legal obligations, confirming their compliance. During FY99, Inspectors visited 171 businesses
where minors were employed, noting some 155 violations that were subsequently rectified by the employ-
ers.

BUSINESS AND LABOR PROTECTION BUREAU

INDUSTRIAL HOMEWORK

FLBP enforces the industnal homework laws (work performed for a company in the employee's
home) by issuing permits to the employers and certificates for each employee. FLBP also monitors these
companies to ensure compliance with the minimum wage and overtime laws. During F Y99, FLBP issued
21 permits and 202 certificates.

WAIVERS

The Fair Labor and Business Practices Division is charged with the authority to waive certain require-
ments of the labor laws under conditions specified within the statutes. Each request for a waiver is carefiiily
reviewed before a determination is made to either grant or deny the request. Three areas of waiver focus
are worthy of note:

Following a review of the criteria for issuing exemptions for the requirement that employers allow
employees a day of rest in seven, the number of such exemptions granted decreased from 76 in F Y98 to
3inFY99.

The Division has rewritten the standards for employment in summer camps based upon changes in the
minimum wage regulations. The written standards are distributed each spring to all camps requesting to
pay subminimum wage. Because of significant changes in the Department of Public Health's camping
regulations, FLBP no longer includes the DPH regulations in the materials it distributes.

The Division no longer grants exemptions to the three-hour minimum daily hours requirement. This
change resulted from an amendment to the minimum wage regulations.

WAIVER STATISTICAL REPORT

TYPE OF WAIVER FEE FOR WAIVER AMOUNT GRANTED FEE COLLECTED

Meal $100.00 $57.00 $5,749.52

7-Day 100.00 3.00 300.00

Theatrical 100.00 23.00 2,300.00

Employer 50.00 123.00 6,150.00

Seasonal 100.00 28.00 2,800.00

BUSINESS AND LABOR PROTECTION BUREAU

3 hr. Minimum

50.00

5.00

250.00

Sheltered Workshop

50.00

22.00

1,100

TOTAL FIGURES

S550.00

$261.00
SIGNIFICANT CASES

$18,649.52

The follo\\ing list provides an overview of 63 prosecution efforts undertaken by FLBP during Fiscal
Year 1999:

• Commonwealth v. Matthew Connolly, Commonwealth Trucking, Inc. (Suffolk
Superior Court) - Matthew Connolly, president of Commonwealth Trucking, Inc., was
convicted by a jury of workers' compensation fraud, failure to provide workers' compen-
sation insurance, failure to pay the prevailing wage, and submitting false certified payroll records
in connection with work on the Central Artery /Tunnel Project. He was sentenced to two years
probation, ordered to pay $1 7, 1 89.44 in restitution to a former employee, $2,500 in fines, and
debarred ft"om bidding or participating on government contracts for three years.

• Commonwealth v. Edlin Almeida, Jr. (Suffolk Superior Court) - Edlin Almeida, the
owner of a trucking company, pled guilty to failure to pay the prevailing wage rate,
failure to submit certified payroll records and filing false certified payroll records for
work performed by his truck drivers on the Central Artery/Turmel Project. He was placed
on probation for seven months and ordered to pay $20,919.99 in restitution to four em-
ployees. Almeida was also debarred from participating or bidding on public works
construction projects for six months.

• Commonwealth v. Daniel Amaral/Amaral Excavating, Inc. (Suffolk Superior
Court) -Amaral Excavating and its president, Daniel Amaral pled guilty to seven counts
of violating the state's prevailing wage law, one count of failure to keep true and accurate
records of employees working at the Central Artery/Tunnel Project, seven counts of
failure to pay overtime, one count of failure to file with the Division of Employment and
Training and pay contributions to the Unemployment Compensation Trust Fund, and one
count of failure to provide worker's compensation coverage. Amaral was sentenced to
nine months in the House of Correction and was ordered to serve 14 days of that sentence
with the balance suspended for three years. He was also ordered to pay a total of
$ 1 07, 1 20.69 in restitution to his employees and $7,700 in fines. Amaral will be debarred fi-om
public works construction for three years. The defendant corporation also pled guilty to the same

BUSINESS AND LABOR PROTECTION BUREAU

charges and was debarred from public works construction in Massachusetts for three years.

• Commonwealth v. Bartholomew Molloy (Suffolk Superior Court) - Bartholomew
Molloy, the owner of a trucking company, pled guilty to indictments charging him with
failure to pay the prevailing wage, failure to pay wages in a timely manner, and failure to
pay overtime in connection with work performed on the Central Artery /Tunnel Project.
The defendant was placed on probation for three years. He was also ordered to pay
$11, 488 in restitution to one employee and was debarred from public works construction
for six months.

• Commonwealth v. Noel St. George, Jr. (Suffolk Superior Court) - The defendant
pled guilty to failure to pay the prevailing wage rate, filing false certified payroll records
and failure to provide workers' compensation insurance for work performed by his
trucking company on the Central Artery/Tunnel Project. St. George was placed on
probation for two years, ordered to pay a $500 fine and was debarred from participating
or bidding on public works projects for three years. He was also ordered to pay
$23,319.77 in restitution for wages owed to his drivers.

• Commonwealth v. Lvnden Wright (Suffolk Superior Court) - Lynden Wright, co-
owner of L&D Trucking, pled guilty to failure to pay the prevailing wage rate for work
performed by his employees on the Central Artery /Tunnel Project, failure to file certified
payroll records, failure to pay wages in a timely manner, failure to pay unemployment
taxes, and failing to provide workers' compensation coverage for his employees. He was
placed on probation for one year and ordered to pay $20,985.74 in restitution. Wright
was also ordered to pay $1,000 in fines and was debarred from participating or bidding
on government contracts for three years.

• Commonwealth v. Diane Wheatlev (Suffolk Superior Court) - Diane Wheatley, co-
owner of L&D Trucking, pled guilty to failure to pay the prevailing wage rate, failure to
submit certified payroll records, failure to pay wages in a timely manner, failure to pay
unemployment taxes, and failing to provide workers' compensation coverage for her
employees. Wheatley was placed on probation for one year and ordered to pay a $500 fine. She
is also debarred from participating or bidding on government contracts for three years.

• Commonwealth v. Michael Walorz (Suffolk Superior Court) - Michael Walorz,
president of Walorz Trucking, pled guilty to failure to pay the prevailing wage rate and
failing to file certified payroll records for work performed by his truck drivers on the

BUSINESS AND LABOR PROTECTION BUREAU

Central Artery /Tunnel Project. He was placed on pre-trial probation for one year, and ordered
to pay $2 J2 1.21 in back wages to his employees.

• Commonwealth v. Arthur L. Norris, Jr. (Suffolk Superior Court) - Arthur
Norris was charged with failure to pay the prevailing wage rate and failure to file certified
payroll records for work performed by his truck drivers on the Central Artery /Tunnel
Project. He was placed on pre-trial probation for one year and ordered to pay $2,83 1 .23
in restitution for wages owed to his employees. Norris was also ordered to pay $1,000 in
fines and was debarred from participating or bidding on public works construction
projects for six months.

• Commonwealth v. Thomas P. Morabito (Suffolk Superior Court) - Owner of T.P.
Morabito Trucking, Thomas P. Morabito pled guilty to failure to pay overtime and failure
to pay wages in a timely mamier for work performed on the Central Artery. He was
ordered to pay $2,700 in fines and $317.20 in restitution.

• Commonwealth v. Ralph Caruso, Jr. (Suffolk Superior Court) - The defendant was
charged with failure to pay the prevailing wage rate and filing false certified payroll
records for trucking work performed by his employees on the Central Artery/Tunnel
Project. He was placed on pre-trial probation for one year and ordered to pay $244 in
restitution for wages owed to his employees.

• Commonwealth v. Tom Bowley/Tewksbury Industries (Middlesex Superior Court)
- Tom Bowley, corporate president of Tewksbury Industries, was charged with two
counts of manslaughter following the deaths of two workers. Prior to the injuries, the
defendant had been informed of general defects regarding the safety of his scrap metal
yard by OSHA, insurance companies and various consultants. The defendant pled guilty
to two counts of assault & battery, and was sentenced to 400 hours community service
and three years probation.

• Commonwealth v. James Verni, DBA Lube Express (New Bedford District
Court) - James Verni, the owner of Lube Express, a car service center, admitted to suffi-
cient facts for findings of guilty on charges of non-payment of wages and failure to pay
unemployment contributions. The charges were continued without a finding for one year
and Verni was ordered to pay $2,810 in restitution to three former employees and $2,000
to the Division of Employment and Training.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Joseph Lewis and Boston Towing Inc. (Boston Municipal
Court) - Boston Towing and its president, Joseph Lewis, admitted to sufficient facts for
findings of guilty on charges of non-payment of wages and failure to obtain workers'
compensation insurance. The charges were continued without a finding for one year.
The defendants were placed on probation and ordered to pay $ 1 , 1 54 in restitution to two
former employees who worked as tow truck drivers, $500 in court costs with an alterna-
tive sentence of guilty findings and 10 days in the house of correction.

• Commonwealth v. D&R General Contracting Inc. and Richard Morello (Wobum
District Court) - D&R General Contracting and its president, Richard Morello, admitted
to sufficient facts for findings of guilty on charges of failure to pay the prevailing wage
rate and failure to pay the correct overtime rate. The corporation also admitted to suffi-
cient facts for a finding of guilty on charges of failure to provide true and accurate payroll
records and failure to provide payroll records. The charges were continued without a
finding for two years. The corporation was ordered to pay $21,463.79 in restitution to
four former employees, $10,000 in court costs and $40,000 in community service
projects. Morello was ordered to pay $1,000 in court costs and debarred for six months.

• Commonwealth v. Janice Falcone (New Bedford District Court) - Janice Falcone,
the owner of a hair and beauty salon, admitted to sufficient facts for findings of guilty on
charges of non-payment of wages, failure to pay unemployment contributions and failure
to provide workers' compensation coverage. The charges were continued without a
finding for one year. Falcone was placed on probation and ordered to pay $2,461 in
restitution to five former employees, $3,525 to the Division of Employment and Training
and $3,000 in court costs, with an alternative sentence of up to 60 days in the house of
correction on the non-payment claims, up to one year on the unemployment claim and up
to two and one-half years on the workers' compensation claim.

• Commonwealth v. Michael Brulport (Chelsea District Court) - Michael Brulport,
the president and owner of Northern Insulation, Inc., admitted to sufficient facts for
findings of guilty on charges of non-payment of wages, failure to pay unemployment
contributions and failure to provide workers' compensation coverage. The charges were
continued without a finding for one year. Brulport was ordered to pay $3,000 in restitu-
tion to one former employee, $1,000 to the Division of Employment and Training and
$100 in court costs.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Kingsberry Building Technologies Inc. and Charles Martin

(Maiden District Court) - Kingsberry Building Technologies, Inc. and its president,
Charles J. Martin, admitted to sufficient facts for guilty findings on charges of failure to
pay the prevailing wage, workers' compensation fraud, unemployment tax fraud, failure
to provide true and accurate payroll records and failure to provide pay stubs to employ-
ees. The charges were continued without a finding for one year. The defendants were
ordered to pay $10,980 in restitution to two former employees, restitution of $28,600 to
Eastern Casualty Company and $5,500 in court costs with an alternative sentence of six
months in the house of correction committed. The defendants were also debarred from
bidding on public works construction projects for one and one-half years.

• Commonwealth v. Carmelina's Waterfront, Inc. and David S. Arsenault (Salem
District Court) - Carmelina's Waterfront and its president, David S. Arsenault, admitted
to sufficient facts for guilty findings on charges of failure to pay unemployment contribu-
tions and failure to provide workers' compensation coverage. The cases were continued
without a finding for 18 months and the defendants were ordered to pay $2,638.03 in
restitution to the Division of Employment and Training and $2,000 in court costs.

• Commonwealth v. Northeast Sweeping & Asphalt Paving Corporation, EMP
Sweeping & Asphalt Corporation, Deanna Zucchari, Peter Maggio and Edward
Crasco (Maiden District Court) - Both corporations worked in concert to hire and pay
employees for work on various highway maintenance projects. The corporations were
both managed by Peter Maggio. Northeast, Deanna Zucchari and Edward Crasco all
admitted to sufficient facts for findings of guilty on charges of non-payment of wages and
failure to provide workers' compensation coverage. Zucchari also admitted to sufficient
facts on charges of failure to register with the Division of Employment and Training,
failure to provide true and accurate payroll records and failure to pay the correct prevailing wage
rate. Crasco also admitted to sufficient facts on a charge of larceny by check. Maggio admitted to
suflBcient facts on charges of non-payment of wages. The cases were continued without a finding for
one year. All parties were ordered, jointly and severally, to pay $ 1 9,26 1 .66 in restitution to 1 0
former employees and all parties were debarred from public works projects for three years. Crasco
was required to pay court costs of $2,000 and Zucchari was ordered to pay court costs of $385.
EMP pled guilty to charges of non-payment of wages, failure to register with the Division of Employ-
ment and Training, failure to provide tme and accurate payroll records and failure to pay the correct
prevailing wage rate. The corpx)ration was placed on probation for one year and debarred from

BUSINESS AND LABOR PROTECTION BUREAU

public works projects for three years.

• Commonwealth v. Sentry Corporation and John T. Jacobus (Hingham District Court) -
Sentry Corporation and its president, John T. Jacobus, pled guilty to seven counts of failure to
pay the prevailing wage and two counts of failure to provide true and accurate payroll records.
The defendants were placed on probation for one year and were ordered to pay $ 1 5,3 1 9.69 in
restitution to four employees and $2,000 in fines. They were also debarred for six months. In
addition, the defendants admitted to sufficient facts for findings of guilty of workers' compensa-
tion fraud. This charge was continued without a finding for two years and the defendants were
ordered to pay a $2,000 fine and $3 1 ,2 1 8 in restitution to Wausau Insurance Company.

• Commonwealth v. Timothy Croft and Advanced Craftmans Co. (Ayer District
Court) - Timothy Croft, owner of Advanced Craftsman Co., pled guilty to three counts of
failing to file a business certificate and was ordered to pay $ 1 50 in fines. Croft also
admitted that there were sufficient facts to find him guilt>' of three counts of failure to
pay the prevailing wage rate. These matters were continued without a finding for six
months with the condition that the defendant be debarred from public works construction
for that period of time. The defendant was also ordered to pay $3,720.06 in restitution to
three employees.

• Commonwealth v. Skyline Roofing and Contracting and Lester Hooben (Taunton
District Court) -Skyline Contracting and Roofing, Inc. and its president, Lester Hooben,
pled guilty to six counts of failure to pay the prevailing wage rate, one count of submit-
ting false payroll records, three counts of failure to pay wages in a timely manner, and
three counts of failure to pay overtime. Hooben was sentenced to 30 days in the House of
Correction, suspended for one year. He was also ordered to pay $8,238.48 in restitution,
$2,150 in fines, and was debarred from public works construction for six months. Sky-
line was also debarred from public works construction for six months.

• Commonwealth y. Brentwood Construction and John Fein (Barnstable District Court)
- John Fein, the operator of a Hyannis construction company, was charged with failure to pay
the prevailing wage rate and failure to provide true and accurate records. The defendant
admitted to sufficient facts for findings of guilty . The case was continued without a finding for
three months and the defendant was debarred for six months, and was ordered to pay $ 1 0,000
in back wages to two employees.

• Commonwealth v. Diversified Contracting, Inc. (Dorchester District Court) -

BUSINESS AND LABOR PROTECTION BUREAU

Diversified was found guilty of four counts of failure to pay the prevailing wage rate and
one count of failure to file true and accurate certified payroll records following a bench trial.
The defendant was ordered to pay $ 1 3,000 in fines.

• Commonwealth v. Medical Weight Loss Center, Inc. (Brighton District Court) -
Medical Weight Loss was found guilty of failure to pay wages following a bench trial.
The defendant was ordered to pay $1,000 in fines and $804 in restitution to one em-
ployee.

• Commonwealth v. J & G Electric, Inc. and Joseph Gauthier (Peabody District
Court) - J & G Electric and its president, Joseph Gauthier, pled guilty to charges of
failure to pay the prevailing wage rate to one employee and failure to pay overtime to five
others. The defendants were placed on probation for two years and ordered to pay
$18,059 to the employees. Both defendants were debarred for six months.

• Commonwealth v. Quality Insulation, Inc. and William L. White, Jr.

(Framingham District Court) - Quality Insulation pled guilty to two counts of failing to
pay the prevailing wage rate and one count of failure to provide true and accurate certi-
fied payroll records. Quality's compliance officer, William White, Jr., admitted to suffi-
cient facts for a finding of guilty on the charge of failing to provide true and accurate
certified payroll records. The charge against him was continued without a finding for six
months. The company was debarred from public works construction for six months.
Quality and White were ordered to pay $7,220.45 in restitution to two employees.

• Commonwealth v. Hickox School of Information Technology and Ralph Covino

(Brockton District Court) -The former Hickox School of Information Technology, Inc.
and its president/treasurer, Ralph Covino, admitted to sufficient facts for findings of
guilty on charges of failure to pay wages to four instructors, failure to make unemploy-
ment insurance contributions, and failure to provide workers' compensation insurance
coverage. The complaints were continued without a finding for one year. The defendants
were ordered to pay $1 ,913 in restitution to the instructors of the former computer train-
ing school, $1,500 to the Division of Employment and Training, and $100 in court costs.

• Commonwealth v. Naratoone Security, Inc., Okey Chikere and Emmanuel Onos

(Dorchester District Court) - Naratoone Security Inc. was charged with failure to make
unemployment contributions. Its president, Okey Chikere, was charged with four counts

BUSINESS AND LABOR PROTECTION BUREAU

of failure to pay wages. Both admitted to sufficient facts for a finding of guilty on eigh-
teen complaints. The cases were continued without a finding for one year, and the defen-
dants were ordered to pay $22,960 in unemployment insurance contributions to the
Division of Employment and Training. Chikere and the company's Chief Financial
Officer, Emmanuel Onos, were also ordered to pay a total of $3,918.98 to four employees
who failed to receive their wages and earned vacation pay when they were laid off fi-om
their positions as security officers.

• Commonwealth v. Pedigree Career Institute Educational Services, Inc. and
Kevin Hallinan (Lynn District Court) - Pedigree Career Institute and its president and
treasurer, Kevin Hallinan, admitted to sufficient facts for findings of guilty on thirteen
counts of failure to pay wages. Pedigree was found guilty and the charges against
Hallinan were continued without a finding for three years. Both defendants were placed
on supervised probation and ordered to pay $13,500 in restitution to thirteen employees.
PCI and Kevin Hallinan are also charged with failure to make unemployment insurance
contributions. Those charges are currently scheduled for trial.

• Commonwealth v. Maria Fatima Carmo d/b/a Sunrise Restaurant (Fall River
District Court) - Maria Fatima Carmo, owner of the Sunrise Restaurant, was found guilty
on one count of failure to provide workers' compensation insurance coverage. Carmo
also admitted to sufficient facts for a finding of guilty on four counts of failure to pay
wages to four employees. The defendant was placed on supervised probation for one
year and was ordered to pay $2,327 in restitution to the employees.

• Commonwealth v. American Transportation and Kevin O'Brien (Peabody Dis-
trict Court) - Kevin O'Brien, president and treasurer of American Transportation, pled
guilty to two counts of failure to pay wages to two employees who worked for him as
drivers. In addition, both defendants pled guilty to one count each of failure to provide
workers' compensation insurance coverage. O'Brien was placed on probation for one
year and was ordered to pay $ 1 ,400 in restitution to the two employees. He and the
company were fined $500 for the workers' compensation insurance violations.

• Commonwealth v. Body by L.A.W., Inc./Brian Tanguy (Quincy District Court) -
Brian Tanguy, the president and treasurer of Body by L.A.W., pled guilty to two charges
of failing to pay wages to two employees. He was ordered to pay $266 in restitution and
was placed on probation for three months.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Cambodian Community of Massachusetts (Chelsea District Court)
-The company admitted to sufficient facts for a finding of guilty on one charge of failing to pay
wages to one employee. The charge was dismissed upon the company's payment of $2,1 52.89
in wages due the employee.

• Commonwealth v. Champion-Maisons, Inc./Raymond Peveri (Lynn District
Court) - Champion-Maisons and its president, Raymond Peveri, admitted to sufficient
facts for findings of guilty on charges of failing to provide workers' compensation insur-
ance coverage. Raymond Peveri and the corporation were ordered to pay $500 in fines.

• Commonwealth v. Allied Weatherproofin^ (Lawrence District Court) - Allied
Weatherproofing was charged with failure to pay overtime and failure to provide true and
accurate payroll records. The workers had been paid in full, so the overtime charges were
dismissed upon payment of $200 in court costs. The charge of failure to provide true and
accurate records was continued without a finding for one year.

• Commonwealth v. Dr. Peter Stathoulopoulos (Worcester District Court) - Dr. Peter
Stathoulopoulos, a Worcester dentist, admitted to sufficient facts on one count of failure
to provide workers' compensation insurance. The charge was continued without a find-
ing for three months and the defendant was ordered to pay $ 1 ,000 in court costs.

• Commonwealth v DAM Concrete Forms, Inc, Sean Dormandy and Michael
Dormandy (Hingham District Court) -Three co-defendants, DAM Concrete Forms, Inc.,
Sean Dormady, the president, and Michael Dormady, the de facto head of the corpora-
tion, operated a concrete forms company. DAM Concrete and Michael Dormady were
charged with one count of workers' compensation insurance fraud, two counts of failure
to pay prevailing wages and two counts of failure to provide true and accurate payroll
records. The corporation pled guilty and was ordered to pay $30,000 in restitution to
Eastern Casualty Insurance Co. and was debarred from engaging in any public works
projects for six months. Michael Dormady was placed on pre-trial probation and is
jointly and severally liable for the restitufion. His son, Sean Dormady, was charged with
two counts each of prevailing wage and records violations. He admitted to sufficient
facts and the charges were continued without a finding for six months.

• Commonwealth v. Stafford Lewis d/b/a Atlantic Masonry (Dorchester District

BUSINESS AND LABOR PROTECTION BUREAU

Court) - Stafford Lewis, the owner of Atlantic Masonry, was charged with failure to pay
the prevailing wage and provide payroll records. The charges were continued without a
finding for six months. Lewis was ordered to pay $23,000 in restitution and he was also
fined $1,500 for failing to provide true and accurate records.

• Commonwealth v. Franny's Landscape and Francis Venuto (Lawrence District
Court) - Franny's Landscape and its president, Francis Venuto, were charged with one
count of failure to pay prevailing wage rates and one count of failing to provide true and
accurate records. These matters were continued without a finding for one year. The
defendant was ordered to pay $15,000 restitution to two employees and debarred for three
months.

• Commonwealth v. J.S. Luiz and Joseph Luiz (New Bedford District Court) - J.S.
Luiz and its president, Joseph Luiz, were charged with failure to pay prevailing wages
and failure to provide true records. The court continued all matters without a finding for
two years and ordered the defendants to pay restitution of $62,132.77 to its employees.

• Commonwealth v. Marquee Restaurant and Ron Mochi (Boston Municipal
Court) - Ron Mochi, owner of Marquee Restaurant, was charged with one count of non-
payment of wages. He admitted to sufficient facts and was ordered to pay restitution in
the amount of $1 ,800. The charges were continued without a finding for three years.

• Commonwealth v. Jennie Woo (Maiden District Court) - Jennie Woo, the
president of a Maiden restaurant, was tried and convicted of failure to pay wages to three
employees. She was placed on probation for one year and ordered to pay $9,216.90
restitution to her former employees. A charge of failure to provide workers' compensa-
tion insurance was continued without a finding for one year.

• Commonwealth v. William Berneburg (Quincy District Court) - William
Bemeburg, the president of an office machine business, pled guilty to failing to pay
wages to one employee. He was placed on probation for six months and ordered to pay
$1,875 in restitution to his employee, plus $100 for court costs.

• Commonwealth v. Yao Feng (Cambridge District Court) -Yao Feng, the president of
a Cambridge computer company, was charged with failure to pay wages to an employee
and failure to pay unemployment insurance contributions. Both charges were continued

BUSINESS AND LABOR PROTECTION BUREAU

without a finding for six months while the defendant paid $1,730.76 in restitution to the
employee and $3,344.50 to the Division of Employment and Training.

• Commonwealth v. Richard Cox and J.C.Bostonian Enterprises, Inc. (Roxbury
District Court) - Richard Cox, the president of a Boston landscaping business, pled guilty
to charges of failure to pay the prevailing wage and failure to pay wages to five employ-
ees. The corporation was convicted of failure to provide true and accurate payroll
records. Cox was sentenced to 60 days in the House of Correction suspended for two
years with probation, and ordered to pay restitution to his employees totaling $2,907.70.
He was debarred from public works construction for six months. The company was
debarred for 1 2 months.

• Commonwealth v Together Health Care and Terri Eldridge (Wareham District
Court) - Terri Eldridge, the former owner of Together Health Care Service, pled guilty to
charges of non-payment of wages and failure to pay unemployment contributions.
Eldridge was ordered to pay $513 restitution to one employee and $1,289 to the Division
of Employment and Training and received a two month house of correction sentence,
suspended for one year with probation.

• Commonwealth v. D.W. White & Sons, Inc. and David White (Lowell District
Court) - David White, the president of D.W. White & Sons, Inc., pled guilty to four
prevailing wage charges. The company pled guilty to four counts of failure to pay the
prevailing wage and one count of failure to provide true and accurate payroll records; the
company and White were debarred for six months. The defendant was ordered to pay
$36,258 restitution. Companion cases in Concord and Ipswich courts were continued
without a finding.

• Commonwealth v. Tuff Turf Landscaping (Hingham District Court) - The defen-
dant admitted to sufficient facts for finding of guilty, for failing to pay wages to 12
employees. The case was continued without a finding for two years and the defendant
was ordered to make restitution for back overtime wages owed to the 12 employees.

• Commonwealth v. J.F. Esposito and John Esposito (Hingham District Court) -
John Esposito, owner of J.F. Esposito, admitted to sufficient facts for findings of guilty
for failure to pay wages and failure to remit DET in 1997. The charges were continued
without a finding. Esposito was ordered to pay $700 restitution to the employee and

BUSINESS AND LABOR PROTECTION BUREAU

$10,473 to the Division of Employment and Training.

• Commonwealth v. Mike Shastany (Barnstable District Court) - Mike Shastany, the
owner of a carpentry contractor, pled guilty to one count of non-payment of wages.
Shastany was placed on probation for six months, and ordered to pay $275 restitution to
the one employee and a $35 victim witness fee. Shastany also admitted to not paying
workers' compensation insurance and received a continuance without a finding for six
months.

• Commonwealth v. Olympic Painting and George Vasiliades (Peabody District
Court) - George Vasiliades, president of Olympic Painting, admitted to sufficient facts to
charges that three employees were not paid wages for their work as painters. Vasiliades
also admitted to engaging in workers' compensation fraud for under reporting his payroll
during certain periods and failing to keep workers' compensation coverage at other times.

• Commonwealth y. Dollar King Stores and Joshuad Peled (Dorchester District
Court) - Joshuad Peled, the former owner of the now closed Dollar King stores in
Brockton, Dedham and Dorchester, was charged with two counts of failure to pay wages
and unemployment taxes, failure to maintain workers' compensation and failure to
maintain employment taxes. He was placed on five years' supervised probation and
ordered into a drug treatment program. He was ordered to pay $9,320.74 restitution to
two employees and back taxes to the Division of Employment and Training.

• Commonwealth y. Lee's Rebar and Steel and Roy Lee (Springfield District Court)
- Roy Lee, owner of Lee's Rebar and Steel Company, pled guilty to failure to pay the
prevailing wage, failure to keep proper records, failure to provide workers' compensation
and failure to pay unemployment insurance. Lee was sentenced to six months in the
House of Correction, suspended for three years. He was ordered to pay $13,632 restitu-
tion to the Unemployment Compensation Trust Fund and $4,000 in fines.

• Commonwealth y. Robert Bolduc and Pride Convenience, Inc. (Springfield
District Court) - Robert Bolduc, president of Pride Convenience, Inc., pled guilty to eight
counts of non-payment of wages. He was placed on probation for one year and ordered
to pay $4,785.07 in restitution to eight employees and $4,000 in fines.

• Commonwealth v. Douglas LaBelle (Springfield District Court) - Douglas LaBelle,
president of Healthy Habits, Inc., admitted to sufficient facts for findings of guilty on 12

BUSINESS AND LABOR PROTECTION BUREAU

charges of non-payment of wages when his health club was closed. The charges were contin-
ued without a finding for three months and the defendant was ordered to pay $4, 1 56 in restitu-
tion to the employees.

• Commonwealth v. Richard Williams (Springfield District Court) - Richard Will-
iams, president of Sentinel Investigations, formerly known as Sentinel Security, admitted
to sufficient facts for a finding of guilty on charges of non-payment of wages. The
charges were continued without a finding for six months. The defendant was ordered to
pay $350 in restitution and $500 in court costs.

• Commonwealth v. Donald Edwards (Springfield District Court) - Donald P.
Edwards admitted to sufficient facts for a finding of guilty on charges of failure to pay
wages to one employee, failure to pay into the unemployment trust fund, and failure to
provide workers' compensation insurance. The charges were continued without a finding
for 1 8 months. Restitution to the victim was ordered in the amount of $6,057.70. Resti-
tution to the trust fund was to have been determined at a restitution hearing, but the
defendant failed to appear and a warrant was issued.

• Commonwealth v. Marlene Meiuller (Palmer District Court) - Marlene Meiuller
admitted to sufficient facts for a finding of guilty to one charge of non-payment of wages.
She was placed on probation for one year and ordered to pay $1,458 in restitution to the
employee.

• Commonwealth v. Dean P. Todd d/b/a Eagle Home Improvement Co. (Pittsfield
District Court) - Dean P. Todd, admitted to sufficient facts for a finding of guilty on one
charge of failure to pay wages. The charge was continued without a finding for one year
and the defendant was ordered to pay $327 in restitution to the employee.

• Commonwealth v. McCauIay Roberts Jacquesalliez d/b/a Australian Love Bagels

(Ware District Court) - McCaulay Roberts Jacquesalliez, owner of Australian Love Bagels,
admitted to sufficient facts for a finding of guilty on charges of non-payment of wages and failure
to provide workers' compensation. The charges were continued without a finding for one year
and the defendant was fined $500 on the workers' compensation charge. The judge allowed
the defendant to make a $500 donation in food to a food pantry within three months in lieu of
the fine. The defendant was also ordered to pay $4,573 restitution to four employees.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Francis A. Waterman d/b/a Waterman Excavating & Landscap-
ing (Adams District Court) - Francis Waterman d/b/a Waterman Excavating and Landscaping
pled guilty to four charges of failure to pay prevailing wages to employees and one charge of
failing to pay overtime. He was placed on probation for one year and ordered to pay $3,000 in
restitution to the four employees. He was also fined $500 and debarred for six months.

SIGNIFICANT SETTLEMENTS

• Commonwealth v. Waste Management, Inc. (Suffolk Superior) - Waste Management
Corporation entered into settlement agreement following a decision by the Suffolk Superior
Court on the Commonwealth's Motion for Summary Judgement in a civil action for declaratory
judgement. The defendant agreed to begin using proper deductions in calculating the appropri-
ate prevailing wage rate for municipal solid waste hauling. The court's decision reaffirmed that
municipal solid waste haulers are subject to the prevailing wage law.

• George E. Frotton Trucking Co., Inc. - Frotten Trucking Company entered into a
settlement agreement resolving claims of failure to pay the prevailing wage rate. The
company agreed to transfer equipment appraised at $27,500 to a former employee. The
employee worked as a truck driver on the Central Artery /Tunnel Project and was not paid
the correct prevailing wage rate. The company also agreed to a six month debarment
from public works.

• Commercial Epoxy Flooring Co., Inc. - Commercial Epoxy Flooring Company
entered into a settlement agreement resolving claims of failure to pay the prevailing wage rate to
five employees. The company agreed to pay $ 1 0,774. 1 1 in restitution to the former employees,
and to a six month debarment.

• Viking Systems, Inc. and Brian L. Straub- Viking Systems Company, and its
president, Brian Straub, entered into an settlement agreement to pay restitution of
$8,843.54 to four former employees and entered into a payment plan with the Division of
Employment and Training to pay $67,386.37 plus 6% simple interest in 72 monthly
payments of $1,1 16.78.

• Jodv Reale and Reale Associate, Inc. - Reale Associates and its president, Jody Reale,
entered into a settlement agreement resolving a prevailing wage issue. The company agreed to

BUSINESS AND LABOR PROTECTION BUREAU

pay restitution of $ 1 8,897.7 1 to five former employees. The employees worked as equipment
operators on several public works projects and were not paid the correct prevailing wage rate.

• Sophia Poutous and Poutous Contracting, Inc. - Poutas Contracting and its president,
Sophia Poutous, entered into a settlement agreement regarding not paying employees for all
hours worked on various public works projects. The company agreed to pay restitution of
$15,713.09 to three employees.

• Quality Care Centers of Massachusetts, Inc. d/b/a Franville Nursing and Reha-
bilitation, President, Bruce A. Shear - Franville Nursing and its president, Bruce Shear,
entered into a settlement agreement resolving allegations of non-payment of wages. The
company agreed to pay a total of $86,863.74 in restitution to70 former employees.

• Paul A. Haves and P.H. Mechanical Corporation - The company and its president,
Paul A. Hayes, entered into a settlement agreement to resolve allegations of prevailing
wage violations due to misclassification of employees as apprentices on public works
projects. The agreement requires the defendant to pay $1 0,540.3 1 in restitution to five
employees. In addition, the company agreed to perform a self-audit on apprentices and to
voluntarily pay all other amounts due its employees.

• Markings, Inc. and Stephen R. Stella. - The company and its president, Stephen R.
Stella, entered into a settlement agreement to resolve allegations of prevailing wage
violations. The company agreed to pay $150,633 in back wages to 44 current and former
employees,

• G.D. Sheehan Trucking, Inc. - G.D. Sheehan Trucking, Inc. entered into a settle-
ment agreement to resolve allegations that truck drivers were not paid for travel time
enroute to and from the Central Artery in 1997 and 1998 as required. The company
agreed to pay $2,340 in back wages.

• HusCo., Inc. - HusCo., Inc. entered into a settlement agreement to resolve allega-
tions of failure to pay the prevailing wages. The owner agreed to pay $4,279 in restitu-
tion to a former employee.

• Castagna Construction- Castagna Constmction entered into a settlement agreement to
resolve allegations of failure to pay the prevailing wage. The defendant agreed to pay $2,852 in restitu-

BUSINESS AND LABOR PROTECTION BUREAU

tion and signed a settlement agreement regarding future conpliarK^

• GSP. Inc.- GSP, Inc. entered into a settlement agreement to resolve prevailing wage
allegations. The company paid $6,401 in restitution to the employees and agreed to a
voluntary six month debarment.

• Griffin Electric - Wayne Griffin, the owner of an electrical contracting company,
agreed to resolve prevailing wage allegations that arose from an improper calculation of
benefits contributions. He agreed to correct this practice and make appropriate restitu-
tion.

• Andreassi Brothers, Inc. -Rocco and Richard Andreassi, president and treasurer,
respectively, entered into a settlement agreement to resolve prevailing wage and over-
time violations. They agreed to pay $5,989 in restitution to their employees and to
comply with the prevailing wage laws.

• Connecticut Valley Institute, Inc. d/b/a Charles River Hospital - Charles River
Hospital and its president, Frederick J. Thacher, entered into a settlement agreement to
pay wages to employees after the hospital closed in the amount of $147,500 and make
40 IK contributions in the amount of $1 1,732.48.

• Riverside Park - This amusement company entered into a settlement agreement to
pay over $37,000 in overtime to year-round employees.

DEBARMENTS

Thirty-five (35) companies and individuals were debarred from public works as a direct result of the
Division's enforcement efforts. The following list provides an overview of debarments obtained by FLBP
in Fiscal Year 1999:

• Caruso & McGovern Construction, Inc., Gerald J. McGovem, President, and
Steven J. Caruso, Treasurer, One Industrial Way, Georgetown, MA 01833 - debarred for
a period of six months beginning July 17, 1998 through January 17, 1999.

• Roy Lee, Jr.. 269 Stonyhill Road, Building G- 1 Apt. 1 09, Wilbraham, MA 0 1 095 -
debarred for a period of one year beginning August 6, 1 998 through August 6, 1 999.

BUSINESS AND LABOR PROTECTION BUREAU

• Francis A. Waterman, 97 Main Street. Cheshire. MA 0 1 225 - debarred for a period of
six months beginning September 10, 1998 through March 10, 1999.

• K & J Mechanical, Inc., Adalgisa Donnellan, President, 9 1 Hibiscus Avenue, Weymouth,
MA 02 1 88 - debarred for a period of six months beginning September 2 1 , 1 998 through
March 2 1,1999.

• Sentry Corporation and John T. Jacobus, President, 2 1 Fottler Road, Hingham,
MA 02043 - debarred for a period of six months beginning September 24, 1998 through
March 24, 1999.

• Bremco, Inc.. and Reginald Morse. President. P.O. Box 1491, Claremont, NH
03743 - debarred for a period of six months beginning October 8, 1998 through April 8,
1999.

• Lvnden G. Wright and Diane Wheatley d/b/a L&D Trucking, Bellingham MA, -
debarred for a period of six months beginning October 16, 1998 through April 15, 1999.

• GSP, Inc., Gregory Pimenta, President, 140 Rear Fremont Street, Taunton, MA 02780 -
debarred for a period of sk months beginning October 20, 1 998 through April 20, 1 999.

• George Vasiiiades d/b/a Olympic Painting, George Vasiliades, President, 4 Samos
Circle, Peabody, MA 01960 - debarred for a period of three years beginning October 19,
1998 through October 19, 2001.

• Northeast Sweeping & Disposal Corporation, Edward Crasco, President, 1 Porter
Avenue, Revere, MA 02151 - debarred for a period of three years beginning November
20, 1998 through November 20, 2001.

• EMP Sweeping & Asphalt Paving Corporation. Deanna Zucchari, President, 20
Production Road, Bay #8, Walpole, MA 02081 - debarred for a period of three years
beginning November 20, 1998 through November 20, 2001 .

• Arthur L. Norris. Jr., 2 Riverside Drive, Marblehead, MA 01945 - debarred for a
period of six months beginning December 3, 1998 through June 2, 1999.

BUSINESS AND LABOR PROTECTION BUREAU

• Noel St. George. Jr.. d/b/a NSG Trucking, 1 4 Meade Street, Coventry, RI 028 1 6 -
debarred for a period of three years and two months beginning October 15, 1998 through
December 20, 2001.

• Frannv's Landscape Co., Inc., Francis A. Venuto, President, 8 Arlington Place,
Framingham, MA 01702 - debarred for a period of three months beginning December 15,
1998 through March 15, 1999.

• Timothy Croft. Owner of Advanced Craftsman Co., 51 Tyler Road, Townsend, MA
01469 - debarred for a period of six months beginning December 16, 1998 through June
16, 1999.

• Kingsberry Building Technologies, Inc.. and Charles J. Martin, President, 10
Winship Drive, Wakefield, MA 01880 - debarred for a period of eighteen months begin-
ning June 1, 1999 through December 1, 2000.

• Skyline Contracting & Roofing, Inc.. and Lester Hooben, President, 399 Washing-
ton Street, Taunton, MA 02780 - debarred for a period of six months beginning January
1 2, 1 999 through July 12,1 999.

• Amaral Excavating, Inc., 17 Hammond Street, Somerville. MA 02145, and Daniel
P. Amaral, President, 47 Governor Winthrop Road, Somerville, MA 02143 - debarred for
a period of three years beginning February 3, 1999 through February 3, 2002.

• JT&C Construction, Inc., Josephine Cristaldi, President, and Angelo Cristaldi,
Manager, 14 Appleton Street, North Andover, MA 01845, - debarred for a period of six
months beginning January 1, 1999 through July 1, 1999.

• J.C. Bostonian Enterprises, Inc.. 60 Winthrop Street, Roxbury, MA 021 19, -
debarred for a period of one year beginning March 10, 1999 through March 9, 2000; and
Richard Cox, President, debarred for a period of six months beginning March 1 0, 1 999
through September 9, 1999.

• Ji&G Electric, Inc. and Joseph O. Gauthier. President, 15 Atherton Circle,
Lynnfield, MA 01940, - debarred for a period of six months beginning March 18, 1999
through September 18, 1999.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth Trucking, Inc., Matthew Connolly, President, 3 1 Taylor Street, North
Quincy, MA 02 1 70, - debarred for a period of six months beginning March 22, 1 999 through
September 2 1,1999.

• Matthew Connoily, 3 1 Taylor Street, North Quincy, MA 02 1 70, - debarred for a
period of three years beginning March 22, 1999 through March 21, 2002.

• Diversified Contracting, Inc., 192 Walnut Street, Dorchester, MA 02124 (former
address), - debarred for a period of six months beginning April 5, 1999 through October
4, 1999.

• Richard F. Morello, 1 3 West Park Drive, Wakefield, MA 0 1 880, - debarred for a
period of six months beginning April 15, 1999 through October 15, 1999.

• Quality Insulation, Inc., Joseph Jillson, President, 2 Industrial Road, Milford, MA
01757, - debarred for a period of six months beginning April 26, 1999 through October
26, 1999.

• Dam Concrete Forms, Inc., Michael L. Dormady, Operations Manager, 577 Circuit
Street, Hanover, MA 02339, - debarred for a period of six months beginning April 27,
1999 through October 26, 1999.

• A.C. Equipment Co., Inc.. Angelo Ciardiello, President, 5 Collins Road, Wakefield,
MA 01880, - debarred for a period of three months beginning May 15, 1999 through July
15, 1999.

• Finish Line Construction or any company owned by Michael Mullen, 52 Mahogany
Run, Leominster, MA 01453-3485, - debarred for a period of six months beginning May
18, 1999 through November 17, 1999.

• Finish Line Construction or any company owned by David Angelli, Owner, 25
York Terrace, Lynn, MA 01902, - debarred for a period of six months beginning May 18,
1999 through November 17, 1999.

• Sunrise Restaurant. Maria Fatima Carmo, Owner, formerly 982 Eastern Avenue, Fall River,

BUSINESS AND LABOR PROTECTION BUREAU

MA, - debarred for a period of three years beginning June 1 0, 1 999 through June 1 0, 2002.

• Bartholomew Mollov. 378 Centre Street, Dorchester, MA 02 1 24, d/b/a Molloy Excavat-
ing, 79 EHot Street, Norwood, MA 02062, - debarred for a period of six months beginning
June 15, 1999 through December 15, 1999.

• Brentwood Construction and John Fein, President, 27 Fresh River Lane, Falmouth,
MA 02540, - debarred for a period of six months beginning June 14, 1999 through De-
cember 14, 1999.

• Commercial Epoxy Flooring Co., Inc., Robert Attenello, President, 23 Old Windsor
Road, Bloomfield, CT 06002, - debarred for a period of six months beginning June 8,
1999 through December 8, 1999.

• George E. Frotton Trucking Co., Inc., George E. Frotton, President, 1 16 Old
Boston Road, Tewksbury, MA 01 876 - debarred for a period of six months beginning
June 1 8, 1 999 through December 1 8, 1 999.

OUTREACH EFFORTS

OUTREACH AND EDUCATION INITIATIVES

Outreach and education continue to be a priority for the Division. In May of 1 999, the Attorney
General appointed a new Outreach Coordinator to expand the dialog with employers, employee groups
and the community. The Coordinator acts as a liaison with the community, encouraging an open dialogue
between FLBP, employers, and employees about their rights and responsibilities, as well as about the
Division's enforcement efforts. Through proactive outreach and ongoing communication, the Division is
able to both foster a higher level of understanding of the laws throughout the employment arena and better
respond to issues as they arise in the field. The Division's Assistant Attorneys General and Inspectors also
act as liaisons to the business and labor communities. They are available to answer questions and address
concems relative to the Division's enforcement efforts and other responsibilities of the Office.

SPEAKING ENGAGEMENTS/TRAININGS

Since July 1 998, the Fair Labor and Business Practices Division staff has presented at numerous
speaking engagements, seminars and conferences for business, labor and other concerned constituent

BUSINESS AND LABOR PROTECTION BUREAU

groups including:

Western Massachusetts Employer Association

Boston University School of Public Health

Chinese Progressive Association

Massachusetts Bar Foundation

Boston Bar Association

Western Massachusetts Auditors

American Payroll Association, Boston Chapter

Labor Guild of Boston

South Shore Chamber of Commerce

Massachusetts Continuing Legal Education

North Central Massachusetts Chamber of Commerce

University of Massachusetts at Lowell

Small Town Administrators Association

Massachusetts Arborists Association

Associated Industries of Massachusetts

Utility Contractions Association ofNorth America

City Solicitors and Town Counsel Association

PaySTUBS

Massachusetts Safety Council

Massachusetts Camping Association

Massachusetts Association of Municipal and Town Councils

City of Somerville

Tri-County Department of Public Works

Massachusetts Association of Retarded Citizens

Massachusetts Food Association

Quincy College

Emerson Hospital

Massachusetts Bui Iding Trades Council

Associated Builders and Contractors

Northeast Payroll Conference

Urban Schools Summit

Massachusetts Certified Public Purchasing Official (MCPPO) Program

Woman in Constmction

BUSINESS AND LABOR PROTECTION BUREAU

FLBP HOTLINE

FLBP staffs a Hotline in the Boston Office, providing information and taking complaints from the
general public. Hotlme personnel include three intake clerks and a duty officer from the inspectional staff.
The Hotline received over 82,000 telephone calls during Fiscal Year 1 999 and also directly assisted
numerous walk-ins. This daily contact with the public is an important aspect of FLBP's education and
outreach efforts.

REGIONAL OFFICES

In addition to the Boston Office, FLBP staffs four satellite offices. The Springfield Office operates full-
time with four inspectors, a deputy managing attorney and a secretary. Offices in Worcester, Fall River,
and Pittsfield are open one day a week and are staffed by experienced inspectors. These offices allow
FLBP to assist workers and employers throughout the Commonwealth by providing them with direct local
access to services and resources. When the satellite offices are not staffed, a call forwarding system in
each of the part-time offices forwards calls to the Boston Office This service provides callers with imme-
diate assistance and local access at no additional cost.

CENTRAL REGISTER PROJECT

FLBP regularly provides the Secretary of State with notice of debarments so that information can be
published weekly in the Central Register notifying awarding authorities, general contractors and other
interested parties. In addition, whenever a contract is open for bid or awarded, the Division sends award-
ing authorities and contractors letters and information advising them of their rights and obligations under the
prevailing wage law.

PUBLICATIONS AND ADVISORIES

FLBP issues a variety of publications detailing the wage and hour laws. These include brochures,
posters, booklets, letters and advisories containing information to assist employers and employees throughout
the Commonwealth. The Attorney General has also undertaken a translation initiative to make this litera-
ture available in a number of languages.

FLBP issued three comprehensive advisories this year addressing: the Small Necessities Leave
Act; the Amendments to the Wage and Hour Laws; and Vacation Policies.

BUSINESS AND LABOR PROTECTION BUREAU

INSURANCE FRAUD DIVISION

INTRODUCTION

The Insurance Fraud Division ("IFD") currently consists of eight Assistant Attorneys General, one
Special Assistant Attorney General, one paralegal, and one secretary. The Insurance Fraud Division
works in conjunction with other divisions in the Business & Labor Protection Bureau to investigate and j
prosecute illegal activities that adversely aifect local businesses and fair competition.

Members of the IFD are devoted to the investigation and prosecution of all types of fraudulent activity i
perpetrated against insurers and public entities. The IFD's cases vary widely, and include multi-million
dollar premium fraud cases, major conspiracies by medical and legal professionals, fraudulent schemes in
auto repair businesses, staged motor vehicle accidents, inflated claims against homeowner's policies, and
cases involving claimants working while collecting workers' compensation benefits. While many of the;
targets and defendants tend to be private citizens, the IFD also prosecutes insurance agents, claims adjust-
ers, and damage appraisers.

The IFD receives referrals from a number of sources. The largest source of referred cases is the
Massachusetts Insurance Fraud Bureau. In addition, the IFD receives referrals from the Human Re-
sources Division, the Governor's Auto Theft Strike Force, the Department of Industrial Accidents, the
Workers' Compensation Rating and Inspection Bureau, the National Insurance Crime Bureau, and the
Social Security Administration. It is noteworthy that the IFD also receives many complaints and referrals
from concerned citizens, private attorneys, clerk-magistrates, and judges. Clearly, this indicates that the
Division's efforts in fighting insurance fraud are appreciated throughout the Commonwealth.

HIGHLIGHTED EFFORTS & SIGNIFICANT ACTIVITIES

The Insurance Fraud Division obtained charges in 47 new cases in Fiscal Year 1999 and closed 49
cases. In addition, the IFD has approximately 80 cases currently under investigation and pending formal
charges or indictments. Cases prosecuted include charges of workers' compensation fraud, motor vehicle
insurance fraud, insurance fraud, as well as larceny, conspiracy, tax evasion, corporate bribery, home
improvement fraud, and forger>'. New cases charged in Fiscal Year 1 999 include allegations that defen-
dants obtained in excess of $ 1 ,432,591 in fraudulent insurance payments. The 49 cases resolved in Fiscal
Year 1 999 resulted in orders requiring restitution payments totaling $256, 1 47. 1 6.

BUSINESS AND LABOR PROTECTION BUREAU

SIGNIFICANT CASES

MOTOR VEHICLE INSURANCE FRAUD

• Commonwealth v. Charlayne Wilson and Charles Edekpayi (Middlesex and
Norfolk Superior Courts) - Charlayne Wilson was an academic counselor at the North-
eastern School of Criminal Justice. Working with Charles Edekpayi, she submitted
motor vehicle insurance claims in connection with a series of 1 6 accidents involving two
cars. According to the claims files, the same damage was reported in each successive
claim. Wilson was indicted in both Norfolk Superior Court and Middlesex Superior
Court on a number of charges, including motor vehicle insurance fraud, larceny over
$250, and forgery. After consolidating those cases, she pled guilty and was sentenced to
five years probation, suspended for two years and ordered to pay $13,489 in restitution.
Charles Edekpayi was charged with larceny over $250, motor vehicle insurance fi-aud,
and attempted larceny. He pled guilty and was sentenced to 2'/2 years in the House of
Correction, suspended for 4 years and was ordered to pay $37,977 in restitution.

• Commonwealth v. Scott Gaumond and Robert Newell (Suffolk Superior Court) --
Scott Gaumond and Robert Newell were indicted, along with three other co-defendants,
following an investigation by the Insurance Fraud Bureau. The multiple insurance fraud
charges against Gaumond and Newell resulted from their orchestration of and participa-
fion in the filing of 12 falsified lost wage claims to insurance companies. In nearly all the
cases, they represented to the insurance companies that as a result of motor vehicle
accidents they lost wages from their jobs at a company called Able Industries, Inc. To
corroborate these claims, they submitted fraudulent lost wage statements fi-om Able,
falsifying salary, start date, and time lost from work. In addition, Gaumond submitted
falsified tax returns and fraudulent IRS withholding forms to support his claims.

Scott Gaumond entered guilty pleas to 3 1 counts of insurance fraud, motor vehicle insur-
ance fraud, larceny over $250, and conspiracy. For the insurance fraud charges, he was
sentenced to two years in the House of Correction and ordered to pay $ 1 5,000 in restitution.
On the remaining charges, he was sentenced to 2 '/a years in the House of Correction, sus-
pended for five years.

Robert Newell also entered guilty pleas to multiple charges of motor vehicle insurance fraud,
larceny over $250, and conspiracy. He was sentenced to IVi years in the House of Correction,

BUSINESS AND LABOR PROTECTION BUREAU

suspended for two years and ordered to pay $ 1 4.600 in restitution.

Both Gaumond and Newell, along with two other co-defendants, were indicted again
during fiscal year 1999. They were each indicted on 26 counts of larceny over $250 and
home improvement contractor violations for a pattern of defrauding elderly homeowners.
The defendants allegedly defrauded eleven victims, ten of whom are over the age of 65,
by charging them greatly inflated prices for home improvements that were far below the
acceptable standards of quality. Of the ten victims over the age of 65, the average age at
the time of the fraud was 80.

• Commonwealth v. James J. Tello (Somerville District Court) ~ James Tello alleged
that his car had been stolen from his residence. He then filed a theft report with the
Medford Police department and a claim with his insurer. Metropolitan Insurance Com-
pany. He was paid $5,904.46 as a result of that claim. An investigation revealed, how-
ever, that Tello had concealed his vehicle at his place of business in Tewksbury prior to
the date of the reported theft. He was charged with motor vehicle insurance ft-aud, lar-
ceny over $250. filing a false theft report, and concealing a motor vehicle. He pled guilty
and was sentenced to IV2 hears in the House of Correction, with 18 months to serve, the
balance suspended for two years. He was also ordered to pay restitution in the amount of
$7,200.

• Commonwealth v. John Lennox (Wareham District Court) ~ John Lennox filed a
motor vehicle insurance claim seeking personal injury protection benefits for wages lost
as a result of an accident. However, the defendant was not employed at the time of the
accident and, thus, his claim for lost wages was false. He was charged with motor ve-
hicle insurance fraud and larceny over $250. A jury found him guilty on both charges.
However, ruling that the statute only applies to theft or damage claims, the judge reversed
the guilty finding for the motor vehicle insurance fraud charge. We have filed a notice of
appeal to the Appeals Court seeking reinstatement of the conviction.

• Commonwealth v. Wendv Home a/k/a Wendy Early (Springfield District Court) ~
WTiile Wendy Home was employed at the Monson Developmental Center in 1994, she
reported a work related injury. After treating for a period of time with a physician, she
was told that she could return to work and that she was no longer disabled. In order to
continue collecting disability payments from her employer's disability insurer. Provident
Life and Accident insurance Company, she forged her doctor's signature on a health care claim

BUSINESS AND LABOR PROTECTION BUREAU

form which falsely documented disability. In addition, Horn forged her employer's signature on
a wage and salary verification form in connection with an automobile accident, which she then
submitted to the Commerce Insurance Company. Horn pled guilty to larceny over $250, motor
vehicle insurance fraud, and attempted motor vehicle insurance fraud. She was sentenced to
nine years probation and ordered to pay $7,200 in restitution.

• Commonwealth v. Alan Viera (New Bedford District Court) ~ In order to fraudu-
lently obtain money from the Plymouth Rock Insurance Company, Alan Viera and a co-
defendant staged the theft of Viera's motor vehicle. Viera filed a stolen motor vehicle
report with his insurance company. An investigation revealed that the theft was, in fact,
staged and the insurance company denied the defendant's claim. He was charged with
motor vehicle insurance fraud, conspiracy, and attempt to commit larceny over $250.
Viera pled guilty and was sentenced to 2/4 years in the house of correction, suspended for
three years with probation. In addition, he was ordered to pay $ 1 ,000 in restitution as
reimbtirsement to the insurance company for the cost of their investigation.

WORKERS' COMPENSATION FRAUD

• Commonwealth v. Shelley Keirstead (Worcester Superior Court) - Shelley
Keirstead began collecting temporary total workers' compensation benefits after report-
ing that opening and closing the door of the school bus she was driving caused an injury
to her shoulder. She was indicted after it was discovered that during this period of al-
leged incapacity she was being paid for entertaining around the Worcester area as
"Boom-Boom the Clown." In addition, it was discovered that during the same period she
had been working as a personal care assistant for disabled adults. Keirstead was charged
with workers' compensation fraud. She pled guilty and was sentenced to six months in
jail, suspended for five years, and ordered to pay $20,000 in restitution.

• Commonwealth v. Charles and Christine Caswell (Middlesex Superior Court) ~ Mr.
Caswell reported a work related injury that he incurred while working for his family's business.
He and his wife, Christine, submitted wage verification forms in which they grossly overstated
the amount of his actual income. Charles Caswell claimed to have earned almost $90,000 a
year. Mrs. Caswell, as treasurer of the corporation, verified the $90,000 income. In fact, his
actual earnings were allegedly only $3,000 a year. Both were charged with workers' compen-
sation fraud, insurance fraud, and larceny over $250. Due to the terminal illness of Mr. Caswell,
the defendants were placed on pre-trial probation and ordered to pay $50,000 in restitution.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Dr. Robert Fitzgerald (Worcester Superior Court) — Robert
Fitzgerald was a chiropractor in Clinton, Massachusetts who aided a patient in the filing
of fraudulent workers' compensation claims. His patient, Federico Williamson, claimed
he was injured while at work. Williamson treated with Dr. Fitzgerald for this alleged
injury. Despite the fact that Fitzgerald had treated this patient in the past for the same
injury sustained during a motor vehicle accident, he documented that the patient had no
previous medical history or injuries. Based on these statements, the insurance company
paid Williamson's workers' compensation claim. Dr. Fitzgerald was charged with
workers' compensation fraud and larceny over $250. He was placed on pre-trial proba-
tion for two years and ordered to pay $5,000 in restitution and $2,000 in fines.

• Commonwealth v. Moses Kbreab (Ayer District Court) - Moses Kbreab, while a
security guard at First Security Service, reported to supervisors and medical staff at a job
site that he had sustained a head injury while ducking under a trailer. Kbreab collected
$4,170.16 in total disability payments from his employer's workers' compensation
insurer. Sentry Insurance. Sentry then canceled payments due to inconsistencies in
Kbreab' s statements. However, soon after, Kbreab refiled his total disability claim with
Sentry. Unbeknownst to both Sentry and First Security Service, during the period of time
in which Kbreab was claiming total disability he ran the Cape Cod Marathon, the New
Bedford Half-Marathon, and the Boston Marathon. He was charged with workers com-
pensation fraud, larceny over $250, and attempted larceny. He admitted to facts suffi-
cient for a finding of guilty and was sentenced to one year probation. He was ordered to
pay full restitution in the amount of $4,170.16.

• Commonwealth v. Thomas Lightbody - Thomas Lightbody sustained a laceration
to his hand while working as a mason on the Central Artery Project. Investigation showed that
during the time in which he was collecting workers' compensation benefits for this injury, he was
also working and getting paid as a construction worker. Lightbody was sentenced to two years
probation and ordered to pay $ 1 ,400 after pleading guilty to charges of larceny over $250 and
workers' compensation fraud.

• Commonwealth v. George Vinciguera - Vinciguera filed a claim for benefits after he
suffered a fractured sternum as he was operating a front-end loader while working on the
Central Artery Project. At the same time that Vinciguera maintained his claim of total disability,
a private investigator observed him working at an apartment building moving ftimiture, mat-

BUSINESS AND LABOR PROTECTION BUREAU

tresses, and debris. Vinciguera was charged with larceny over $250 and workers' compensa-
tion fraud. His case was continued without a finding and he was ordered to pay $500 in
restitution.

• Commonwealth v. Hiram Ibanez -- Hiram Ibanez was working on the Central
Artery Project as an apprentice carpenter. He claimed he had been injured when he
slipped and dislocated his arm. He was paid total disability benefits for the injury.
Meanwhile, investigator observed that Ibanez was working at a day care center at the same
time he was collecting disability benefits. He was charged with workers' compensation fraud
and larceny over $250. Ibanez admitted to sufficient facts and was placed on probation and
ordered to pay $4,000 in restitution.

OTHER SIGNIFICANT CASES

• Commonwealth v. Michael Dow (Boston Municipal Court) — Michael Dow was an
insurance agent and the owner of his own insurance agency in Boston and Framingham.
He accepted insurance premium payments from clients and then converted those monies
to his ovm use, while falsely telling the clients he had purchased their insurance. He also
filed forged premium finance applications to a finance company and kept the proceeds of
those loans. Dow pled guilty to 13 counts of larceny over $250 and agreed to surrender
all of his insurance licenses and securities broker licenses. He was ordered to not reapply
for such licenses for 10 years, to pay $25,000 in restitution and $20,000 in fines, and to
perform 400 hours of community service. Finally, the defendant was required to partici-
pate in a videotaped interview explaining the details of how he committed his crimes.
That videotape will be used by the Office of the Attorney General in training programs
and seminars on the subject of fraud by insurance agents.

• Commonwealth v. Marc Laroque (Uxbridge District Court) - Marc Laroque was
an insurance agent and office manager at the East Douglas Insurance Agency. Mr.
Laroque forged a Certificate of Insurance for Perkins Trucking, a subcontractor of one of
his clients, in order to artificially lower its workers' compensation premiums. This
certificate was then given to Liberty Mutual during a 1996 workers' compensation insur-
ance audit for Perkins Trucking, and relied upon in setting the workers' compensation
rates. The defendant was charged with larceny, forgery, and uttering. He entered a guilty
plea and was sentenced to one year probation and ordered to pay $500 in fines.

• Commonwealth v. Ella Cox (Natick District Court) - Ella Cox was an insurance claims

BUSINESS AND LABOR PROTECTION BUREAU

representative who defrauded Liberty Mutual Insurance Company by issuing unauthorized
company checks to several of her relatives. Ms. Cox reopened claims which had been closed
by the company and issued settlement checks in the names of her daughter, sister, and ten month
old grandson. Her relatives cashed eight checks totaling $37,000. Cox was charged with
forgery, larceny over $250, and attempted larceny. She pled guilty to these charges and was
sentenced to two years in the house of correction, suspended for five years. In addition, she
was ordered to pay $ 1 2,000 in restitution and perform 480 hours of community service.

• Commonwealth v. Peter and Irene Dolnick (Dedham District Court) ~ Mr. and
Mrs. Dolnick endorsed and cashed a series of total disability checks that were issued to
Mr. Dolnick's mother. Mr. and Mrs. Dolnick failed to notify they insurer that the true
recipient of the disability checks was deceased. Entitlement to workers' compensation
benefits terminates at death and the recipient's estate is not entitled to further weekly
benefits. Both defendants were charged with larceny over $250 and forgery. Peter
Dolnick pled guilty and was sentenced to one year probation and ordered to pay $3,854 in
restitution. Irene Dolnick's case was continued without a finding for nine months and she
was ordered to pay $3,855 in restitution.

OTHER EFFORTS

• Commonwealth v. James N. Ellis, Jr., et. al (Worcester Superior Court) - A
considerable amount of the time and effort of the IFD continues to be spent on the pros-
ecution of James N. Ellis, Jr., Nicholas Ellis and other partners, employees and clients of
the former Ellis & Ellis law firm of Worcester. During FY 1999, the following matters
concerning the pending prosecutions were addressed.

Defendants ' Motions to Dismiss Due to Lack of Disinterested Prosecutor — Superior Court
Judge Robert Bohn, Jr. decision denying the defendants' motion to dismiss because of a lack of
"disinterested" prosecutors was upheld by the Supreme Judicial Court of Massachusetts. This
motion was based on the contention that, due to the nature of the funding of the IFD, its pros-
ecutors are not "disinterested" and are, therefore, unconstitutionally biased. Judge Bohn
rejected this argument, endorsed the funding mechanism as constitutionally sound, and found the
prosecutors of the IFD unbiased. AAG Erin Olson successfully argued the appeal before the
Supreme Judicial Court. The SJC unanimously upheld the denial of the motion to dismiss
finding that there were no constitutional violations in the stamtory fiinding mechanism.
Defendants ' Motion to Dismiss Due to Selective Prosecution - Judge Bohn denied the

BUSINESS AND LABOR PROTECTION BUREAU

defendant's motion to dismiss based on the claim that they were the victims of selective pros-
ecution because the IFD does not prosecute insurance companies, but only claimants against
insurance companies. Judge Bohn held that the defendant had not made even a prima facie
showing of selective prosecution and there was nothing improper in the prosecution of the
defendants.

Defendant 's Motion to Dismiss Due to Violation of Marital Privilege Before the
GrandJury - Judge Bohn denied the defendant's motion to dismiss the indictments against
former Ellis & Ellis client and employee, James Economou. Massachusetts Lawyers Weekly
declared this one of the 20 most important decisions of 1 998.

Defendant 's Motion to Suppress Identifications — After a three day evidentiary
hearing, Judge Bohn also denied the defendants' motion to suppress die identification of two
nurses that were employees of the firm. The nurses were identified by former clients as coach-
ing them on how to exaggerate their injuries during independent medical exams.

Defendant 's Motion to Change Venue ~ Judge Bohn also denied the defendants'
motion to change venue of the trial from Worcester County to Suffolk County. The basis for
their motion was that the jury pool in Worcester County had been tainted and biased by the
news coverage of the indictments and criminal prosecution of the defendants.

Defendant 's Motion to Suppress all Evidence Obtained During the Search-- The
defendants filed a motion to suppress the evidence obtained during the search of the Ellis & Ellis
law offices. They contend that the search warrant was overly broad and the evidence seized
exceeded the scope of the warrant. The evidentiary hearing on this motion lasted nearly a
month. We are still awaiting Judge Bohn's decision on the motion.

Defendant 's Motion to Dismiss on Account of Prior Adjudication — The defendant James
N. Ellis, Jr. filed a motion to dismiss his indictments in the Formoso/Milan case claiming that the
prior dispositions before the Department of Industrial Accidents and in Federal District Court
precluded the present criminal prosecution. Judge Bohn denied this claim.

Commonwealth 's Motion for Protective Order — The Commonwealth filed a motion for
protective order during two separate evidentiary hearings seeking to prevent the required
production of investigators and expert's notes. In a written opinion. Judge Bohn allowed both
motions and entered the protective order.

BUSINESS AND LABOR PROTECTION BUREAU

• Commonwealth v. Gary Sbordone (Middlesex Superior Court) -- Judge Charles
Barrett denied the defendant's Motion to Dismiss based on Commonwealth v. McCarthy
and Commonwealth v. O'Dell groimds. Defense coimsel argued that the Commonwealth
had not presented sufficient evidence to support the indictments and that the Grand Jury
presentation was unfair and misleading. Judge Barrett found that there was ample
probable cause to support the indictments and that there was nothing improper or mis-
leading about the Grand Jury presentation.

• Central Artery/Harbor Tunnel Project- The IFD continues to work with legal
counsel and the administration of the Central Artery /Harbor Tunnel Project ("Project") in
recognizing, reporting, investigating, and prosecuting insurance fraud associated with the
Project. In FY 1999 the IFD charged and closed three cases of workers' compensation
fraud by workers in the Project. A number of additional cases are currently under investi-
gation and awaiting formal charges.

• Agency Liaisons — The IFD has established ongoing relationships with a number of
agencies and has designated Assistant Attorneys General to act as liaisons. The goal of
these relationships is to increase state and federal cooperation in fraud cases. The follow-
ing is the list of attorneys that are agency liaisons:

Social Security Administration - AAG Erin Olson
Board of Registration in Medicine ~ AAG Erin Olson
Board of Bar Overseers - AAG Erin Olson
Division of Registration - AAG Joshua Krell
Division of Insurance ~ AAG Amy Sharff
Division of Standards - AAG Brian Burke
Human Resources Division ~ AAG John Crimmims

• Repair Shop Registration Revoked - On February 24, 1 999, the Office of Con-
sumer Affairs and Business Regulation revoked the repair shop registration of Mario
Marenghi. AAG Brian Burke requested the revocation and argued at the hearing that
arenghi and his shop engaged in a history of fraudulent accidents and claims for auto rentals.

SPEAKING ENGAGEMENTS AND TRAININGS

BUSINESS AND LABOR PROTECTION BUREAU

• Attorneys in the IFD participated in a number of speaking engagements and trainings
throughout FY 1999. The following is a list of trainings and workshops that members of
the IFD facilitated.

Insurance Premium Avoidance Seminar — The Office of the Attorney General and
the Insurance Fraud Bureau hosted a premium avoidance fraud seminar in Worcester.
AAG John Ciardi and AAG John Crimmins were presenters to the many adjusters,
attorneys, and investigators in attendance.

Insurance Agent Fraud Seminar ~ AAG David Marks and AAG Amy Sharff were
presenters at the Insurance fraud Bureau sponsored seminar on insurance agent fraud.
AAG Sharff spoke about the Armand Arce case she prosecuted in FY98 and AAG
Marks discussed the Michael Dow case. The seminar was attended by attomeys, insurance
adjusters, and investigators.

Licensed Private Detectives Association -- Annual Holiday Meeting — AAG Brian
Burke addressed 150 licensed private detectives at their annual meeting at the
Braintree Sheraton Tara Hotel. AAG Burke described the role of the IFD, as well as
the ways in which this office develops cases for prosecution. He also discussed the
issue of insurance company vendor fraud.

Batterers Intervention Training Conference — In September, AAG Amy Sharff
was a presenter at the Batterers Intervention Certification Training. This conference
is affiliated with the Department of Public Health and is a certification program for trainers in
batterers intervention. AAG Sharff spoke about the prosecution of domestic violence cases
in front of attomeys, social workers, clergy, and others who provide intervention for
batterers.

Annual Attorney GeneraFs Office Domestic Violence Training -- AAG Amy

Sharff spoke before 300 police officers, attomeys, and other members of the law
enforcement community. The topic of her presentation was investigation and docu-
mentation in cases of reported domestic violence.

Harvard Trial Advocacy Workshop - In January, AAG Steve Thomas participated
for a fifth time as a teaching team member in Harvard Law School's Trial Advocacy Work-

BUSINESS AND LABOR PROTECTION BUREAU

shop. The workshop is an intensive three week course for second and third year students
on preparing for and Htigating civil and criminal cases.

DIVISION STATISTICAL SUMMARY

NEW CASES CHARGED IN FY99

Motor Vehicle Insurance Fraud
Workers' Compensation Fraud
Workers' Compensation Premium Fraud
Other Insurance Fraud
TOTAL

11
47

CASES CLOSED IN FY99

Motor Vehicle Insurance Fraud

Workers' Compensation Fraud

Property Insurance Fraud

Workers' Compensation Premium Fraud

Other Insurance Fraud

TOTAL

A
49

MEDICAID FRAUD CONTROL UNIT

INTRODUCTION AND CURRENT INITIATIVES

The Massachusetts Medicaid program administers approximately $5 billion of healthcare services to
over 700,000 members. It is a state-administered, federally financed, program that provides healthcare i
for the indigent and disabled.

The Attorney General's Medicaid Fraud Control Unit operates separately from the Medicaid program
and prosecutes healthcare providers who commit crimes that adversely affect the Commonwealth's Med-
icaid program as well as individuals who abuse, neglect, or mistreat elderly and disabled residents of the
Commonwealth's 550 Medicaid fimded long term care facilities.

Recognizing that Medicaid fraud is complex and costly to prosecute, the federal government provides i

BUSINESS AND LABOR PROTECTION BUREAU

fimding for the Medicaid Fraud Control Unit's operation in every state. The Massachusetts Unit continues
to aggressively pursue healthcare fraud as it sets the national pace in regards to the number of successful
prosecutions and affirmative civil actions it produces.

Consistent with its mission to conduct a state wide program for the investigation of healthcare fraud,
the Medicaid Fraud Control Unit uses a "strike force" concept of investigators, auditors, nurses, pharma-
cists and attorneys seeking to have a significant deterrent impact on those healthcare providers that de-
fraud the Medicaid program. Through the extensive use of Special Grand Juries, as well as its statutory
and regulatory discovery authority, the Unit has obtained convictions and recovered monies for the Med-
icaid program exceeding the Unit's annual expenditures.

During Fiscal Year 1 999, the Medicaid Fraud Control Unit brought both criminal and civil enforce-
ment actions against nursing home owners, pharmacies, physicians, dentists, home healthcare companies,
billing intermediaries, and other medical providers. These enforcement actions focused on providers that
misrepresented to the Medicaid program the services they provided, inflated the costs of their services,
provided medically unnecessary services, or violated Medicaid's anti-kickback laws. As a result, the Unit
recovered $1 .4 million, completed 45 investigations, brought 24 indictments, obtained several convictions
and initiated 69 new investigations.

The Medicaid Fraud Control Unit also investigates hundreds of patient abuse incidents each year
referred from the Department of Public Health as well as incidents involving sexual assaults, financial
exploitation, and long term care facilities that knowingly provide substandard care. During fiscal year
1999 alone, the Medicaid Fraud Control Unit investigated over two hundred cases, and brought several
significant prosecutions against individuals that assaulted nursing home residents. The Unit obtained sev-
eral convictions including the incarceration of a nurses aide for repeated abuse and assault of five elderly
Alzheimer patients over a four month period.

In addition, the Medicaid Fraud Control Unit investigates physicians and psychiatrists that prescribe
controlled substances for non-medical reasons, not supported by medical diagnosis or necessity. The Unit
investigates dentists and durable medical equipment companies for upcoding and unbundling their services.
It investigates pharmacy chains and pharmaceutical companies that overcharge the Medicaid program and
inflate the costs of prescription drugs. And, the Medicaid Fraud Control Unit investigates the relationships
between physicians, hospitals, and laboratories to detect illegal referrals, kickbacks and conflicts with
patient care.

HIGHLIGHTED EFFORTS & SIGNIFICANT ACTEVITIES

BUSINESS AND LABOR PROTECTION BUREAU

CRIMINAL/CIVIL PROVIDER FRAUD AND ANTI-KICKBACK CASES

• Hyde Park and Medford Nursing Home Operator: Two nursing home corporations, its
owner, treasurer and chief financial officer were sentenced in Suffolk Superior Court after
pleading guilty to multiple felony counts of filing false Medicaid claims and larceny. The trea-
surer and CFO were sentenced to one year in the house of correction, house arrest and placed
on probation for four years and ordered to pay $ 1 00,000 in restitution.

In a related civil disposition, the nursing home's owner and two other partners entered
into a civil settlement agreement with the Attorney General's Office to repay an addi-
tional $263,000 to the Medicaid program. As part of the civil settlement, all parties are
permanently banned from owning nursing homes or participating as Medicaid providers with any
long-term care facility in the Commonwealth.

• Two Boston Dentists Settle Fraud Allegations: Two Boston dentists agreed to pay
$300,000 in civil penalties and restitution to settle allegations of fraudulent abuse in their
billing practices to the Medicaid program in connection with their dental practices in
Lowell and Lawrence.

The civil complaint alleged that from September 1994 through September 1998, the
corporation's president and his partner billed Medicaid for more expensive services than
they actually performed, misrepresented the services they provided and billed for services
that are non-reimbursable through the Medicaid program. The complaint further alleged
that the corporation allowed a dentist, a non-provider in the Medicaid program, to ille-
gally bill her services through the company's group provider number.
It was also alleged that neither the two defendants nor the corporation kept accurate
records to report the reasons that their patients needed certain services that were covered by
Medicaid.

Under the terms of the settlement, one of the dentists will pay $140,000 and withdraw from
participating in the Medicaid program for four months. Following the four month period, the
dentist must submit an approved pre-treatment plan to Medicaid for the first six months after
returning to the Medicaid program.

The settlement requires the other dentist to reimburse $160,000 to the Medicaid program,
on behalf of the corporation, for over billing that allegedly took place during the four year

BUSINESS AND LABOR PROTECTION BUREAU

period.

• Pharmacy Voluntary Disclosure/Amnesty Program: The Massachusetts MFCU
recovered more than $450,000 as a part of an amnesty initiative involving hundreds of
pharmacies that overcharged the Massachusetts Medicaid program for prescriptions.

The Attorney General's "Voluntary Disclosure Program" began after a six-month investi-
gation by the MFCU found that more than 600 Massachusetts pharmacies had charged
the state Medicaid program full price for partially filled prescriptions and prescriptions
that were ordered but never delivered.

The MFCU investigators found that pharmacies were dispensing partially filled prescriptions to
customers when they lacked sufficient stocks of a drug. After distributing the partial prescrip-
tion, the pharmacies would tell the customers to come back for the remainder of their prescrip-
tion the following day.

In many instances, the recipients of the medication would not return, but the pharmacies'
automatic computer billing system billed the Medicaid program the cost of the full prescription.

In February 1998, near the end of the MFCU probe, all of the state's 1,100 pharmacies
were notified in writing that they were required by state law to review and report any
potential overcharges that may have occurred as a result of prescriptions billed to Medic-
aid but not dispensed.

• Jamaica Plain Dentist: A Jamaica Plain dentist will be prohibited from discriminat-
ing against HIV patients and has agreed to pay $60,000 to settle discrimination and
Medicaid fraud charges.

As part of the discrimination case, the Jamaica Plain dentist and his office manager
agreed to a consent judgment and a $20,000 penalty. The dentist also entered into a
separate judgment in which he agreed to pay $40,000 in civil penalties and restitution to
settle allegations of fraudulent billings to the Medicaid program.

Under the terms of the consent judgment, the dentist and office manager are prohibited
from retaliating against or mistreating HIV patients and the dentist will treat HIV positive people
who have no dental insurance or whose dental insurance has run out, free of charge. The

BUSINESS AND LABOR PROTECTION BUREAU

program will be monitored by the HIV Dental Ombudsman Program of the Boston Public
Health Commission and will equal 1 05 free visits.

Of the $40,000 civil penalty and restitution, $20,000 will be paid to the Medicaid pro-
gram, $1 1,550 will be distributed in the form of $150 each to the 77 Medicaid recipients
that paid cash for an upgraded service, and $8,450 will be donated to the Battered Chil-
dren and Women's Program at the Elizabeth Stone House in Jamaica Plain in the name of
those Medicaid recipients who were entitled to a refund but could not be located.

The case was coordinated by the Medicaid Fraud Control Unit and the Consumer Protec-
tion and Antitrust Division.

• Boston Dermatologist: A Boston physician was found guilty of Medicaid false
claims after a two week jury trial in Suffolk Superior Court. The physician was con-
victed of charges that arose from a state police undercover investigation that focused on
the physician's prescribing habits.

The physician was sentenced to one year probation and, as result of his convictions, the
physician's license to practice medicine, which is currently suspended, is awaiting revocation
proceedings at the Board of Medicine. The charges were the result of a multi-state/federal
investigation by the MFCU, the State Police, the Boston Police Department, the Federal
Bureau of Investigation's Healthcare Fraud Squad and the Drug Enforcement Administration's
Drug Diversion Control Unit.

• Methuen Nursing Home: The MFCU and a Methuen Nursing Home reached an
agreement in which the nursing home will pay $125,000 to settle charges that the nursing
home overcharged the Medicaid program and misrepresented the acuity level of patients in its

The nursing home was a 4 1 bed long-term care facility in Methuen which provided nursing
home care for individuals from the Greater Lawrence area. It closed at the end of August 1 996.

The two count civil complaint alleged that the nursing home misrepresented the level of
care it provided to its patients which resulted in the nursing home being reimbursed at a
higher Medicaid rate. The complaint alleged that nursing home employees were instructed to
rewrite documents resulting in misrepresentations of the amount of care the patients received.

BUSINESS AND LABOR PROTECTION BUREAU

By using this scheme, the nursing home fraudulently received a higher rate of reimbursement
from the Medicaid program.

• Emergency Room Billing Services Global Settlement: An Emergency Room
Billing Service agreed to repay $3.1 million in a national settlement for allegedly over-
billing Medicaid, Medicare and other Federal programs for emergency room services.
The Massachusetts' Medicaid program received $285,344 as a result of the settlement.

The settlement was the result of a civil lawsuit filed in Oklahoma City by a former
employee of the Oklahoma-based emergency room billing service. The litigation fo-
cused on claims for services provided in 1 1 states -- Arkansas, Louisiana, Maryland,
Massachusetts, Michigan, New Hampshire, New Jersey, New York, Pennsylvania, Texas
and West Virginia - from 1992 to 1994.

Emergency room services are billed to state and federal programs using five codes which
describe the complexity of a patient's illness. The alleged over-billing occurred when the
Emergency Room Services Company upcoded the severity of the services actually ren-
dered.

The Director of the Maryland MFCU and the Director of the Massachusetts MFCU
coordinated the multi-state settlement efforts through the National Association of Medic-
aid Fraud Control Units.

• Marlborough Home Health Company: A Marlborough home health care company
reimbursed the state's Medicaid program $195,000 to settle allegations related to its
prescription drug billing practices.

The home health care company entered into a settlement agreement with the MFCU to
resolve charges that it over billed Medicaid for extra units of prescription drugs and billed
Medicaid the full price for prescription products that were discounted by the manufac-
turer.

Instead of crediting Medicaid for the manufacturers discounted coupons on certain merchandise, the
pharmacy allegedly profited by charging full price for the purchase of the marked down items.
The company was also cited for allegedly billing for the wrong Medicaid recipients and for
failing to have the proper documentation to support refills to certain recipients. In total, MFCU

BUSINESS AND LABOR PROTECTION BUREAU

investigators identified hundreds of situations where the pharmacy had allegedly billed Medicaid
without producing valid documentation.

• Medford Audiologist: A Medford audiologist paid $100,000 in restitution, penalties
and damages to settle allegations that he overcharged the state's Medicaid program.

Under the terms of the settlement agreement, filed with a civil law suit in Suffolk Supe-
rior Court, the audiologist agreed to pay $100,000 in connection with his role as president
of his Medford corporation for failing to pass on manufacturers' discounts that he re-
ceived to the Medicaid program. The MFCU also alleged that the audiologist over-
charged Medicaid for medical ear molds and accessories used in dispensing hearing aids.

• New Jersey Pharmaceutical Company: A New Jersey pharmaceutical company
that provides insulin delivery systems to Massachusetts' hospitals and pharmacies agreed
to settle anti-kickback allegations. The pharmaceutical company paid $100,000 in goods
and fines to resolve the allegations that the company's promotional practices violated the
Massachusetts Medicaid anti-kickback law.

The agreement requires that the pharmaceutical company pay a $ 1 0,000 fine and to
distribute $90,000 of its patented insulin delivery systems, as well as insulin, free of
charge to Medicaid recipients.

The Attomey General conducted an investigation of the pharmaceutical companies promotional
practices and alleged that the company instituted a "draft advantage" marketing program. The
program offered rebates to independent pharmacists based on the volume of pharmaceutical
company products that the pharmacist purchased.

The Attomey General alleged that the cash refiands violated the state's Medicaid anti-
kickback statute by offering rewards as an inducement to pharmacists to purchase the
company's products.

After being notified by the MFCU that the alleged practice was against the law, the
company immediately discontinued its rebate program in Massachusetts and cooperated
with the Attomey General's investigators.

The pharmaceutical company also has agreed to develop a corporate compliance plan to review
its national marketing program and to discontinue those promotional practices that violate state

BUSINESS AND LABOR PROTECTION BUREAU

and federal laws. The company will distribute insulin and insulin delivery systems to Massachu-
setts state hospitals and the Massachusetts General Hospital.

• Salisbury Nursing Home: The Massachusetts MFCU reached a civil settlement
agreement with a Salisbury nursing home's operator to remedy problems identified with a
bank account for the facility's residents' personal needs allowance money. The nursing
home corporation and its president paid a total of $2 1 ,600 in restitution, administrative
fines, and costs of investigation.

The MFCU investigation focused on the nursing home's management of the residents'
bank accounts. Each nursing home resident in the Commonwealth receives $60 per
month as an allowance for personal needs that can be spent by the residents in any way
they see fit. The fiands usually are spent on such things as clothing, hair cuts or beauti-
cian services or to attend social outings outside the facility. Many nursing homes manage
these monies in a trustee bank account set up for the patients.

The MFCU's investigation uncovered that on several occasions, the nursing home used
the ftmds from the residents' bank account to meet business expenses at the facility
amounting in essence to interest free loans.

The settlement agreement also includes a compliance component to insure the proper
administration of the account in the future. According to the terms of the agreement, the
nursing home's president is required to bear the expense of conducting quarterly audits of
the account by a certified public accountant.

PATIENT ABUSE PROSECUTIONS

• Wilmington Nurses Aide : A former nurses aide was sentenced to four to five years
in state prison for abusing elderly residents at a Wilmington nursing home, including
slapping, kicking and spitting on patients who lived at the facility.

The aide also received a suspended two-year House of Correction sentence and three years
probation on the patient abuse charges. After the aide was sentenced at Middlesex Superior
Court, she was immediately imprisoned at MCI Framingham.

The aide was convicted on seven counts of patient abuse and two counts of felony elder abuse.
The aide physically and mentally mistreated five elderly patients under her care at the special

BUSINESS AND LABOR PROTECTION BUREAU

Alzheimer's Unit at the Wilmington nursing home.

Witnesses testified that the aide assaulted the five elderly residents, all of whom were
over 80 years of age, on seven different occasions between October 1 997 and February
1 998. The charges of felony elder abuse involved an incident in which another employee
witnessed the aide forcing an 83-year-old female patient to eat her own feces and a second
incident in which the aide was witnessed kicking and stomping on the crotch of an 8 1 -year-old
resident resulting in severe bruising to the patient. The aide also slapped an elderly woman in
the head and kicked her in the shins and, in another incident, pushed a patient out of her wheel-
chair onto the floor, grabbed her arms and dragged her to her bedroom.

The nurses aide was also convicted of other incidents of patient abuse including spitting directly
into the face of a 92-year-old patient, pulling the hair of an 86-year-old patient, and assaulting
an 87-year-old male resident. All of the victims suffered from severe medical conditions
including Alzheimer's Disease and senile dementia.

• Boston Nursing Home Security Guard: A former nursing home security guard pled
guilty in Suffolk Superior Court to assault and battery on an elderly person.
The security guard admitted to forcefully shoving a 77-year-old nursing home resident to
the concrete pavement. The resident suffered a fractured left hip and a laceration to his
forehead which required stitches.

At the time of the incident, the security guard had been hired by the nursing home to
protect the Roxbury facility.

During unauthorized hours, the 77-year-old resident was smoking in a designated outside
smoking area when the guard told him to put out his cigarette. When the resident at-
tempted to put the cigarette to his lips, the guard grabbed the burning cigarette from his
hands, threw it to the ground and crushed it with her foot. When the resident became
agitated at the guard's actions, the guard grabbed his wxists, swung at him and forcefully
shoved him to the ground.

The guard was sentenced to one year of probation with the condition that she undergo
anger management counseling. In sentencing the guard to probation, the court considered
that the guard had served 35 days in jail after she had been arraigned and placed on bail.

BUSINESS AND LABOR PROTECTION BUREAU

• Saugus Nurses Aide: A former nurses aide at a Saugus nursing home pled to suffi-
cient facts on charges that he illegally restrained, neglected and harmed an Alzheimer's
patient.

The nurses aide restrained a 63 year old resident by binding him to his bed with a blanket that
was tightly drawn across his chest and tied to the bed frame. Due to the alleged restraint, the
patient was unable to sit up, turn to his side, or get up out of bed. The aide then left the
patient's floor without checking on him for several hours. The patient was later found suffering
from respiratory distress after inhaling his own vomit into his lungs.

• Lynn Behavior Specialist: A former nursing home behavior specialist admitted to
patient abuse and assault and battery in Lynn District Court.

The behavior specialist admitted to forcefully shoving a 45-year-old nursing home patient
at a Lynn nursing home.

The resident had problems communicating effectively due to a severe traumatic brain
injury and a history of drug abuse. He was known to play a game of "hide and seek" with
the staff. The patient engaged in his form of "hide and seek" leading the defendant and
another behavior specialist to search for him on the lower floor. After the defendant had
called to the other employee indicating that he had found the patient, the other employee
witnessed the accused forcefully grab the disabled patient by the arm and flipped him
hard to the floor.

The defendant was fired following the facility's investigation and the court placed the
defendant on supervised probation for one year.

• Ludlow Nurse: A Ludlow nurse admitted in Holyoke District Court that she struck
an 85 year old man in the face at a local nursing home.

The nurse admitted to sufficient facts to support a finding of guilty to one count of patient
abuse and one count of assault and battery.

The Ludlow nurse was a Licensed Practical Nurse (LPN) at the Mount Marie Health Care
Center in Holyoke when she struck an 85 year old male patient, who suffered from dementia, in
the face. Two Certified Nurses Aides witnessed the incident and notified the Director of

BUSINESS AND LABOR PROTECTION BUREAU

Nursing. The LPN admitted to the nursing home administrator that she slapped the resident.
The court sentenced her to one year probation.

DIVISION STATISTICAL SUMMARY

STATISTICAL SUMMARY

Formal Investigations Initiated 69

Investigations Completed and Closed 45

Individual Indictments 24

Convictions 9

PATIENT ABUSE/NEGLECT CASES

Abuse & Neglect Referrals 568

Abuse & Neglect Investigations 252

Total Criminal Complaints & Indictments 8

Prosecutions Completed and Closed 5

Individuals Convicted 5

Pending Prosecutions 1 9

CIVIL/CRIMINAL FINANCL\L RECOVERIES

Number of Civil Recovery Cases
Civil Recovery

$1,267,271.54

Number of Criminal Recovery Cases
Criminal Recovery

3
$100,185.00

Total Recovery

$1,367,456.54

TASK FORCES AND OUTREACH EFFORTS

BUSINESS AND LABOR PROTECTION BUREAU

Recognizing that the vast majority of healthcare providers in the Commonwealth are eager to provide
quality healthcare, the Massachusetts Medicaid Fraud Control Unit has continued to educate the provider
community regarding Medicaid program regulations, their application to fraud alerts and the use of effec-
tive corporate compliance plans. In pursuit of those providers that operate outside legal boundaries, the
Medicaid Fraud Control Unit has participated with several enforcement associations.

The National Association of Medicaid Fraud Control Units initially was conceived and founded in
1 978 as a means by which the Medicaid Fraud Control Units could provide health care fraud training to
investigative personnel, and thus comply with federal requirements. In the early 1 980' s there was little
emphasis placed on health care fraud and few programs that offered any kind of health care fraud training,
let alone that which was specific to the highly regulated Medicaid program. Training has continued to be
the organization's most important and time-consuming function over the years, and increasingly has be-
come more sophisticated and professional. The National Association of Medicaid Fraud Control Units
has offered approximately 70 training programs altogether, sponsoring or co-sponsoring seven in 1 998
alone. The Unit directors meet regularly to discuss emerging trends in fighting healthcare fraud. In con-
junction with the Federal Department of Justice, the National Association of Medicaid Fraud Control
Units has brought several prosecutions against healthcare corporations resulting in millions of dollars re-
turned to the Medicare and Medicaid programs nationwide.

The Northeast Healthcare Law Enforcement Association consists of chief investigators from Medicaid
Fraud Control Units in New England, and those from New York and New Jersey, the Massachusetts
State Police Diversion Investigative Unit and federal law enforcement agencies, including the Drug En-
forcement Administration, the Federal Bureau of Investigations, the Internal Revenue Service and the
Office of the Inspector General. The group shares investigative strategies, develops joint state/federal
health care fraud investigations and prosecutions, and sponsors quarterly training programs.

The Medicaid Fraud Control Unit representatives, along with the Federal Drug Enforcement Agency
and the Board of Registration in Medicine and Pharmacy, work with various state and federal agencies
concerning drug diversion enforcement, including the sharing of investigative resources to develop com-
prehensive prosecutions.

The Medicaid Fraud Control Unit's Chief Investigator meets with representatives from the Bureau of
Special Investigations, the agency within the Executive Office of Public Safety responsible for the investigation
of frauds committed by Medicaid's members, to discuss welfare fraud and inter-agency investigations.

The Medicaid Fraud Control Unit also coordinates enforcement actions with representatives from
the Division of Registration's Health Care Fraud Unit, the agency responsible for bringing complaints

BUSINESS AND LABOR PROTECTION BUREAU

against health care professionals before various professional licensing boards seeking license suspensions
or revocations.

The Medicaid Fraud Control Unit's Patient Abuse Investigative Team coordinates with officials from
the Department of Public Health to discuss the investigation and prosecution of nursing home owners that
fraudulently bill Medicaid for substandard care and individuals who abuse, neglect and mistreat residents
of long term care facilities.

The Medicaid Fraud Control Unit's Pharmacy Coordinator provides training opportunities to the
state's registered pharmacists instructing and educating them on the Medicaid Fraud Control Unit's phar-
macy enforcement program and the latest trends, laws, and regulations affecting the pharmacy community.

The Medicaid Fraud Control Unit meets quarterly with the New England Anti-Fraud Association,
which consists of private insurance health care fraud investigators, and also meets monthly with the Divi-
sion of Medical Assistance, the agency that administers the state's Medicaid program, to discuss effective
fraud review programs, referrals and the development of health care fraud investigations.

CRIMINAL BUREAU

i\ppELLATE Division

Criminal Investigations Division

Environmental Crimes Strike Force

Economic Crimes Division

Financial Investigations Division

High Tech and Computer Crimes Division

Public Integrity Division

Safe Neighborhood Initl\tive

Special Investigations and Narcotics Division

CRIMINAL BUREAU

Criminal Bureau

The mission of the Criminal Bureau is to protect the citizens of the Commonwealth and advance the
law enforcement priorities of the Attorney General through the prosecution of individuals who violate state
criminal laws, particularly in the areas of computer crime, economic crime, environmental crime, narcotics
violations, and public corruption. In addition to prosecuting significant cases, the Criminal Bureau devel-
ops criminal justice policy, establishes on-going partnerships with communities and law enforcement through-
out the Commonwealth, and provides training and assistance to state and federal agencies. The Bureau is
comprised of highly-specialized legal teams, forensic experts, and individuals who serve as resources both
within the Office of the Attomey General and to prosecutors, law enforcement agents, and members of the
public throughout the Commonwealth.

The Criminal Bureau is organized into ten divisions, each of which reflects an area of specialization and
expertise: 1) Appellate; 2) Criminal Investigations; 3) Economic Crimes; 4) Environmental Crimes Strike
Force; 5) Financial Investigations; 6) High-Tech and Computer Crimes; 7) Public Integrity; 8) Safe Neigh-
borhood Initiative; 9) Special Investigations and Narcotics; and 1 0) Victim/Witness Assistance.

Assistant Attomeys General in the Criminal Bureau who serve as trial lawyers represent the Common-
wealth in criminal prosecutions throughout the state, primarily in the areas of computer crime, economic
crime, environmental crime, narcotics violations, and public corruption. On the appellate side. Assistant
Attomeys General conduct post-conviction proceedings, including representing the Commonwealth in
appeals of criminal convictions, and defending against federal habeas corpus challenges to state criminal
convictions. Appellate attomeys also appear on behalf of state officials, members of the judiciary, pros-
ecutors, and other law enforcement agents named as defendants in state and federal civil suits generated by
prisoners. Assistant Attomeys General in the Bureau further serve the public by responding to inquiries
and complaints on myriad issues from citizens, reviewing extradition documents from executive officers of
the 50 states, and sponsoring and participating in training programs on criminal justice issues.

An important component of the Criminal Bureau has been the Safe Neighborhood Initiative (SNI), a
collaborative community prosecution effort among the Office of the Attomey General, the Boston Police
Department, the Mayor of Boston's Office, the Suffolk County District Attorney's Office, the U.S. Attorney's
Office, and community residents. During the past six years, the SNI has been found to reduce crime,
increase economic stability, and improve the quality of life in the neighborhoods where it has been estab-
lished. The SNI operates on a community prosecution model now in place in Dorchester, Roxbury,
Chelsea, Brockton, Taunton and Montague-Turner's Falls.

CRIMINAL BUREAU

In addition to combating urban violence and reducing crime. Attorney General Reilly's other law
enforcement priorities include protecting families, children and the elderly, and fighting High Tech Crime
and fmancial fraud. The resources of the Criminal Bureau are continually channeled in ways that further
these priorities.

The Chief of the Criminal Bureau is Gerard T. Leone, Jr., formerly Deputy First Assistant District
Attorney in Middlesex County. Kurt N. Schwartz, Deputy Bureau Chief, is a veteran prosecutor and
former police officer in the Commonwealth. Mark D. Smith serves as Senior Litigation Counsel.

The Division Chiefs and Directors within the Criminal Bureau are: Appellate Division, Pamela L. Hunt;
Criminal Investigations Division, Detective Lieutenant Mark Delaney; Economic Crimes Division, Carol
A. Starkey; Environmental Crimes Strike Force, Martin E. Levin; Financial Investigations Division, Paul
Stewart; High-Tech and Computer Crimes Division, T. Gregory Motta; Public Integrity Division, James H.
O'Brien; Safe Neighborhood Initiative, Susan Spurlock; Special Investigations and Narcotics Division,
William T. Bloomer; and VictimAVitness Assistance, Kathleen Morrissey. During a significant part of
FY99, Jeremy Silverfme served as the Public Integrity Division Chief, and Massachusetts State Police
Captain John D. Kelly served as the commanding officer of the Criminal Investigations Division.

The Criminal Bureau also has two Bureau Attomeys. Mary A. Phillips, Bureau Attorney for Training
and Administration, coordinates the Attorney General's grand jury process throughout the Common-
wealth, develops training programs for the Criminal Bureau, serves as the Chair of the Training Committee
for the Office of the Attorney General, and advises the Bureau Chief on administrative and budgetary
matters. Elisabeth J. Medvedow, Bureau Attorney for Policy and Legislation, develops and coordinates
criminal justice initiatives, reviews and drafts legislation affecting the criminal justice system, produces the :
Law Enforcement Newsletter, serves as Co-Chair of the Diversity Committee for the Office of the Attor-
ney General, and is a member of the Supreme Judicial Court's Standing Committee on Substance Abuse.

Currently, there are 43 prosecutors, seven fmancial investigators, 1 2 support staff, two victim witness
advocates, and two program coordinators for the Safe Neighborhood Initiative. In addition, 29 members
of the Massachusetts State Police are assigned to the Bureau to investigate criminal conduct in the Com-|
monwealth.

CRIMINAL BUREAU

APPELLATE DIVISION

The Appellate Division handles a wide variety of criminal, federal habeas corpus, state habeas corpus
and other civil cases which impact criminal prosecutions and the criminal justice system. The Division's
caseload includes appeals and post-convictions matters in criminal cases prosecuted at the trial level by the
Attomey General's Criminal Bureau and from convictions of criminal contempt throughout the Common-
wealth, all habeas corpus petitions filed in federal court that challenge Massachusetts convictions, parole
surrenders, civil commitments, and renditions, and appeals in the First Circuit Court of Appeals from the
denial or granting of habeas corpus relief The Division also engages in civil litigation defending judges,
clerks, probation officers and other court personnel. District Attomeys, Assistant District Attomeys and
other prosecutorial personnel sued civilly in state or federal court for actions taken during the criminal
justice process. The Division defends the constitutionality of criminal statutes and challenges to statutes,
court rules, practices and procedures concerning all aspects of the criminal justice system, represents the
interests of prosecutors when subpoenaed to testify or provide documents in civil cases, supervises agency
staff attomeys handling litigation involving the Department of Correction and the Parole Board, and handles
appeals and federal court litigation concerning the Parole Board and Probation Department.

The Appellate Division's caseload reflects the Attomey General's commitment to representation of the
interests of the state's prosecutors in both criminal and civil arenas. Well over half of the cases handled by
the Division during F Y99 concerned District Attorneys' offices in some way. Through centralization in the
Appellate Division of all litigation concerning the state's prosecutors and all cases in the Office that affect
the validity of convictions or impact the criminal justice system, the development of an amicus brief pro-
gram and participation in other criminal justice initiatives, the Appellate Division plays a leadership role in
the Commonwealth and is able to maximize its expertise in criminal law and procedure.

Federal habeas corpus litigation accounts for a significant portion of the Division's caseload. The
passage by Congress of the 1 996 amendments to the federal habeas corpus statute has continued to result
in a substantial increase in not only the number of petitions filed by Massachusetts prisoners, but also in the
amount of work required to defend these cases.

In addition to their case work, Division attomeys participate in and present training programs both for
the Criminal Bureau and officewide, as well as provide assistance to otiier Criminal Bureau attomeys on a
variety of matters, including investigations, motions, trials, post-conviction proceedings, and single justice
actions. The Division also works closely with tiie District Attomeys' offices, especially their Appellate
Divisions, in identifying and acting as a clearinghouse on criminal law issues of statewide importance and
interest.

CRIMINAL BUREAU

During FY99, the following attorneys and support personnel were assigned to the Appellate Division
for part or all of the year: Annette Benedetto, AAG; William Duensing, AAG; David Edmonds, AAG;
Bonny Gilbert, AAG; Ellyn Lazar, AAG; Susanne Levsen, AAG; Gregory Massing, AAG; William Meade,
AAG; CathrynNeaves, AAG; Kenneth Steinfield, AAG; Catherine Sullivan, AAG; William Weinreb,
AAG; Pamela Hunt, AAG and Division Chief; Daneka Barbour and Kelli Murray, support staff.

CASE STATISTICS

CASES HANDLED

During Fiscal Year 1 999, Appellate Division attorneys handled 603 cases, 1 5% fewer than in receif
years, but still over 40% greater than the number of cases handled in F Y92. Over 3 1 2 new cases were
opened and 253 were resolved during the year. Over the last eight years, there has been an increase in
every kind of case handled by the Division.

The number of new cases has remained constant for the last seven years despite the fact that during
that time increasing numbers and types of cases have been referred to agency counsel to handle under the
supervision of the Appellate Division. The 3 1 5 new cases opened in FY99 is nearly a 1 00% increase over
the 161 new cases opened in FY91 . In addition, in FY99, 171 cases were referred by the Appellate
Division to agency counsel at the Department of Correction or the Parole Board who defend these cases
as Special Assistant Attorneys General, as well as to the District Attorneys, or the various sheriffs' depart-
ments.

The following is an outline of the case activity for the Appellate Division for FY99:

Cases Opened

Cases Disposed

Total Cases Handled

A. Federal Habeas

146

104

300

B. Federal Civil

C. State Civil

55 "

113

D. State Habeas

E. Criminal

F.G.L.c.211§3and

Other Single Justice Cases

G. Other

TOTALS

315

255

603

CRIMINAL BUREAU

The following is a comparison of case activity for the Appellate Division for the last eight ;

years:

FY 1999

FY 1998

FY 1997

FY 1996

FY 1995

FY 1994

FY 1993

FY 1992

Total Cases

315

360

343

344

341

307

351

222

Opened
Total Cases

255

365

370

406

515*

213

282

206

Disposed
Total Cases

603

721

715

778

747

652

649

428

Handled

* INCLUDES 125 OLD CASES.

APPELLATE BRIEFS AND MAJOR SUBSTANTIVE FILINGS

During FY99, the Appellate Division filed over 45 appellate briefs in the United States Supreme
Court, Court of Appeals for the First Circuit, Supreme Judicial Court and Massachusetts Appeals Court.
Two briefs were written at the request of the United States Supreme Court in opposition to petitions for
certiorari in federal habeas corpus cases. After briefing, certiorari was denied in both cases.

Nine briefs were filed in the United States Court of Appeals for the First Circuit, all in federal habeas
corpus cases. Twelve briefs were filed in the Supreme Judicial Court in a variety of criminal and civil cases
including the constitutionality of the DNA database statute; interpretation of immunit>' provisions of the
Massachusetts Tort Claims Act; the burden of proof of criminal responsibility; proper procedures when a
clerk magistrate denies an application for criminal complaint; whether trial and appellate courts may im-
pose a nominal filing fee for filing civil lawsuits upon inmates who can afford to pay; constitutionality of
arraignment procedures in Plymouth County; whether a state court can order police to return to a criminal
defendant money that had been forfeited in federal proceedings; whether a person charged with failing to
pay child support may be extradited; and the Commonwealth's appeal fi-om a verdict that an individual
was no longer sexually dangerous. The 1 9 briefs filed in the Appeals Court primarily involved appeals
fi-om criminal convictions, but also concemed state civil and habeas corpus cases on such issues as the
powers and authority of the Parole Board in determining parole eligibility, civil motor vehicle violations and
civil rights actions brought against state prosecutors.

The Appellate Division continued its practice of filing amicus briefs on behalf of the Attorney General
in cases having broad impact and importance to the criminal justice system, consistent Vtith the Attorney
General's statutory responsibility as the chief law enforcement officer of the Commonwealth. To that end,
three amicus briefs were filed in the state appellate courts in F Y99. One brief was written in response to
the Supreme Judicial Court's request for special briefing on whether the court should retain the "presump-

CRIMINAL BUREAU

tion of sanity" or alter the method by which cases involving the insanity defense should be tried, and the
constitutional implications of such a change. Amicus briefs were also written in cases involving the proper
procedure by which a criminal defendant may seek to correct a sentence, and the statutory construction
and application of the sentence structure under the home invasion statute.

The Appellate Division also prepares and files lengthy substantive memoranda in opposition to peti-
tions for habeas corpus relief, in support of motions to dismiss or for summary judgment in civil cases or
trial and post-trial proceedings in criminal cases, most of which are the equivalent of full appellate briefs.
During FY99, in addition to appellate briefs. Division attorneys filed 1 56 substantive legal memoranda; 89
were filed in federal habeas corpus cases and 67 in other civil and criminal cases.

RENDITIONS

Attorneys from the entire Criminal Bureau, at the request of the Governor's office, render opinions to
the Governor on the legal sufficiency of applications for the Govemor's warrants sought by other states, as
well as requests by Massachusetts District Attomeys, the Department of Correction and the Parole Board
to rendite fiigitives to Massachusetts. From July 1, 1998, through June 30, 1999, 151 cases were re-
viewed. Criminal Bureau attomeys also handle the habeas corpus cases brought by an individual challeng-
ing the validity of a Govemor's warrant in the state and federal trial and appellate courts, and coordinate
extradition of the fugitive of the requesting state.

CASE HIGHLIGHTS

HISTORY

The Division's caseload has changed over the last eight years. Since 1 99 1 , there has been a substan-
tial increase in criminal and federal habeas corpus cases, and the Division has transferred much of its civil
litigation, primarily involving prisoners, including Treatment Center litigation and annual petitions for release
from the Treatment Center, and appeals in unemployment benefit cases, to the Government Bureau or to
agency counsel at DOC or the Parole Board. The Division only handles these types of cases when a novel
or substantial issue is involved. The Division has retained those civil cases which directly or indirectly
involve challenges to criminal convictions, the actions of those in District Attorneys' offices or the criminal
justice system, and has taken over handling other similar cases which were previously handled in the
Government Bureau, including some State Police and Public Safety cases.

CRIMINAL BUREAU

In a number of areas, including expungement motions in criminal cases and matters where members of
a District Attorney's office are subpoenaed to provide documents or testimony in civil cases, the Division
has worked to develop the legal principles and establish the law. These cases, however, have become so
prevalent that it became necessary to transfer them to the District Attorneys or the Probation Department.
The Division continues to represent the District Attorneys' offices in federal court cases.

FEDERAL HABEAS CORPUS

One of the Appellate Division's primary missions is representing the Commonwealth's interest in fed-
eral habeas corpus cases challenging state criminal convictions and custody. These cases represent ap-
proximately 50% of the Appellate Division's caseload and require a substantially high percentage of the
attomeys' time. Most cases require the filing of lengthy and complex memoranda and occasionally, evi-
dentiary hearings are held in federal court in these cases.

During the course of the fiscal year, the Appellate Division carried 300 federal habeas cases, a number
well exceeding those handled in previous years. In the last decade, the Attomey General's Office has seen
a 400% increase in the number of federal habeas corpus cases filed. For example, in FY87, only 30 new
federal habeas corpus cases were handled by six staff attomeys and a Division Chief, compared to the 1 46
new cases handled by nine staff attomeys and a Division Chief in FY99.

The April, 1 996, amendments to the federal habeas corpus statute remain largely responsible for the
increased number of cases. The number of new federal habeas filings has continued to rise in FY98 and
FY99 where the approximately 1 50 new cases that were filed in each of those years reflect more than a
30% increase over FY97, the first fiill fiscal year after the new law went into effect, and a 78% increase
over the number of cases filed prior to the amendments.

The Division has been particularly successftil in defending against habeas corpus challenges. In the last
eight years, only four cases from over 765 disposed were ultimately unsuccessful from the Commonwealth's
perspective. The habeas corpus cases handled by the Division involve challenges to a wide variety of state
court convictions obtained throughout the Commonwealth, including a number of first degree murder and
other high profile cases. Most of the Division's federal habeas cases also continue to involve the interpre-
tation and application of the substantial revisions to the statute and in FY99, the Division successfully
litigated several important cases involving the various provisions of the new federal statute, and its applica-
tion to Massachusetts convictions. This year, the Division was successful in every federal habeas corpus
case decided by the First Circuit. In two cases, one involving a Worcester County murder conviction from
the 1 970s, and the other involving a Hampden County rape conviction, the Division was successful in

CRIMINAL BUREAU

convincing the First Circuit to reverse orders of District Court judges that would have issued the writ and
required new trials. In a third case, the Division won reinstatement of a Suffolk County murder conviction
Another case involved the successful defense of an attack on the constitutionality of the new juvenile court
jurisdiction statute applicable to murder cases.

STATE HABEAS CORPUS CASES

During F Y99, the Appellate Division handled 5 1 state habeas corpus actions by prisoners seeking
immediate release from confinement in such matters as challenges to validity of governor's warrants and
extradition, challenges to criminal convictions, claims that parole surrenders were unlawful, and attacks on
civil commitments to the Treatment Center.

In one state habeas corpus case, on behalf of the Parole Board, the Division successflilly appealed an
adverse ruling by a Superior Court judge concerning the calculation of parole eligibility for sentences that
have mandatory minimum and non-mandatory terms. In another case, the Division convinced the court to
reject a challenge to the statute concerning sentencing and incarceration of juveniles convicted of murder.
In a third case, a matter of first impression in Massachusetts, the Supreme Judicial Court agreed with the
Division's arguments that permitted extradition of a man charged in Oregon with failing to support his minor
children for prosecution in that state.

STATE AND FEDERAL CIVIL CASES

The Appellate Division handled 41 federal civil matters, which primarily involved civil rights actions
brought against state prosecutors, public defenders, judges and other criminal justice system officials, and
actions against the Parole Board by inmates denied parole. Despite the variety of defendants and claims,
Division attorneys were successful in obtaining dismissals prior to any time-consuming and burdensome
discovery. Several cases involved representation of prosecutors who were subpoenaed to testify or
produce their investigative or trial files, or cases where the integrity or validity of state criminal prosecutions
were at issue. In one case, we successfully resisted the efforts of a federal postal supervisor charged in
Bristol County with assaulting a female employee to remove the criminal prosecution from state to federal
court.

The Appellate Division's state civil caseload of 1 1 3 cases include appeals in all cases handled at the
trial court level by agency counsel at the Parole Board which challenge Parole Board practices, policies
and decisions, while the large majority of state civil cases involve representation of prosecutors, judges,
public defenders, and other court personnel sued for actions taken in their official capacity. The Division

CRIMINAL BUREAU

also actively seeks to prevent collateral attacks on criminal convictions in cases where defendants bring
civil or tort claim actions against prosecutors, courts, and witnesses for their actions relating to prosecu-
tions, and has intervened on behalf on the various District Attomey offices to stay civil proceedings until
related criminal cases are concluded, or to oppose efforts by criminal defendants seeking the return of
money or property subject to forfeiture proceedings.

During F Y99, the Appellate Division, along with the Government Bureau, successfully defended a
number of cases which made various constitutional challenges to the state's statute creating a DNA data-
base. We convinced the Supreme Judicial Court to vacate an injunction which had halted implementation
of the statute, and to find the statute constitutional. In another case, involving the Tort Claims Act relating
to actions of a state prosecutor, the Division was successful in convincing the SJC to reverse the trial court
and also to declare that the Commonwealth can take an immediate appeal from an adverse ruling on an
immunity defense. In another case, where the Commonwealth appealed from a jury verdict that an indi-
vidual ^^'as no longer sexually dangerous, the Supreme Judicial Court agreed that the Commonwealth can
take such an appeal, but rejected our argument that the judge's instructions precluded the jury from con-
sidering extensive evidence of the petitioner's sexual misconduct.

CRIMINAL CASES

The majority of criminal cases handled by the Appellate Division are appeals fi-om criminal convictions
in prosecutions brought by the trial divisions of the Criminal Bureau. The number of cases handled this
year, 82, continues to reflect the volume of the Criminal Bureau trials and convictions. The Division also
represents the Commonwealth when a defendant petitions the United States Supreme Court for a review
of a state conviction and handles all appeals fi-om trial court judgments of summary criminal contempt.

During F Y99, the Division handled criminal appeals fi-om convictions or fi-om the denial of motions for
i a new trial in a variety of cases including narcotics, arson, tax evasion, election law violations, and larceny
and fi-aud. Most of the Division's criminal cases were successful, although the Appeals Court ordered a
new trial in a narcotics case and remanded a tax prosecution to the trial court for additional findings. In
addition, the Appeals Court reversed a trial court fmding of summary contempt in one case and ordered a
lesser sanction in another. In a case of first impression, the Division prosecuted a successful appeal from
atrial court ruling that had ordered the State Police to retum $38,000 to a criminal defendant even though
the money had already been ordered forfeited in federal proceedings. The Division's most significant
criminal case was the first degree murder conviction for the 1 995 murder of Assistant Attomey General
Paul R. McLaughlin. The Appellate Division Chief worked jointly with Special Prosecutor Thomas Brennan
for nearly four years in the investigation, prosecution, and trial of that murder case which resulted in a

CRIMINAL BUREAU

conviction in May, 1 999.

G.L. C. 21 1 §3 AND OTHER SINGLE JUSTICE MATTERS

The Appellate Division handled a number of cases in the single justice session of the Supreme Judicial
Court. These matters frequently involve representation of the courts and judges, in defense of some aspect
of the criminal justice process or system.

Among the cases handled in FY99 were the successful defense to challenges involving: the practice in
Plymouth County of holding arraignments at the jail in order to save the various cities and towns the
expense of housing and transporting arrestees who were unable to make bail after weekend arrests; a
challenge to an order of immunity; litigation involving the role of a clerk's hearing and whether there is a
right to appeal to a judge when a clerk magistrate denies the issuance of a complaint; the trial and appellate
courts' powers to impose a reduced filing fee on a prisoner seeking to file or take an appeal in a civil case,
where the prisoner has adequate funds in his prison account to pay the nominal fee; procedures under the
state's bail statute; and matters concerning media coverage of a high-profile murder trial.

CRIMINAL JUSTICE INITIATIVES

Many of the attorneys in the Appellate Division work for the betterment of the legal profession and are
engaged in public service in a number of ways.

• Assistant Attorneys General Cathryn Neaves and William Duensing served on the
National Association of Attorneys General (N AAG) working group on corrections and
inmate litigation.

Assistant Attorney General William Meade serves as a member of the Editorial Board
of the Massachusetts Law Review.

Assistant Attorney General Pamela Hunt is a member of the Massachusetts Sentenc-
ing Commission and serves as chairperson of the Commission's Committee on Interme-
diate Sanctions. AAG Hunt is also a member of the Supreme Judicial Court's Standing Advi-
sory Committee on the Criminal Rules, and is on the NAAG Criminal Law Committee. She
was appointed a member of the Criminal Justice Section Council of the Massachusetts Bar
Association and Vice Chairperson of the Appellate Bench Bar Committee.

CRIMINAL BUREAU

• Division attorneys are active members of the Commonwealth' s Appellate Attorneys Action
Project and work closely with the District Attomeys' offices on matters of statewide interest
and impact.

• The Division has provided information on behalf of the Attorney General to the
Parole Board and the Governor's Council relevant to their consideration of pardon,
commutations, and parole decisions for those serving parole-eligible sentences.

• Division attomeys actively participate in officewide initiatives such as the Abandoned
Property Project and the Diversity Committee.

SAAG SUPERVISION

PAROLE BOARD

Agency counsel at the Parole Board are designated Special Assistant Attomeys General (SAAG) to
handle the Board's litigation in the state trial courts. Appellate Division attomeys work with Board counsel
in the defense of these matters, and handle all appeals in these cases. The Appellate Division is also
involved in many Parole Board cases which require coordination with the Department of Correction.
Assistant Attomeys General from the Appellate Division and the Government Bureau defend all cases
concerning the Parole Board in federal court.

DEPARTMENT OF CORRECTION

Department of Correction attomeys, under the direction and supervision of the Appellate Division and
the Government Bureau, handle civil and state habeas corpus litigation filed by prisoners in a number of
matters including challenges to conditions of confinement, prison disciplinary matters, and calculation of
sentence credits. Agency counsel handle petitions filed by sexually dangerous persons for discharge from
the Treatment Center, while Appellate Division attomeys defend cases which attack the validity of original
SDP commitment or the underlying criminal conviction.

DISTRICT ATTORNEYS

Whenever a District Attomey has a conflict of interest in an appellate case or in a case involving a
parole hearing, the Commonwealth's interests are represented by either Assistant Attomeys General or by

CRIMINAL BUREAU

an Assistant District Attorney who is designated a Special Assistant Attorney General and is supervised by
attorneys in the Appellate Division. In addition, Assistant District Attorneys in Berkshire County are
designated Special Assistant Attorneys General to handle challenges to renditions pursuant to governor's
warrants in that county.

COMMISSIONER OF PROBATION

During F Y99, agency counsel in the Office of the Commissioner of Probation, under the supervision of
the Appellate Division, were designated Special Assistant Attorneys General to handle matters in which a
motion to expunge probation and court records in criminal cases was filed.

CRIMINAL BUREAU

CRIMINAL INVESTIGATIONS DIVISION

The Criminal Investigations Division provides the Criminal Bureau with highly trained and experienced
investigators from the ranks of the Massachusetts State Police, as well as a core of civilian investigators.
The Division investigates a variety of crimes, predominantly in the area of organized crime, narcotics
trafficking, public corruption, firearm violations, money laundering, securities violations, tax fi^ud, com-
puter crime, crimes against the elderly, and environmental crime.

The Division also provides technical support and resources to other divisions within the Office of the
Attorney General and to municipalities within the Commonwealth in such areas as handwriting analysis and
photography /video expertise. The Criminal Investigations Division has developed outstanding cooperative
working relationships with many law enforcement agencies throughout the Commonwealth, as well as
throughout the country.

The State Police Unit assigned to the Criminal Bureau is commanded by Detective Lieutenant Mark
Delaney; Lieutenant Steve Matthews serves as the Executive Officer. Lieutenant Frank Matthews oversee's
the Public Integrity /Special Investigations unit in Boston. Lieutenant Joe Flaherty commands the High-
Tech and Computer Crimes Division, and oversees the Springfield Special Investigations Unit run by
Sergeant John Gibbons. Sergeant Rich Prior commands the Narcotics Unit with the assistance of Ser-
geant Tom Coffee. Collectively, the State Police assigned to the Criminal Bureau bring over 1 00 years of
investigative experience through a variety of backgrounds and experience.

Several significant investigations have been initiated since January of 1 999. One in particular, which
has kept the Office operating at a blazing pace, is the investigation into theft and corruption within the State
Treasury. A Special Grand Jury is looking into the widespread corruption and theft of more than nine
million dollars from the State coffers. Indictments from the first phase of the investigation are expected
within the next several months.

The High-Tech and Computer Crimes Division continues to lead the way in the Commonwealth through
their assistance to other agencies and tiieir continued pursuit of hackers, child pomographers and Internet
thieves. A recent e-mail bomb threat to the Secretary of State's office resulted in the arrest of an individual
from the Leominster area. The threat was made by a disgruntled individual who threatened to blow up a
state office building. A quick response by the High-Tech and Computer Crimes Division resulted in an
arrest and search of the defendant's home by State Police bomb experts.

CRIMINAL BUREAU

During FY99, the Criminal Investigations Division accomplished the following:

Investigations 1 86

Arrests 77

Search Warrants 47

Assistance to other Agencies 60

Drug Money Seized $775,432.84

Background Investigations 1 049

ENVIRONMENTAL CRIMES STRIKE FORCE

MAKING THE GOVERNMENT WORK TO PROTECT THE ENVIRONMENT

The Massachusetts Environmental Crimes Strike Force, a collaborative effort of the Attorney Gen-
eral, the Secretary of Environmental Affairs, Department of Environmental Protection, Environmental Po-
lice, and State Police, continued to pull together available government resources in the service of enforcing
the state's environmental laws. The Strike Force also worked with the U.S. Environmental Protection
Agency and the U.S. Attomey's Office for the District of Massachusetts, pursuing joint state and federal
environmental crimes investigations. The Strike Force's enforcement efforts included cases in Berkshire
County, Middlesex County, and Worcester County.

Fiscal Year 1 999 saw successful trials in the largest asbestos dumping case in the Commonwealth to
date, and the first criminal prosecution for interfering with a hazardous waste site cleanup action pursuant
to G.L. c. 2 IE. The Strike Force also won the Commonwealth's first criminal conviction of a public
official for environmental violations. i

During Fiscal Year 1 999, the Strike Force unit operating out of the Criminal Bureau of the Attomey
General's Office opened investigations in 24 matters, and concluded 1 7 investigations. The Strike Force
resolved cases against three defendants, convicting all.

CRIMINAL CASE HIGHLIGHTS

CASES INITIATED IN FISCAL YEAR 1999

• Commonwealth v. Stepping Stone Realty, Inc. & James Harritv, Jr.: This real estate
86

CRIMINAL BUREAU

company and its president were charged in Worcester District Court with violating state air
pollution and solid waste laws in connection with the renovation of a residential property in
Worcester. The defendants allegedly operated an unpermitted asbestos removal project in the
basement of the residential property and failed to comply with air pollution regulations intended
to prevent the emission of asbestos fibers. The asbestos waste was then allegedly buried in the
basement.

CASE DISPOSITIONS IN FISCAL YEAR 1999

• William Bertrand: This Billerica contractor was convicted by a Middlesex County
jury for illegally disposing of hazardous waste and illegally interfering with a hazardous
waste site cleanup action pursuant to G.L. c. 21E. The defendant was hired to transport
approximately 1200 tons of oil contaminated soil from a 21E site in Wilmington to an
asphalt recycling company in Maine. Evidence showed that the defendant delivered only
105 tons to the recycling facility, which charged $28 a ton to accept the contaminated
soil. The defendant dumped much of the remaining contaminated soil at a Carlisle home,
having offered it to the unsuspecting homeowners for use as fill. The defendant kept the
approximately $30,000 that he would have had to pay to the recycling company. The
defendant was sentenced to two and a half years in the House of Correction, six months
to serve, with two years probation.

• Commonwealth v. Jonathan Gabriel The president of New England Demolition,
Inc. of Worcester was convicted by a Worcester County jury for illegally removing and
disposing of asbestos and violating a DEP solid waste cleanup order. The evidence
showed that at demolition jobs in Holden and Worcester, the defendant and his company
failed to follow required asbestos removal procedures to insure that the asbestos was not
released to the ambient air. The defendant also ordered his employees to illegally dispose
of asbestos waste in a smokestack at a commercial building in Worcester. The employees
ordered to perform the job were not protected from exposure to the asbestos. The asbes-
tos dimiped in the stack filled approximately 250 bags, making this the largest asbestos
disposal prosecution in the Commonwealth. The defendant was sentenced to two years in
the House of Correction, with an additional two years suspended, two years with proba-
tion.

• Commonwealth v. Leo Senecal The Department of Public Works Chief for the City of
North Adams plead guilty in Berkshire Superior Court to charges of illegally disposing of

CRIMINAL BUREAU

hazardous waste without a license and in a manner which could endanger the environment. The
defendant admitted to having ordered City employees to dig a trench on DPW property and
dump three 50-gallon drums of waste oil in the trench. He instructed one of his employees to
cover the trench with dirt. The defendant thereafter misled DEP inspectors about the incident
and the whereabouts of the dumping. The defendant was sentenced to five years probation with
the special condition that he step down as DPW superintendent and that he not have any
supervisory authority over any DPW employee or any work of the DPW for five years.

BROADENING ENVIRONMENTAL IMPACT

Strike Force activities continued to extend the impact of its environmental prosecution efforts beyond :
the deterrence and remediation achieved in particular cases. Strike Force members participated in educa-
tional efforts reaching other law enforcement agencies, the private bar, and the community as a whole.
These efforts included seminars attended by Massachusetts local law enforcement agencies, hazardous
waste inspectors fi"om states throughout the northeastern United States, and members of the Massachu-
setts Bar, as well as a symposium on emerging environmental trends sponsored by New England School of !
Law. The University of Massachusetts Work Environment Justice Fund, created as a result of the Strike
Force's 1 994 prosecution of a Somerville lead smelting company, granted its fifth annual awards to seed
projects for improving workplace health and safety among low income workers. A total of $1 00,000 was i
awarded to seven non-profit agencies across the state.

The members of the Environmental Crimes Strike Force for all or part of F Y99 were: Martin Levin,
Chief, AAG; Michael Dmgle, AAG; Pamela Talbot, AAG; Irfan Nasrullah, Volunteer AAG; Gail Larson,
Lieutenant; John Lapan, Trooper; Michael Moore, Environmental Police Officer; Michael Sweeney, Ser-
geant; and Pat Haley, Environmental Police Officer.

CRJMINAL BUREAU

ECONOMIC CRIMES DIVISION

INTRODUCTION

The Economic Crimes Division investigates and prosecutes all types of private sector, white collar and
economic crime in state courts across the Commonwealth. The Division is charged with stemming the
serious and egregious effects of private sector white collar offenders within the state through both pro-
active prevention and aggressive prosecution. The seriousness of the cases prosecuted by the Division
demonstrates the crippling impact of economic crime as it travels through families, communities, and in
some instances, throughout the state, forever changing those affected. The victims of these crimes take
many shapes, from the vulnerable elderly individual, to the small business or large corporation.

Although the cases handled by the Division vary in size, from the $50,000 theft from a single elderly
victim, to the multi-million dollar theft from a large corporation, the intensity of harm is treated with equal
importance. Each year, the goal of the Division is not only to indict and convict guilty felons from stripping
victims of their life savings, their businesses, or ultimately, their personal futures, but also to assist the public
and private sector in creating systemic change in order to prevent fraud.

Massachusetts citizens annually incur hundreds of millions of dollars in losses through private sector
fraud. Since Fiscal Year 1 995, the Economic Crimes Division has obtained 250 convictions and disposi-
tions totaling over $70 million dollars in private stolen funds from victims throughout the Commonwealth.
The statistics contained within this report paint a portrait of the battle waged by a group of qualified
professionals against private sector fraud, committed to making offenders accountable for their financial

Throughout the past year, the Economic Crimes Division focused on three priority areas: ( 1 ) lawyer
fraud, (2) tax crimes, and (3) all types of financial crimes (including theft and securities fraud) which
victimize both vulnerable individuals and large corporations. Cases involving financial crimes against the
elderly are priority prosecutions for the Economic Crimes Division.

The Economic Crimes Division consists of seven attorneys, one special assistant attorney general, and
one secretary, in addition to civiUan financial investigators and state police officers. The members of the
Division during part or all of the year consist of the following: Carol Starkey, Chief, AAG; Molly Parks,
AAG; Kevin Brekka, AAG; Sarah Hartry, AAG; Lori Balboni, AAG; Phillip McGovem, AAG; Mark
Mulligan, AAG; Andy Zaikis, SAAG; Olivia Blanchette, Secretary; James McFadden, Investigator; Patrick
Ormond, Investigator; Brad Chase, Investigator; David Baker, Investigator; and SallyannNelligan, Inves-

CRIMINAL BUREAU

tigator. Paul Stewart, Director of Financial Investigators, and the State Police Unit assigned to the Crimi-
nal Bureau, have been invaluable to the successful work of the Division.

In Fiscal Year 1 999, the Economic Crimes Division commenced another 10 complex criminal pros-
ecutions against those individuals, entities, and corporations that took advantage of positions of power in
the private sector to the detriment of the working men and women of the Commonwealth. EXiring the same
time, 36 convictions were obtained against white collar criminals and corporations, including those defen-
dants wiio were not charged within this fiscal year. The attached charts reflect the statistics for the financial
and tax prosecutions indicted for the past fiscal year, and all cases completed by the Division throughout
the last four fiscal years.

PRIVATE SECTOR FRAUD: THE FINANCIAL AND TAX PROSECUTIONS
HANDLED BY THE ECONOMIC CRIMES DrVTSION

Economic Crimes Division

1995-1999
250 Dispositions

Traditional White
Collar Crime

(GuUty)

54%

Traditional White
Collar Crime

{Acquittals/Dismissals}
1%

r^A

^-.Jf^

TaxCj

(Acquittals/D
0%

V
ises

smissals}

Tax Cases

1 Guilty}
45%

CRIMINAL BUREAU

THE DIVISION'S AGENCY LIAISONS

The Economic Crimes Division receives referrals from both state and federal agencies, as well as
judges, attorneys, private parties, and police departments throughout the Commonwealth.

The Division continues to work closely with such offices and agencies as the Board of Bar Overseers
("BBO"), the Client Security Board ("CSB"), the Criminal Investigations Bureau of the Department of
Revenue ("CIB" of "DOR"), the F.D.I.C, the Secretary of State of the Commonwealth ("SOS"), the

Economic Crimes Division
Agency & Case Referral Relationships

Judges,
Attorneys &
Private Parties

United States Attorney's Office ("USAO"), and various District Attomey's Offices across the state.
THE FINANCIAL PROSECUTIONS

The investigations initiated by the Division tend to be difficult, complex white collar cases that
involve the analysis and review of prolific documentation, tracing an economic crime through exposing the
"paper trail" of evidence left by the white collar criminal. In order to conduct a thorough investigation of an
economic fraud, extensive interviews and testimony must be obtained from all people involved or affected
by the theft. In addition, most cases require the use of an expert vsdtness to aid an assistant attomey general
or investigator in evaluating the perpetrator's handwriting, the financial formula employed, or the mental
state which enabled the defendant to perpetrate the crime.

CRIMINAL BUREAU

To answer the challenging goals of the Economic Crimes Division in prosecuting the most elaborate of
financial schemes, law enforcement techniques have grown more sophisticated in response to the changing
face of private sector fi-aud over the passage of time. Computer technology and enhanced litigation tools
are fi-equently employed by Division members to explain often complicated financial matters to a grand
jury or a trial jury . The significant effect of such efforts sends the message that our evolving technological
age will be embraced by law enforcement officials to prosecute even the most sophisticated felon as we
advance to the next century.

CATEGORIES OF FINANCIAL CASES PROSECUTED
BY THE ECONOMIC CRIMES DIVISION

The following is a synopsis of the types of cases accepted for investigation and prosecution
within the Economic Crimes Division, utilizing the Division's law enforcement techniques,
resources and initiatives.

Types of Cases and Case Highlights

Within the broad focus areas of lawyer fi-aud and other types of financial crimes, there are
essentially six categories of white collar crime that are investigated and prosecuted by the Office
of the Attorney General's Economic Crimes Division. They are: (1) Organizational Fraud; (2)
Fiduciary Fraud; (3) Investment/Securities Fraud; (4) Health Care Fraud; (5) Identity Fraud; and
(6) Tax Fraud. While these types of schemes overlap in a number of ways, they are distinguish-
able by the position of the perpetrator within the scheme, the type of victim and/or the manner in
which the fraud is perpetrated.

Organizational Fraud: This refers to crimes committed by an employee, agent, representative or
contractor of an organization. The victim of these schemes is the organization which generally is a
corporation. The crimes that are usually the subject of the investigation are larceny or embezzlement,
false entry in corporate books, forgery and uttering. The fi^audulent conduct often appears in the form of
a false billing scheme. The perpeti-ator uses his access to a payroll system or to payment documents,
such as purchase orders, to cause payments for services not provided or to create unauthorized checks
for his own personal use.

CASE HIGHLIGHTS

CRIMINAL BUREAU

• Commonwealth v. John Curtis, et. al (Suffolk Superior Court) This Canton resident was
indicted on charges that he stole more than one million dollars from Star Market through an
elaborate scheme involving fake purchase orders, bogus billings and other alleged deceptions.

; John Curtis, 54, was the head of the maintenance department for Star Market until November,
1 995 and responsible for the maintenance and purchase of equipment for all of Star Market's
39 stores. Linda Christmas, and Carole and Bill Melanson were also indicted for conspiring
with Curtis in one of his false billing schemes in return for a kickback of tens of thousands of
dollars. The matters were resolved against all parties, and the court ordered substantial incar-
ceration, restitution or probation sentences for each defendant.

• Commonwealth v. Brian P. Psota (Suffolk Superior Court) A former payroll
specialist for Media One, Brian P. Psota, plead guilty to stealing over $225,000 while
employed as the corporate accounting manager over a five-year period, spending the
money on lavish vacations and building a new home. The defendant was sentenced to
two years in the House of Correction, one year to serve, with a $50,000 restitution pay-
ment to be made forthwith to the victim corporation on the date of the plea, and 20 hours
of community service to be completed per month during his probation.

Fiduciary Fraud: This refers to crimes committed by individuals in positions of trust, such
as attorneys, trustees, executors and guardians. The Division receives a majority of its BBO
referrals alleging lawyer fraud, one of the Division's focus areas. The victims are those who
entrusted their assets to the fiduciary and those who were the beneficiaries of the trusts or estates.
The crimes charged include larceny, embezzlement, forgery, uttering and perjury. Forgery,
uttering and perjury are frequently charged because part of the scheme often includes the submis-
sion of false signatures on payment instruments and/or the submission of false statements to a
probate court, banking institution or insurance company. These crimes are especially egregious
j because the perpefrator will often be a fiiend of the family or someone who has had a relation-
' ship with the victim for many years. The defendant will steal from individuals all the while
porfraying himself as a protector, friend or confidant of the victim, many of whom are elderly or
I infirm.

Case Highlights

Commonwealth v. Charles Victor. II (Suffolk Superior Court)
Commonwiealth v. Thomas Cargill (Suffolk Superior Court)
Commonwealth v. Walter Palmer (Suffolk Superior Court)

CRIMINAL BUREAU

Commonwealth v. John Conroy (Suffolk Superior Court)
Commonwealth v. Jeffrey Boxer (Norfolk Superior Court)

Five Massachusetts attorneys were recently indicted or plead guilty to larceny and tax indict-
ments, their combined alleged fraud totaling over $4.45 million from multiple victims. The cases
of Thomas Cargill, Walter Palmer, Charles Victor, II and John Conroy, involved stealing large
sums of money. Cargill and Palmer are alleged to have plundered the accounts and estates of
multiple clients, misappropriating millions of dollars. In Conroy's case, the defendant admitted
to stealing from trusts established for charities, and in the Victor matter, the defendant plead
guilty to stealing nearly half a million dollars from estates of children suffering from lead paint
poisoning. The final matter involved a disbarred attorney, Jeffrey Boxer, who stole $188,000
from four clients, comprised of both elderly and disabled victims.

Investment/Securities Fraud: This refers to crimes committed by individuals serving in the
capacity of financial advisers. It also involves whole organizations set up as fraudulent invest-
ment houses. The victims are individuals who have handed over money based on the under-
standing that the money will be invested on their behalf This type of financial fraud is usually
in the form of a "ponzie" scheme where the perpetrator is returning just enough money to his
victims to persuade them that their investments are profitable, all the while depleting the majority
of the equity for the defendant's own use. The fraudulent investment house conspirators accom-
plish their theft by persuading the victims that they can be trained to make money through
securities trading, while engaging the victim in a fixed market. This scheme also uses its victims
to lure in others, such as fiiends and associates, by requiring them to recruit other investors,
much like a pyramid scheme. The crimes charged include larceny, embezzlement, securities
fraud, false statement of corporate assets, bucketing, conspiracy, forgery and uttering.

Case Highlights

• Commonwealth v. Albert Levesque (Bristol Superior Court) A former Metropoli-
tan Insurance agent and financial advisor, Albert Levesque, indicted for stealing approxi-
mately $200,000 by coercing an elderly widow into transferring assets into trust accounts
from which he later embezzled, plead guilty and received two years in the House of
Correction, committed, with a two year House of Correction sentence, suspended, to run
from and after the incarcerated portion of his sentence.

• Commonwealth v. Jeffrey Maniff (Norfolk Superior Court) The Commonwealth
94

CRIMINAL BUREAU

received one of its strongest sentences after conviction in a financial crimes case involv-
ing an Easton man charged with allegedly stealing more than $325,000 from an elderly
woman who lives in a nursing home. Jeffrey Maniff was indicted on 13 counts of larceny
over $250, and five counts of securities fraud. The indictments allege that Maniff, an
accountant and businessman who ran a luxury auto leasing operation, stole the money
after befiiending two elderly women, ages 97 and 90, offering to perform tax work and
banking transactions for them. He was sentenced to nine to ten years in state prison, in addition
to paying back the fiill amount of restitution.

Health Care Fraud: This refers to crimes committed by individuals working on behalf of
health and science foundations or health care providers who, through their position of authority,
are able to convert monies for their own use. The perpetrator is generally an individual in a
position of high authority in the organization, such as a department chief, a member of the board
of trustees or chairman of a foundation. The schemes include converting the institution's funds
through a false billing scheme, embezzling fiinds received for research purposes, or converging
premiimis paid for insurance coverage. The victims in these matters are not only the institutions
but also the claimants and service providers, for example physicians.

Case Highlight

Although the Division currently has matters of this category under investigation, an example
of a past completed prosecution handled within this category is Commonwealth v. Bernardo
Nadal-Ginard. Suffolk Superior Court. Dr. Nadal-Ginard held the positions of Chief of Cardiol-
ogy at Boston Children's Hospital, President of the non-profit corporation known as the Boston
Children's Heart Foundation, tenured Professor at Harvard Medical School and Howard Hughes
Investigator. In his various positions of authority. Dr. Nadal-Ginard was entrusted with hundreds
of thousands of dollars for research and treatment of children with heart disease and defects. At
the conclusion of a month-long jury trial in Suffolk Superior Court, Dr. Nadal-Ginard was
convicted of 1 2 counts of larceny. He was sentenced to a year in the House of Correction with three
years of probation. He was further ordered to complete two full yeais of community service, working
fiill-time for free, and to pay full restitution to the victim foundation.

Identitv Fraud: This refers to crimes where the initial object of theft is the "identity" of the
victim ~ their name, credit card number, social security number or bank account number, cell phone
number or computer station. Once the identity is usurped, it then becomes the instrument through which
money is stolen or other crimes are committed. The victims are limitless as are the avenues through

CRIMINAL BUREAU

which an identity can be stolen. The identity can be acquired through telephone gimmicks, electronic
scanning of cell lines or as an offshoot of a con game.

Case Highlight

• Commonwealth v. Kerrin Alfonso (Suffolk and Norfolk Counties) This case
involves a woman known as the "Queen of Identity Fraud," who is alleged to have used
identifying information from family, friends, former employers and acquaintances to
create counterfeit checks and to open fraudulent credit accounts. Alfonso is alleged to
have stolen several hundred thousand dollars in fraudulent credit purchases.

TAX FRAUD PROSECUTIONS

Although each Assistant Attorney General in the Economic Crimes Division handles a
caseload including tax cases, one Assistant Attorney General, with the assistance of one Special
Assistant Attorney General concentrates fiill time on this subject area. Since July of 1 995, the Tax
Prosecution Unit litigated a significant number of cases in the criminal courts and conducted several
long-term investigations of suspected tax crimes. Many cases were referred to the Office of the Attor-
ney General by the Criminal Investigations Bureau of the Department of Revenue, and investigators of
that agency actively assisted the Tax Prosecution Unit in investigations and prosecutions, particularly in
the area of analysis of documentation relating to potential tax violations. Additional cases were devel-
oped by the Tax Prosecution Unit as a result of referrals from other agencies.

Case Highlights

• Commonwealth v. Paul Cacchiotti (Suffolk Superior Court) After a Middlesex jury
trial completed in late July of 1998, the jury found CPCS attorney Paul Cacchiotti guilty
of extortion, larceny, tax evasion and filing false income tax returns. The defendant was
convicted of extorting money from his indigent criminal clients while being paid by the
Commonwealth for his legal services. In addition, Cacchiotti failed to report on his
income tax returns the legal fees that he had earned from his private clients. The defendant was
sentenced to two years in the House of Conrection, committed, with a from and after sentence
of two years probation during which time he must complete 400 hours of community service
and make $ 1 ,500 in restitution to the family of the attempted extortion victim. Due to the

CRIMINAL BUREAU

extensive tax charges in the case, the investigation and the prosecution was a joint effort of both
the Economic Crimes Division and the PubUc hitegrity Division.

• Commonwealth v. Gary Burris (Suffolk Superior Court) This matter involves a
Pittsfield vending machine business which was the subject of a search warrant executed
from western Massachusetts. Burris and several restaurant owners were subsequently
indicted upon the completion of a grand jury tax investigation. Burris recently plead
guilty and received, on an imagreed plea, two years probation, 250 hours of community
service and a $50,000 fine.

CASES CHARGED BY THE ECONOMIC CRIMES DIVISION

INDICTMENT DATE

CASE DESCRIPTION

9/10/98 Commonwealth v. Brian P. Psota

(Larceny Prosecution)
COURT: Suffolk Superior

DESCRIPTION: Brian Psota is alleged to have stolen over $220,000 from Continental
Cable-vision, Inc., now Media One, while employed as a payroll clerk and corporate
accounting manager over a five year period using three different ft-audulent schemes.

CHARGES:

10/2/98

Larceny Over $250 (3 Counts)

False Entries in Corporate Books (3 Counts)

Attempted Larceny over $250 (1 Count)

(AAG C. Starkey)

Commonwealth v. Walter Palmer

(Larceny Prosecution)

COURT: Suffolk Superior

DESCRIPTION: The defendant, a disbarred attorney, is alleged to have embezzled at

least two million dollars from his former clients through his abuse as trustee, guardian

and executor to at least six former clients.

CHARGES: Embezzlement (6 Counts)

(AAG K. Brekka)

10/29/98

Commonwealth v. Neil R. McCrystal

(Larceny Prosecution)

CRIMINAL BUREAU

COURT: Bristol Superior

DESCRIPTION : The target was a property manager for the Hamilton Company, who alleg-
edly stole approximately $ 1 04,000 by ( 1 ) creating a fictitious company and approving payment
by Hamilton clients of the invoices for work never performed or for work actually performed by
employees on the company payroll, and (2) stealing various checks payable to Hamilton clients
and depositing them directly to his personal bank account.
CHARGES: Larceny Over $250 (8 Counts)

Larceny Over $250 (3 Counts)

(AAG M. Parks)

10/21/98

Commonwealth v. Castro Aristis

(Narcotics Prosecution)

COURT: Suffolk Superior

DESCRIPTION: Aristis is charged with Hector Florian in a drug trafficking operation in

the Chelsea and possibly Fitchburg areas. He lives in Chelsea and lists his employment

as Mario's Fruit Company.

CHARGES: Trafficking Cocaine (2 Counts)

Conspiracy to Violate Drug Law (1 Count)

(AAG P. McGovem)

10/27/98

Commonwealth v. Hector Florian

(Narcotics Prosecution)

COURT: Suffolk Superior

DESCRIPTION: Florian is charged with Aristis in a drug trafficking operation in the

Chelsea and possibly Fitchburg areas. He lives in Chelsea and has stated that he works in

customer service for ATA American Trans Air at Logan Airport.

CHARGES: Trafficking Cocaine (2 Counts)

Conspiracy to Violate Drug Law (1 Count)

(AAG P. McGovem)

12/16/98

Commonwealth v. Dermot P. Q^Brien

(Larceny Prosecution)

COURT: Suffolk Superior

DESCRIPTION: This defendant is alleged to have stolen over $250,000 from a non-
profit charitable organization, Morgan Memorial Goodwill Industries, while operating as
a Payroll Specialist, and then converting the money to pay for his own gambling debt.
CHARGES: Larceny Over $250 (3 Counts)

False Entries in Corporate Books (3 Counts)

Forgery (7 Counts)

CRIMINAL BUREAU

(AAG C. Starkey)

3/10/99

Commonwealth v. Dermot P. O'Brien

(Tax Prosecution)

COURT: Suffolk Superior

DESCRIPTION: This defendant is alleged to have filed false tax returns and failing to
file tax returns due to his theft of over $250,000 firom a non-profit charitable organization,
Morgan Memorial Goodwill Industries.

CHARGES: Filing False State Income Tax Returns (3 Counts)

Willftil Failure to File (3 Counts)

(AAG C. Starkey)

3/16/99

Commonwealth v. Neil McCrystal

(Tax Prosecution)

COURT: Suffolk Superior

DESCRIPTION: The defendant is alleged to have stolen money while operating as the

property manager for the Hamilton Company, using a scheme to falsely bill the company

for work he never performed totaling approximately $500,000.

CHARGES: Willful Filing of False Income Tax Returns (2 Counts)

(AAG M. Parks)

3/16/99 Commonwealth v. Arnold Brandyberry

(Tax Prosecution)

COURT: Suffolk Superior

DESCRIPTION: As the President and CEO of a Western Mass corporation, Berkshire
Paper Co., Inc., the defendant is alleged to have failed to file non-resident income tax
returns fi'om 1993 through 1996. During this period, he earned between $145,000 to
$190,000 in salary which he failed to report as Massachusetts source income.
CHARGES: Willftil Failure to File State Income Tax Returns (4 Counts)

(AAG L. Balboni)

6/3/99

Commonwealth v. Richard T. Cousins

(Tax Prosecution)

COURT: Suffolk Superior

DESCRIPTION: The defendant was the sole corporate officer for Trenton Construction

Corp., a pile driving business. He is alleged to have failed to pay and file returns for state

income tax withheld from his employees' paychecks.

CFIARGES: Willftil Failure to Account for and Pay Over Withholding Taxes (2 Counts)

CRIMINAL BUREAU

(AAGM. Parks)
CASES DISPOSED BY THE ECONOMIC CRIMES DIVISION

CONVICTION DATE CASE DESCRIPTION

7/16/98 Commonwealth v. Steven Derrick

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Bohn

DESCRIPTION: This matter involves a husband and wife who leased cabs through
various corporations while failing to report and pay all of their collected sales taxes.
CHARGES: Willful Attempt to Evade and Defeat Sales Taxes (7 Counts)

Willful Failure to Account For and Pay Over Sales Taxes (4 Counts)
SENTENCE: The defendant plead guilty on all counts. He was sentenced to two years in
the (edit 6) House of Correction, suspended for two years probation, with the completion
of six months of home confinement. The defendant was further ordered to pay $30,000
in fines and surfines, $10,000 of which must be paid within one week of imposition of the
sentence, and the balance to be paid during the first six months following the completion
of his sentence. Finally, the defendant was ordered to file all past due tax returns and
new tax returns. $60 Victim/witness fee.

(SAAG A. Zaikis)

7/16/98 Commonwealth v. Susan Derrick

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Bohn

DESCRIPTION: This matter involves a husband and wife who leased cabs through
various corporations while failing to report and pay over all of their collected sales taxes.
CHARGES: Willfiil Attempt to Evade and Defeat Sales Taxes (1 Count)

Willful Failure to Account For and Pay Over Sales Taxes (2 Counts)
SENTENCE: Placed on file without change of plea.

(SAAG A. Zaikis)

7/30/98 Commonwealth v. Paul Cacchiotti

(Tax Prosecution)

COURT/JUDGE: Middlesex Superior/Fremont-Smith

DESCRIPTION: After a Middlesex jury trial completed in late July of 1998, the jury
found CPCS attorney Paul Cacchiotti guilty of extortion, larceny, tax evasion and filing
false income tax returns. The defendant was convicted of extorting money from his

100

CRIMINAL BUREAU

indigent criminal clients while being paid by the Commonwealth for his legal services.
In addition, Cacchiotti failed to report on his income tax returns the legal fees earned
from his private clients. Due to the extensive tax charges in the case, the investigation and
the prosecution was a joint effort of both the Economic Crimes Division and the Public
Integrity Division.
CHARGES: Attempted Extortion (3 Counts)

Larceny Over $250 (1 Count)

Tax Evasion (1 Count)

Filing of False Tax Return (1 Count)
SENTENCE: The jury returned not guilty verdicts on the first two (edit 7) counts of
the Attempted Extortion Indictment. The jury returned guilty verdicts as to all other
counts. The defendant received two years House of Correction, committed, with a from
and after two year probation sentence. Defendant was ordered to complete 200 hours
community service with each year of probation. The defendant was further ordered to
make restitution of $1,500 to the victim of the attempted extortion charge. $60 Victim/
witness fee.

(AAGs L. Balboni/A. Lawlor)

8/6/98 Commonwealth v. John Curtis

(Larceny Prosecution)

COURT/JUDGE: Suffolk Superior/Borenstein

DESCRIPTION: The defendant admitted that he stole in excess of $ 1 million from Star
Market through his position as the head of their maintenance department.
CHARGES: Larceny Over $250 (24 Counts)

Larceny Over $250 (1 Count)

False Corporate Records (24 Counts)

False Corporate Records (1 Count)

Conspiracy to Commit Larceny (2 Counts)

Conspiracy to Commit False Corporate Records (2 Counts)

Larceny Over $250 (1 Count)
SENTENCE: The defendant plead guilty to all charges. He admitted he stole in
excess of one million dollars from Star Market Corporation, and was sentenced to two
and-a-half years in the House of Correction, five years probation, and restitution through
surrender of two residences (valued at over $325,000). Court offered less incarceration
than the Commonwealth's recommendation based on defendant's statement that he would
make above described restitution. Victim/ witness fee waived over Commonwealth's
objection.

(AAG K. Brekka)

8/11/98 Commonwealth v. Jeffrey Maniff

(Larceny/Securities Fraud Prosecution)

101

CRIMINAL BUREAU

COURT/JUDGE: Norfolk Superior/Houston

DESCRIPTION: The defendant met the victims, two elderly sisters, while doing their
taxes, and then proceeded to use the money to fund his luxury rental car business as well
as purchase other items for his home and family.
CHARGES: Larceny Over $250 (3 Counts)

SENTENCE: Defendant received a sentence of four and one half years State Prison
committed, with four and-a-half years State Prison committed from and after on the first
two indictments. On the next two counts, the defendant was sentenced to 1 0 years proba-
tion, from and after, with a condition of probation being the payment of $321,658 in
restitution, and prohibition from work as an accountant or fiduciary. The court also
issued a Stay-Away order from the victims. The rest of the charges were guilty filed.
$60 Victim/witness fee.

(AAGs S. Hartry and M. Mulligan)

8/14/98 Commonwealth v. Paul Cacchiotti

(Tax Prosecution)

COURT/JUDGE: Middlesex Superior/Bennett

DESCRIPTION: After a Middlesex jury trial in late July of 1 998, the jury found CPCS

attorney Paul Cacchiotti guilty of extortion, larceny, tax evasion and filing false income

tax returns. The defendant was convicted of extorting money from his indigent criminal

clients while being paid by the Commonwealth for his legal services. In addition,

Cacchiotti failed to report on his income tax returns the legal fees that he had earned from

his private clients. Due to the extensive tax charges in the case, the investigation and the

prosecution was a joint effort of both the Economic Crimes Division and the Public

Integrity Division.

CHARGES: Tax Evasion (I Count)

Attempted Extortion (1 Count)

False Tax Return (1 Count)
SENTENCE: The defendant was sentenced to two years in the House of Correction,
committed, with a from and after sentence of two years probation during which time he
must complete 400 hours of community service and make $1,500 in restitution to the
family of the attempted extortion victim.

(AAGs L. Balboni/A. Lawlor)

8/20/98 Nancy Burgess v. Commonwealth

(Petition for Writ of Habeas Corpus)

COURT/JUDGE: Middlesex Superior/Zobel

DESCRIPTION: This defendant, convicted of larceny, is sought by Connecticut for a
probation violation following completion of her Massachusetts sentence. The defendant
unsuccessfully challenged a Governor's Warrant and sought release on bail.

102

CRIMINAL BUREAU

SENTENCE: Disposition: Petition for a writ of habeas corpus denied.
(AAG M. Parks)

9/8/98 Commonwealth v. Philip J. Tavares

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Volterra

DESCRIPTION: Tavares lived in New Hampshire and worked as a physician in Massa-
chusetts during the years 1991 through and including 1996, and failed to file non-resident
income tax returns. Tavares earned approximately $497,775 income, and he owed
approximately $29,833 in tax liability.

CHARGES: Willful Failure to File Non-Resident State Income Tax Returns (6

Counts)

SENTENCE: The defendant received a sentence of pre-trial probation for one year,
with a from and after sentence of unsupervised probation for one year, and $5,000 court
costs over the Commonwealth's objection. All other counts were sentenced concurrently.

(AAG S. Hartry)

9/18/98 Commonwealth v. Dan Beliveau

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Ball

DESCRIPTION: This defendant was a salesman who worked and lived in Massachu-
setts while failing to file income tax returns and falsely claiming his wages were earned
out of state.
CHARGES : Willful Filing of a False Income Tax Return ( 1 Count),

Willful Failure to File State Income Tax Returns (4 Counts)
SENTENCE: The defendant was sentenced to a $1 0,000 fine, and one year unsuper-
vised probation. The rest of the charges were guilty filed. $60 Victim/witness fee.

(SAAG A. Zaikis)

9/23/98 Commonwealth v. Joseph Haven

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Ball

DESCRIPTION: This matter involves an employee who collected worker's compensa-
tion payments while being paid imder the table by his employer.
CHARGES: Willftil Filing of False Income Tax Returns (2 Counts)

SENTENCE: $ 1 00 fine, two years probation. $60 Vicfim/witness fee.

(AAG A. Zaikis)

103

CRIMINAL BUREAU

10/20/98 Commonwealth v. 770 Broadway, Inc.

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Quinlan

DESCRIPTION: 770 Broadway, Inc. operated five retail bedding and furniture stores in
Southeastern Massachusetts under the name of Off-Track Bedding. Marie Campbell was
the corporation's bookkeeper. The defendants filed 31 false and fi-audulent monthly sales
tax returns for the periods of March 1992 through December 1994. Campbell prepared
and filed each of the false and fraudulent returns and in doing so, used four distinct
schemes to underreport the sales tax owed, including subtracting a round number or
excluding the sales and taxes owed by one of the five stores.

CHARGES: Willftil Failure to Account For and Pay Over Sales Tax (3 Counts)

SENTENCE: Defendant plead guilty. On each count, court imposed fine of $7,500
plus surfine of $2,500. Total fines and surfines $30,00, including $ 60 Victim/Witness
fee. (Edit 8)

(AAG M. Mulligan)

10/20/98 Commonwealth v. Marie Campbell

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Quinlan

DESCRIPTION: 770 Broadway, Inc. operated five retail bedding and ftimiture stores in

Southeaster Massachusetts under the name of Off-Track Bedding. Marie Campbell was

the corporation's bookkeeper. The defendants filed 31 false and fraudulent monthly sales

tax retums for the periods of March 1 992 through December 1 994. Campbell prepared

and filed each of the false and fraudulent retums and in doing so, used four distinct

schemes to underreport the sales tax owed, including subtracting a round number or

excluding the sales and taxes owed by one of the five stores.

CHARGES: Willful Failure to Account For and Pay Over Sales Tax (3 Counts)

Willful Filing of False Sales Tax Retums (3 Counts)
SENTENCE: The defendant was sentenced to one year House of Correction, sus-
pended for one year of probation with 500 hours community service. $60 Victim/witness
fee.

(AAG M. Mulligan)

10/27/98 Commonwealth v. Alan S. Katz

(Larceny/Forgery /Uttering Prosecufion)

COURT/JUDGE: Middlesex Superior/Worcester Superior/White
DESCRIPTION: The charges relate to a sophisticated course of criminal conduct in
which Katz used aliases, phony business names, an answering service, fake letterhead and
business cards, and counterfeit checks drawn on non-existent banks (created by him using
computers and laser printers) to steal thousands of dollars' worth of computers from

104

CRIMINAL BUREAU

small computer businesses all over the country. Katz defaulted in 1 994 and was recently
picked up by the Oregon authorities. He is now held on $100,000 cash bail.
CHARGES: Larceny Over $250 (4 counts)

Receiving Stolen Property (2 Counts)

Forgery (4 Counts)

Uttering (3 Counts)

Attempted Larceny (1 Coimt)
SENTENCE: The defendant was adjudicated a common and notorious thief, and
given a sentence of 12 to 20 years, seven years to serve, the balance suspended for five
years probation, with $27,921.70 in restitution, 1000 hours of community service, and
enrollment in a compulsive gambling program. All others charges were guilty, and
concurrent with the larceny charge. $50 Victim/witness fee.

(AAG C. Starkey)

10/28/98 Commonwealth v. Irving Morgan

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/McHugh

DESCRIPTION: This case involves Morgan's alleged failure to file and pay taxes for

the years during 1991 up to and including 1995, in an amount totaling approximately

$22,757.25 and $400,000 in income.

CHARGES: Willful Failure to Pay State Income Taxes (5 Counts)

SENTENCE: Defendant plead guilty to all counts. He was sentenced to five years

probation and $3,000 per count, total fine $5,000 to be paid over the term of probation. II

fme is paid within four years, probation will be terminated. Probation supervision fee

imposed for first year only. $60 Victim/Witness Fee (edit 9)

(AAG L. Balboni)

10/29/98 Commonwealth v. Arthur J. Bradley

(Larceny Prosecution)

COURT/JUDGE: Essex Superior Court/Van Gestel

DESCRIPTION: The defendant is an attorney (disbarred in August 1 997) who acted

under a power of attorney for an elderly client and proceeded to embezzle all of his funds

- roughly $63,000. After the matter was referred to Elder Services of Merrimack Valley,

the defendant sold a piece of real estate and substantially repaid the victim.

CHARGES: Larceny Over $250 (5 Counts)

SENTENCE: The defendant was sentenced to three years of probation with the

following conditions: $2,000 restitution, payable in monthly installments, and 100 hours

community service. On four of the counts, the defendant received three years probation,

to run concurrently. $60 Victim/witness fee.

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(AAG M. Parks)

11/10/98 Commonwealth v. Paul E. Hardy

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Bali

DESCRIPTION: The defendant is a close associate of Robert Lockwood, a Beverly
Farms businessman, who was indicted for failure to file income tax returns. When he
finally filed five years worth of delinquent tax returns, they were all fabricated.
CHARGES: Filing False Tax Returns (3 Counts)

Failure to File Tax Returns (2 Counts)
SENTENCE: The defendant plead guilty to all charges. He received a sentence of
two years probation and a $6,000 fine. $60 Victim/Witness fee

(SAAG A. Zaikis)

1 1/20/98 Commonwealth v. Josephine Lontok

(Larceny Prosecution)

COURT/JUDGE: Suffolk Superior/Doerfer

DESCRIPTION: The defendant is the former supervisor of Filene's Basement's Trans-
portation Department. Between 1991 and 1996, she allegedly stole in excess of $230,000
through a false billing scheme.
CHARGES: Larceny Over $250 (6 Counts)

False Filing in Corporate Books (1 Count)

Attempt to Commit a Crime (1 Count)
SENTENCE: Defendant plead guilty to all charges, and was sentenced to one year
home confinement with furlough to work 40 hours per week, and placed on 1 0 years
probation. She was further ordered to pay $238,242.04 restitution, $60,000 to be paid
immediately, and 800 hours commimity service to be performed within four years. On
the False Filing in Corporate Books and Attempt to Commit a Crime charges, the defen-
dant received 1 0 years probation to run concurrently with the Larceny Over. $60 Victim/
witness fee.

(AAG K. Brekka)

11/30/98 Commonwealth v. Mark N. Schlafman

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Ball

DESCRIPTION: The defendant is a business executive who filed false tax returns for

several years.

CHARGES: Willfiil Filing of False Income Tax Returns (3 Counts)

SENTENCE: The defendant plead out along the terms of a plea agreement under

which he will cooperate in our upcoming trial against Robert Lockwood and his associ-

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ated coqDorations.

(SAAG A. Zaikis)

12/10/98 Commonwealth v. Aivin Goldstein

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Quinlan

DESCRIPTION: Goldstein is president and treasurer of Barb-Al, Inc., a corporation
which owns and operates a retail card and gift shop in Randolph under the name
Barbara's Hallmark. The retail store has been in existence for more than 10 years, and
since its inception, no withholding or sales tax returns have been filed and no amounts for
sales or withholding taxes were paid to DOR.

CHARGES: Willftil Failure to Account For and Pay Over Sales Taxes (5 Counts)

Willful Failure to Account For and Pay Withholding Taxes (5 Counts)
Willftil Making and Subscribing False Tax Returns (4 Counts)
WiMil Making and Subscribing False Withholding Tax Returns (1 Count)
SENTENCE: The defendant plead guilty to all charges. He received a sentence of
two years House of Correction, suspended for five years probation. The conditions of
probation are as follows: first 90 days of probation to be served as home confinement,
curfew Monday through Friday - 6:00 p.m.-8:00 a.m., except Monday, Wednesday,
Thursday - 9:30 a.m.-8:00 a.m, to allow to teach at Northeastern, 24 hour confinement
Saturday and Sunday, 5,000 hours of community service to be performed at a senior
citizen's center in Randolph. All other charges to run concurrently. $60 VicUm/wimess
fee.

(AAG L. Balboni)

2/8/99 Commonwealth v. Albert Levesque

(Fiduciary Embezzlement Prosecution)

COURT/JUDGE: New Bedford Superior/Tiemey

DESCRIPTION: The defendant was a sales representative for Metropolitan Life Insur-
ance Company who handled life insurance and mutual funds. The defendant assisted an
elderly couple in establishing a trust for which the defendant became trustee. After the
husband's death, the defendant convinced and pressured the wife to cash in her invest-
ments and bonds and deposit the proceeds in the Trust accounts. Once the money was in
the Trust accounts, the defendant proceeded to deplete the accounts for his own personal
use and gambling habit. Levesque stole over $200,000.
CHARGES: Fiduciary Embezzlement (3 Counts)

SENTENCE: The defendant plead guilty to all charges and received a sentence of
two years in the House of Correction, committed, with two years probation, suspended,
from and after count one Probation fee $45 per month while on probation. $60 Victim/
witness fee.

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(AAG M. Mulligan)

2/12/99 Commonwealth v. Paul MacDonald

(Tax Prosecution)

COURT/ JUDGE: Suffolk Superior/Lopez

DESCRIPTION: The defendant is a close associate of Robert Lockwood, a Beverly
Farms man indicted on tax charges, who was paid off the books but who attached fabri-
cated tax forms to his tax returns to get credit for withholding taxes that were never paid
over on his behalf.

CHARGES : Willful Filing of False Income Tax Returns (5 Counts)

SENTENCE: Over the Commonwealth's objection, Judge Lopez placed the defen-
dant on pre-trial probation for a period of three years.

(AAG A. Zaikis)

2/22/99 Commonwealth v. Charles A. Victor. II

(Larceny Prosecution)

COURT/JUDGE: Suffolk Superior/Lopez

DESCRIPTION: The defendant was an attorney who, while serving as trustee, misap-
propriated over $45,000 from seven trusts established for children who suffered lead
poisoning injuries. The defendant used the money from the trusts to finance his various
business ventures, fund his failing law practice and to purchase items for his personal use.
CHARGES: Fiduciary Embezzlement (6 Counts)

Larceny Over $250
SENTENCE: The defendant plead guilty to all charges, and received a sentenced of
two to four years in State Prison, with a sentence of five years probation, from and after
Count 1, with fiall restitution of $446,936.60. Execution of sentence stayed until March
8,1999. $60 Victim/witness fee.

(AAG M. Mulligan)

2/19/99 Commonwealth v. Domingo Pena

(Tax Prosecution)

COURT/ JUDGE: Suffolk Superior/Volterra

DESCRIPTION: The defendant was the former owner-operator of Domingo's Olde
Restaurant. In December 1996, he plead guilty to Failure to Account for and pay over
Meals Tax and Tax Evasion. He was sentenced to two years House of Correction, sus-
pended, six months home confinement, and supervised probation with the condition that
he cooperate with DOR to settle his tax obligations.

CHARGES: Failure to Account For and Pay Over Meals Taxes (2 Counts)

Tax Evasion (2 Counts)

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SENTENCE: The defendant was sentenced to two years HOC, suspended for six
months home confinement, supervised probation with condition that he cooperate with
DOR to settle his tax obHgations.

(AAG K. Brekka)

2/15/99 Commonwealth v. Wajahat Malick

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Lopez

DESCRIPTION: The defendant was the Controller of Prestige Imports, Inc. In that

capacity, between April 1989 and January 1991, the defendant stole in excess of

$1,016,000. The defendant plead guilty on March 8, 1993, and was sentenced as a

common and notorious thief to 18-20 years, committed, 12-15 years imprisonment, on

and after.

CHARGES: Willfiil Filing of False Income Tax Returns (5 Counts)

SENTENCE: Over the objection of the Commonwealth, the defendant was placed on

pre-trial probation for three years.

(AAG K. Brekka)

3/2/99 Commonwealth v. John P. Conrov

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Lopez

DEFENDANT DESCRIPTION: The defendant, a Boston accountant/lawyer, was

charged with stealing funds from several charities and filing numerous income tax returns

over the years.

CHARGES: Willfiil Filing of False Tax Returns (3 Counts)

Embezzlement by a Trustee (1 Count)
SENTENCE: The defendant plead guilty to all charges and received a sentence of
two years House of Correction. $60 Victim/witness fee.

(SAAG A. Zaikis)

3/29/99 Commonwealth v. Jeffrey Boxer

(Larceny Prosecution)

COURT/JUDGE: Norfolk Superior/Graham

DESCRIPTION: This matter involves an attorney (now disbarred) who solicited clients

with investment losses and then embezzled the settlements he obtained for them. He

embezzled a total of roughly $188,000 from four separate clients, several of whom are

elderly and one of whom is disabled. He repaid about $41,000 after complaints to the

BBO.

CHARGES: Larceny Over $250 (5 Counts)

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Embe2zlement by Fiduciary (1 Count)
SENTENCE: The defendant plead guilty to all charges. He was sentenced to 18
months House of Correction, committed, with three years probation, from and after
Count 1 . $60 Victim/witness fee.

(AAG M. Parks)

4/14/99 Commonwealth v. Brian P. Psota

(Larceny Prosecution)

COURT/JUDGE: Suffolk Superior/Lopez

DESCRIPTION: Brian Psota is alleged to have stolen over $225,000 from Continental

Cable vision. Inc., now Media One, while employed as a payroll clerk and corporate

accounting manager. Over a five-year period, the defendant is alleged to have used three

different fraudulent schemes in order to convert the money for expensive trips, clothes

and improvements for his family home.

CHARGES: Larceny Over $250 (3 Counts)

False Entries in Corporate Books (3 Counts)

Attempted Larceny Over $250 (1 Count)
SENTENCE: The defendant plead guilty to all charges. He was sentenced to two
years House of Correction, one year to serve, balance suspended for three years with the
following conditions of probation: payment forthwith of $50,000 to the corporate victim,
and 20 hours per month of community service to be served for the three years of proba-
tion. On the False Entries in Corporate Books, the defendant received two years House
of Correction, suspended for three years of probation, to run concurrent with the larceny
charge. The defendant ftirther received two years House of Correction, suspended for
three years of probation, to run concurrent on the Attempted Larceny Over $250 charge.
$60 Victim/witness fee.

(AAG C. Starkey)

4/14/99 Commonwealth v. Robert Flater

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Lopez

DESCRIPTION: This is a failure to file investigation against an individual who worked
in Massachusetts for a number of years while failing to file any tax returns.
CHARGES: Failure to Account for Withholding Taxes

Failure to File Income Tax Returns

Failure to File Excise Tax Returns
SENTENCE: The defendant plead guilty. Two years pre-trial probation, $50,000
fine. $60 Victim/witness fee.

(SAAG A. Zaikis)

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4/14/99 Commonwealth v. Susan Teixeira

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior Court/Quinlan

DESCRIPTION: Mario and Susan Teixeira are a married couple who ran a jewelry store

on Nantucket Island. They did not file income tax returns for several years and have

grossly under- reported their taxable sales on their business tax returns.

CHARGES: Failure to File Income Tax Returns

SENTENCE: One year pre-trial probation.

(SAAG A. Zaikis)

4/14/99 Commonwealth v. Mario Teixeira

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior Court/Quinlan

DESCRIPTION: Mario and Susan Teixeira are a married couple who ran a jewelry store
on Nantucket Island. They did not file income tax retiuns for several years and have
grossly under-reported their taxable sales on their business tax returns.
CHARGES: Failure to File Income Tax Returns

SENTENCE: The defendant plead guilty to all charges. He was sentenced to one

year probation, $31,250 fine, 500 hours of community service. $60 Victim/witness fee.

(SAAG A. Zaikis)

4/14/99 Commonwealth v. S. J. Patten. Inc.

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior/Quinlan

DESCRIPTION: Mario and Susan Teixeira are a married couple who ran S.J. Patten,

Inc., a jewelry store on Nantucket Island. They did not file income tax returns for several

years and have grossly underreported their taxable sales on their business tax returns.

Therefore, the corporation was also charged.

CHARGES: Failure to File Excise Tax Returns (1 Count)

SENTENCE: Defendant plead guilty. Sentenced to $7,500 fine.

(SAAG A. Zaikis)

5/13/99 Commonwealth v. Carole Melanson

(Larceny/Conspiracy Prosecution)

COURT/JUDGE: Suffolk Superior/Barrett

DESCRIPTION: The defendant conspired with John Curtis, the former head of the
maintenance department for Star Market, to defraud the corporation. This defendant was
a bookkeeper for Melanson and Sons and in that capacity, submitted false records alleg-
ing that the company had provided refrigeration equipment. In actuality, no equipment was

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delivered. The bulk of the monies received from Star were kicked-back to Curtis.
CHARGES: Larceny Over $250 (1 Count)

Conspiracy to Commit Larceny Over $250 (1 Count)
Conspiracy to Make False Entry in Corporate Books (1 Count)
SENTENCE: The defendant plead guilty and received a sentence of pre-trial proba-
tion with the stipulation of underlying facts and $5,000 in restitution. $35.00 Victim/
witness fee.

(AAG K. Brekka)

5/13/99 Commonwealth v. Linda Christmas

(Larceny/Conspiracy Prosecution)

COURT/JUDGE: Suffolk Superior/Barrett

DESCRIPTION: Defendant conspired with Curtis to defraud Star Market Corporation.
The defendant was a bookkeeper for Melanson and Sons and in that capacity, submitted
false records alleging that the company had provided refrigeration equipment. In actual-
ity, no equipment was delivered. The bulk of the monies received from Star were kicked-
back to Curtis.
CHARGES: Larceny Over $250 (1 Count)

Conspiracy to Commit Larceny Over $250 (1 Count)
Conspiracy to Make False Entry in Corporate Books (1 Count)
SENTENCE: The defendant plead guilty, and after admission to sufficient facts,
received a sentence of one year pre-trial probation, and a $5,000 restitution order. $35.00
Victim/witness fee.

(AAG K. Brekka)

5/25/99 Commonwealth v. Bill Melanson

(Larceny/Conspiracy Prosecution)

COURT/JUDGE: Suffolk Superior/Barrett

DESCRIPTION: Defendant conspired with Curtis to defraud Star Market. Defendant
was a bookkeeper for Melanson and Sons and in that capacity, submitted false records
alleging that the company had provided refrigeration equipment. In actuality, no equip-
ment was delivered. The bulk of the monies received from Star were kicked-back to
Curtis.
CHARGES: Larceny Over $250 (1 Count)

Conspiracy to Commit Larceny Over $250 (1 Count)
Conspiracy to Make False Entry in Corporate Books ( 1 Count)
SENTENCE: The defendant plead guilty after a jury trial. He received a one year
House of Correction sentence, 90 days to serve, the balance suspended for three years
probation, and ordered to pay $8,500 in restitution. $35.00 Victim/witness fee.

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(AAG K. Brekka)

6/21/99 Commonwealth v. Charles Weekes

(Tax Prosecution)

COURT/JUDGE: Suffolk Superior Court/ Donovan

DESCRIPTION: This matter involves a former state resident who used many false New
Hampshire addresses to avoid state withholding and taxation. Weekes is Vice President
of U.S. and European Sales for Zilog, Inc., a national and international semi-conductor
company headquartered in California with a regional office in Chelmsford, Mass.
CHARGES: Willful Attempt to Evade and Defeat Income Taxes (5 Counts)

Willful Making and Subscribing a False income Tax Return (1 Count)
Willful Failure to File State Income Tax Returns (4 Counts)
SENTENCE: The defendant plead guilty, and received a sentence of two years in the
House of Correction, suspended for three years probation, with a $25,000 fine paid
forthwith. Payment to DOR of approximately $ 1 1 2,000 and probation to be supervised until
paid in full. All other charges concurrent or filed without change of plea. $60.00 Victim/wimess
fee.

(AAG K. Brekka)

6/28/99 Commonwealth v. Robert S. Zawadski

(Larceny/Fraud Prosecution)

COURT/JUDGE: Suffolk Superior/ Donovan

DESCRIPTION: Defendant is a Boston Police officer who is alleged to have submitted false

insurance claims alleging fictitious lost wages.

CHARGES: Larceny Over $250 (2 Counts)

Motor Vehicle Insurance Fraud (2 Counts)

Uttering (2 Counts)

Attempt to Commit a Crime (2 Counts)
SENTENCE: Defendant plead guilty, and on an unagreed upon plea, the defendant
was sentenced to two years House of Correction, seven months to serve, balance suspended
for two years of probation, and $ 1 0,000 restitution. All other charges filed without change of
plea or received concurrent sentence. $60 Victim/Witness fee.

(AAGs K. Brekka/M. Parks)

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FINANCIAL INVESTIGATION DIVISION

The Financial Investigation Division provides the Criminal Bureau with six experienced
civilian investigative professionals who investigate and assist in the prosecution of white-collar
criminal cases. These investigations include larceny, public corruption, campaign finance viola-
tions, securities fraud, bucketing, tax fraud and all other white collar frauds which are referred to
the Division. The investigators bring to the Division many years of experience from investigat-
ing cases in local, state and federal government as well as private sector venues.

This fiscal year, the Division was comprised of three Certified Fraud Examiners, one Certi-
fied Public Accountant, two lawyers and two investigators from the banking and insurance
industry.

During FY99, the members of the Division for all or part of the year were: David Baker;
Brad Chase, Esq.; Peter Darling, Esq.; Bill Frugoli, CFE; Jim McFadden, CFE; Sallyann
Nelligan; Patrick Ormond, CPA; and, Paul Stewart, CFE, the Division's Director.

INVESTIGATIVE RESPONSIBILITIES

The investigators assigned to this Division work closely with Criminal Bureau prosecutors
and also Massachusetts State Police assigned to the Criminal Investigation Division. Investiga-
tors may also be asked to work on a case by case basis with investigative or audit personnel from
referring agencies such as the Securities Division of the Secretary of State's Office (SOS), Board
of Bar Overseers (BBO), Criminal Investigations Bureau of the Department of Revenue (CIB),
and the Office of the State Auditor (OS A).

All investigators are responsible for designing and implementing investigative plans which
assess allegations of criminal conduct. These investigations require extensive review and analy-
sis of business, personal and banking records to document the illegal activities of the white collar

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criminal. In addition, investigators conduct interviews of victims, witnesses and targets, and
provide summary witness testimony before Superior Court special grand juries and in trial
settings. Further, utilizing modem computerized technology, investigators are able to scan a
wide array of informational databases to track and profile potential subjects of criminal investi-
gations.

In addition to working active investigative caseloads, each Division investigator is respon-
sible for screening a portion of the hundreds of matters received annually which fail to meet
guidelines of a respective division or whose allegations do not rise to the level of a criminal
investigation.

The majority of the Division's investigative assignments come from the Bureau's Economic
Crimes Division. The Division works closely with the Economic Crimes Division Chief during
the screening process and then with the assigned AAG when a matter has been accepted for
formal investigation.

Another source of investigative assignments for the Division is the Public Integrity Division.
Our primary involvement in Public Integrity Division matters is in the screening and investiga-
tion of matters referred from the OS A.

The Division also commits investigative resources to the Special Investigations and Narcot-
ics Division and to the Bureau's investigative efforts of the Central Artery Third Harbor Tunnel
iProject. Since the Division's inception in 1995, it has also performed investigative assignments
.for the Bureau's Environmental Crimes Strike Force and the Appellate Division.

ADMINISTRATIVE FUNCTIONS

In addition to our investigative tasks, the Division also performs many administrative duties
for the Bureau with respect to cars, seized evidence and the spending of forfeited fimds. We are
responsible for the assignment, maintenance and reporting on the usage of all Bureau cars. The
Division maintains a log of all money seized by the State Police in association with any arrest.
iThe seized money is kept in a safety deposit box and the contents are inventoried on a quarterly
! basis by Division staff. Additionally, we prepare an accounting of all forfeited frmds of die
Special Investigations and Narcotics Division which are disbursed in accordance with the
Commonwealth's forfeiture laws. The accounting system is designed as a management tool for
the Bureau, not only to retrospectively track spending but also to project ftiture needs.

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CRIMINAL BUREAU

OUTREACH

The staff is an integral part of the Bureau's outreach to referral agencies. We maintain con-
tact with the Chief Investigator at CIB and the BBO's Senior Financial Investigator to update
them monthly on the status of all referrals from their respective agencies. CIB and BBO cases
are referred through the Economic Crimes Division. Our outreach efforts are designed to
complement those of the Chief of the Economic Crimes Division.

TRAINING

Division members have prepared and delivered training sessions to their colleagues through
the officewide training program, personnel from outside referral agencies and also to groups such
as The Arson Investigators Association, Massachusetts Society of Certified Public Accountants,
The Southeastern Massachusetts Fraud Investigators Association, Suffolk University, The Check
Fraud Clearinghouse, and local school districts.

Presentations include:

• How to Perform Title Searches of Registered and Recorded Land, and Review Pro-
bate Court Records

• Interview and Report Writing Techniques

• Financial Investigative Techniques

• Investigative Resources for the Financial Investigator

INTERN PROGRAM

The Division's intern program seeks to provide a valuable one semester training experience
for interested students who have a background in accounting, finance, business law or criminal
justice. Through the efforts of our intern coordinator, the Division has been provided with a
steady stream of talented interns from Boston area schools.

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HIGH TECH AND COMPUTER CRIMES DIVISION

The High-Tech and Computer Crimes Division (HT&CC) is charged with the responsibility
of investigating or assisting in the investigation of the commission of crimes facihtated through
the use of computers, the Internet, or other unusual technology (so-called "high tech") and,
where appropriate, prosecuting such offenses. The HT&CC, formally known as the High-Tech
Crime Unit of the Special Investigations and Narcotics Division, was raised to Division status
within the Criminal Bureau in order to signify its expanded role in assisting all divisions within
the Bureau as well as to reflect the Attorney General's priorities to appropriately enforce the
Commonwealth's laws on the Internet. The HT&CC has primary original jurisdiction over those
offenses which are committed solely through the use of computers including:

1. Unauthorized Computer Access (Hacking); G.L. c. 268, § 120F; and

2. Possession and Dissemination of Child Pornography (including the use of child
pornography by child "predators" to lure children for sex; G.L. c. 272, §§ 29, 29B

The HT&CC assists Divisions and Bureaus throughout the Office in the investigation of
other crimes facilitated with the use of a computer, the most common examples of which in-
clude:

1 . Larceny (e-commerce via stolen credit cards and identity theft)

2. Fraud (Internet Auction fraud)

3. Assault (hate e-mail)

4. Internet Gambling

5. Illegal Sales via the Internet (Alcohol, Firearms, prescription drugs)

6. Malicious Destruction of Personal Property (computer data destroyed by viruses)

7. Theft of Trade Secrets

8. Wholesale Pirated Copyrighted Software

DIVISION ORGANIZATION AND OBJECTIVES

The HT&CC Division's structure is unique within the Office of the Attorney General. The
HT&CC has a Division Chief, Thos. Gregory Motta, who serves as the full-time prosecutor of
the Division and coordinator of the Division's investigations and prosecutions. In FY2000, the
Division will be expanded to include two additional full-time attorneys. Currently, as investiga-

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CRIMINAL BUREAU

tions and prosecutions arise, attorneys from other Divisions are assigned to matters that fall
within the purview of the HT«&CC Division in order to augment its capabilities or, in the ahema-
tive, the HT&CC Division Chief will assist the attorneys in other Divisions as the need arises.

The HT&CC is comprised of three specially trained, full-time investigators: Tpr. Kevin |

Bibeau, Tpr. David McSweeney and Tpr. Matthew G. Murphy. In addition, Det. Eric Lunberg of
the Easton Police Department is detailed full time to the Division for on-going investigations and
is similarly experienced in forensic computer examinations as well as on-line investigations.
During FY99, Sgt. J.J. McLean of the Medford Police Department served as both Supervisor of
Investigations and Technical Advisor to the Division. Although Sgt. McLean has returned to his
duties in Medford, he continues to serve as a Technical Advisor to the Division. Currently, State
Police Lt. Joseph Flaherty supervises the Division's investigators and assists in investigations.
In FY2000, the HT&CC Division will be adding two additional troopers who will be provided
special training in On-line Internet investigations as well as forensic computer data recovery and
analysis. t

INVESTIGATIVE INITIATIVES

A significant portion of the HT&CC Division's time and resources are dedicated to providing
direction and counsel to criminal and civil investigators throughout the state and the country.
Assistance is provided to:

1 . Area prosecutors in the drafting of appropriate language for search warrants to seize
and recover evidence stored in computers;

2. Area law enforcement agencies in identifying whether computers will retain evidence
of criminal wrong-doing and where in the computer such evidence is most likely to be
recovered; and

3. Companies providing Internet access to citizens in the Commonwealth (so-called
Internet Service Providers, or ISPs) in order to facilitate assistance to law enforcement in
conformity with the Electronic Communications Privacy Act.

The HT&CC also engages in on-going evaluations of new and emerging computer software
application and hardware being publicly marketed to law enforcement for use in computer
investigations. Moreover, the HT&CC assists the Office of the Attorney General with the
drafting of legislation aimed at addressing and resolving issues raised by advances in technology.

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INVESTIGATIVE HIGHLIGHTS

InFY99, the HT&CC significantly assisted the Economic Crimes Division of the Bureau with the
pecovery of evidence relating to the on-going investigation of former officials of the Treasurer's and
Receiver General's Offices of the Commonwealth. This assistance included the seizure of numerous
computers and the forensic review and recovery of evidence. The task was complicated as some of
these computers included unusual databases and unique operating systems devised to service the special
needs of the Treasury Office.

At the same time, in FY99, the HT&CC Division continued to be involved in a number of
child exploitation cases arising out of the Internet for the dissemination of child pornography
and, in some cases, the luring of children by adults for sexual contact. On a regular basis, inves-
tigators of the HT&CC Division go "on-line" posing as teenage children in various commercial
and non-commercial chat rooms or chat channels. During these investigations, various subjects
will contact the investigator and either propose sexual contact outright or begin by attempting to
sexually titillate the curiosity of their young prey by sending, via e-mail, sexually explicit images
of children engaged in sexual intercourse as a means of breaching inhibitions. In some such
cases, these investigations were handed over to officials in the jurisdictions where the offenders
resided for prosecution. In at least five of the cases, the offenders were prosecuted by the
HT&CC Division resulting in convictions which have yielded varying periods of incarceration,
forfeiture of computer equipment, counseling, no-contact with minors conditions and registration
in the state DNA database.

Numerous threatening e-mail investigations are conducted by the HT&CC Division. These
include "hate" e-mail aimed at members of specific groups or bomb threats. The HT&CC
Division has investigated the senders of constitutionally un-protected anti-gay, anti-Jewish or
sexually harassing e-mail and, where appropriate have referred matters for civil or criminal
enforcement. In a similar type of case in FY99, an employee of a major computer company in
the Commonwealth used his company's e-mail service to send sexually harassing e-mails to
several women in the company and, ultimately to attempt to extort sexual favors from at least
one of the women. That individual was arrested when he appeared at a local hotel for a coerced
sexual rendezvous only to learn that the female co-worker was replaced by a Massachusetts State
Trooper. The offender has recently plead guilty to the felony charge of Attempted Extortion and
is awaiting sentencing.

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In FY99, the HT&CC investigated and prosecuted the use of the Internet for the transmission of
bomb and death threats including threats transmitted to elected officials of the Commonwealth and
threats made by high school students to harm or injure fellow students and/or teachers posted over
Internet news groups. At least three such threats were deemed specific and credible enough after the
Littleton, Colorado tragedy to merit the assistance of the HT&CC Division in the evaluation and identifi-
cation of the students posting such threats. More recently, the HT&CC Division investigated a dis-
gruntled Gulf War Veteran who responded to the denial of certain claimed benefits by implicitly threat-
ening to blow up government buildings in the Commonwealth. That individual is awaiting trial.

Perhaps the most challenging of the investigations conducted by the HT&CC during FY99
involve "hacking." Typically, the majority of "hacking" offenders tend to either be disgruntled
former employees (usually former IT personnel) or computer literate juveniles. In either in-
stance, the offenders tend to possess a much greater knowledge of computer skills than other
offenders and go to greater lengths to destroy evidence, conceal their identities and otherwise
cover their tracks. There have been approximately five such investigations conducted by the
HT&CC Division in FY99 resulting in two prosecutions by the HT&CC and referral of the
others.

In many other instances, the HT&CC Division provides forensic recovery advice relative to
the recovery of e-mails of evidentiary significance. This advice has ranged fi-om the recovery of
maliciously deleted data for victims of hackers to the recovery of e-mail of suspects engaged in
conspiracy to commit murder.

In short, the HT&CC Division is charged with the formidable task of empowering the
Commonwealth's law enforcement community with the capability to detect, prosecute and deter
crimes committed with new and emerging technologies.

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PUBLIC INTEGRITY DIVISION

The Public Integrity Division's mission is to criminally prosecute and convict those who
attempt to personally profit at the public's expense, or who in some other manner breach the
public's trust or safety, in violation of the criminal laws of the Commonwealth. Towards that
end, in FY99, the Public Integrity Division commenced nine criminal prosecutions against public
officials and others who violated the public trust and/or safety. During that same period, over 38
criminal prosecutions were resolved. The criminal prosecutions that were initiated this past year
ranged from crimes of larceny by police officers to bribery by a Clerk-Magistrate in Middlesex
County.

During all or part of FY99, the members of the Division were: Jeremy Silverfine, AAG and
Division Chief; Elisabeth Ditomassi, AAG; Audrey I-Wei Huang, AAG; John Grossman, AAG;
Andrew Lawlor, AAG; Jonathan Mitchell, AAG; Michael Zullas, AAG; Sheila Connolly and
Kelli Murray, support staff.

CRIMINAL CASE HIGHLIGHTS

HIGHLIGHTS OF CASES DISPOSED IN FISCAL YEAR 1999

1 . A captain with the Taunton Police Department was found guilty of stealing one or
more firearms from the City's gun buy back program. After a four-day trial, a Bristol
County jury found the police captain guilty. The Superior Court judge sentenced the
captain to a two-year House of Correction term, suspended for a period of two years, with
probation and restitution. The Commonwealth had recommended a two year committed
sentence.

The evidence indicated that beginning in 1994, the City of Taunton ran several gun
buy back programs. During the first gun buy back program, six weapons were missing
from the list of weapons which were supposed to have been destroyed by the police. The
Commonwealth was able to identify four of the six weapons and connect them to the
defendant. The evidence indicated that two of the handguns were given to the captain's
daughter and the daughter's then boyfriend.

2. After a six-day jury trial in Middlesex Superior Court, a Middlesex County defense
attorney from Manchester-by-the-Sea was found guilty of extorting money from an
indigent defendant who had been charged with drug trafficking. The attorney was found

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guilty of charges he extorted cash payments from the defendant by threatening that he
would not do his job as a court-appointed attorney unless the client paid him $3,000.

The jury also convicted the attorney of one count of tax evasion, one count of filing a
false tax return and one count of larceny over $250. The larceny charge arose from the
attorney's receipt of $1,500 in cash extorted from family members of the indigent client.
The attorney had submitted four bills to the state claiming he had performed work for the
client, which falsely certified that he had not received money from anyone else for the
work. As a result of the four false bills, the state paid the attorney $2,250. Under a
scheme to evade state income taxes on the extra income he was receiving, the attorney
filed a false tax return for 1 993 that omitted the extortion money he had received and
some $46,000 in income he had received from private clients. He had only reported on
his tax returns the income he received from the state for his public defender work.

The attorney was sentenced to two years committed to the House of Correction, with
two years probation on and after his committed term, 200 hours of community service,
and $1 ,500 restitution. Several weeks after the conviction and subsequent sentencing, the
attorney also plead guilty to two additional counts of tax evasion and two counts of false
tax returns. He was sentenced to 30 days committed in the House of Corrections to run
concurrent with the other committed sentences.

3. A former assistant clerk-magistrate in Middlesex Superior Court plead nolo conten-
dere to charges he accepted cash gifts and a vacation from a lawyer and private investiga-
tor. The assistant clerk-magisfrate had been indicted in Suffolk Superior Court on two
counts of accepting illegal gratuities. He was sentenced to one year in the House of
Corrections, 60 days to serve, the balance suspended with 300 hours of community
service as a condition of his probation.

From 1992 to 1995, the clerk-magistrate routinely received at Christmas and at the
time of his spring vacations cash gifts ranging in size from $100 to $300 from a former
private investigator and a criminal defense lawyer. One cash gift was delivered by a
former Middlesex Court Clerk-Magistrate. The criminal defense lawyer also gave the
clerk free use of a Pompano Beach, Florida condominium for two one- week periods. As
an assistant clerk-magistrate in Middlesex Superior Court, the clerk-magistrate often
tracked down motions filed by the defense lawyer or involving the private investigator
and then prompted judges to act on the motions. He received the cash payments as
gratuities or tokens.

4. A Winchendon woman plead guilty in Worcester Superior Court to charges of steal-

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ing $21,679 from the state by making false representations to the Department of Transi-
tional Assistance ("DTA"). She plead guilty to one count of larceny over $250 and one
count of making false representations. Between 1991 and 1996, the defendant submitted
false landlord verification forms to the DTA stating that she had paid rent to a landlord.
In actuality, the defendant was living with the father of her child who earned more than
$60,000 a year.

She was sentenced to two years in the House of Corrections, suspended for five years,
during which time she will be on probation. In addition, she was ordered to pay $21,679
restitution and serve 300 hours of community service.

5. A West Roxbury man plead guilty to assaulting a Suffolk Superior Court judge,
disrupting court proceedings and resisting arrest. A different Suffolk Superior Court
Judge sentenced the West Roxbury man to two years in the House of Corrections, com-
mitted, for attacking the judge, along with four years probation for resisting arrest. He
was also ordered to undergo drug and alcohol counseling. The charges arose when the
defendant attended his cousin's sentencing in Suffolk Superior Court for unrelated
charges. Soon after sentencing, this defendant stormed out of the courtroom yelling
profanities. He then re-entered the courtroom seconds later through a private door near
the judge's bench and began charging the judge. Courtroom officers intercepted the
defendant before he reached the judge. He then struggled with the court officers and
resisted their attempts to handcuff him. No one was injured in the incident.

6. An insurance executive from Beverly who had once managed one of the student
health plans at tlie University of Massachusetts, Amherst, plead guilty in Hampden
Superior Court to stealing more than $600,000 from school accounts established to pay
for student health benefits. He had been indicted in 1995 by grand juries in Hampshire
County and Essex County on 30 counts of larceny over $250, six counts of procurement
fraud, four counts of making false claims, one count of forgery, one count of uttering a
forged instrument and four tax charges. He was sentenced to nine to 1 1 years in state
prison.

The defendant's theft and other crimes occurred from the insurance company for
which he was one of two principals. The company had held a contract with University
Health Services at UMASS-Amherst to manage claims payments for the University's
Supplemental Health Benefits Plan, which paid for off-campus medical care for students.
Acting on behalf of the insurance company, the defendant created and submitted inflated
invoices to UMASS-Amherst to embezzle school funds to operate the insurance agency.

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He inflated the invoices by about $200,000. He used the stolen money to cover his
business's overhead expenses. In addition, on two occasions the defendant created
fraudulent checks to use school funds to pay for personal expenses, including the monthly
rent for his three-bedroom luxury Beverly apartment and the Beverly Golf and Tennis
Club. All totaled, about $633,000 was stolen.

7. Four bail commissioners admitted to their involvement on tax evasion and filing false
returns relative to their income earned as bail commissioners. They received suspended
sentences and fines. One of the defendants, from Dennisport, plead guilty to six counts
of tax evasion and filing a false return. He served as a bail commissioner for Harwich,
Dennis, Yarmouth and the State Police. Between 1991 and 1996 he understated his
income by $126,190. He admitted to the Department of Revenue that he had understated
his income and lied to his tax preparer. A Suffolk Superior Court judge imposed a two-
year House of Correction term suspended for two years, 300 hours of community service,
and a $9,000 fine. The Commonwealth had recommended a two-and-a-half year sentence
to the House of Corrections with six months to serve and a $30,000 fine.

A second defendant, from Wobum, plead guilty to six counts of tax evasion and filing
a false tax return. He served as a bail commissioner in the Wobum District Court. He
failed to report the $108,029 in fees he collected between 1991 and 1996. A Suffolk
Superior Court judge imposed a sentence of two years to the House of Corrections sus-
pended for two years, 300 hours of community service and a $13,000 fine. The Com-
monwealth had recommended a two-and-a-half year sentence to the House of Corrections
with six months to serve.

8. A Millbury man who got paid for being a "no-show" park ranger while he was moon-
lighting as a Special Police Officer in Millbury was sentenced after pleading guilty to
illegally earning more than $4,000 from the Commonwealth. The defendant, who was
employed by the Department of Environmental Management as a park ranger at
Cochituate and Callahan State Park in Wayland since 1990, plead guilty to one count of
stealing from the state by a continuous scheme, one count of making false statements to
get paid, and one count of making false claims to the state.

A Boston Municipal Court judge sentenced the defendant to two-and-a-half years in
the House of Corrections, suspended, with two years of probation, and ordered him to pay
$4,273.10 in restitution to the state, a $5,000 fine and to perform 100 hours of community
service.

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9. A Winthrop probation officer plead guilty to charges that he ran a booicmaking
operation in 1 995 from his home. The defendant had been indicted in Suffolk County in
December of 1996 on two illegal betting charges: possession of betting apparatus and
using a telephone for gaming purposes. He also was charged in a separate indictment in
Hampden County on an additional charge of using a telephone for gaming purposes
which was later consolidated with the Suffolk County charges. The probation officer
was assigned to serve as a Family Service Officer in Middlesex Probate and Family
Court. A State Police search of his home and safe deposit box yielded extensive gam-
bling records, including betting slips, cuff lists, and wagering sheets that detailed bets on
hundreds of sporting events. His safe deposit box contained more than $100,000 cash.
He was sentenced to a two-year suspended sentence followed by two years of probation
and was fined $3,000.

10. Two Southeastern Massachusetts men were sentenced after pleading guilty to trying
to cheat on their civil service police examination. The men plead guilty in New Bedford
District Court to one count of altering or substituting examination papers. Both men had
tried to switch their identities when they took their police exams in April, 1997, to ensure
that one of them would score well. They were each sentenced to one year probation and a
$200 fine.

11 . A prisoner of a work release program plead guilty in the middle of a jury trial to
stealing laptop computers from a state office building. The prisoner was sentenced to an
additional two years, committed, from and after the term he was serving.

12. The former head of the Westport Police Department's detectives plead guilty to
embezzling $5,300 from the town's DARE program to pay for a home entertainment
center. The former detective was sentenced to two years in the House of Corrections,
suspended for two years with probation, and a $10,000 fine.

HIGHLIGHTS OF CASES INITIATED IN FISCAL YEAR 1999

1 . A former New Bedford elementary school principal was indicted for stealing fiinds
from student fundraisers. In 1994, a group of New Bedford elementary school student's
parents began to criticize the principal's handling of a fiindraising account of the school's
library. At the parent's request, the then Superintendent conducted an "audif of the
library account and found no wrongdoing. The parents persisted with their complaints to

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the elected School Committee. In April, 1996, the School Committee adopted a policy
requiring principals to keep detailed records of student fundraising. Unsatisfied, the
parents continued their complaints, and a new Superintendent referred the matter to the
police in July, 1996. The police helped one parent swear out a forgery complaint against
the principal in the New Bedford District Court in August, 1997. In July, 1998, the local
District Attorney's office requested the Attorney General's Office take over the prosecu-
tion on the grounds that it had a conflict of interest.

The principal was charged with embezzlement. Over a three-year period, the princi-
pal allegedly embezzled over $20,000 from a school bank account. The money was
raised by school children to pay for extra educational activities, and by parents to fund
improvements to the school library. The principal also failed to report the receipt of the
embezzled funds on her state income tax returns.

2. A Corrections Officer at MCI/Norfolk was indicted for soliciting and receiving a
series of payments from the wife of an inmate. The corrections officer was indicted on
one count of bribery and one count of delivering articles to an inmate.

INDICTED CASES JULY 1, 1998 TO JUNE 30, 1999

DATE
9/25/98

DEFENDANT'S NAME

Randolph Mogren

one count larceny over $250
one count false written statements
one count false claims

10/1/98

Timothy Sousa

one count altering/substituting examination papers

10/1/98

Edward Mello

one count altering/substituting examination papers

10/22/98

Douglas Whitlow

one count forgery
one count uttering
one count larceny over $250

12/29/98

Cynthia Mello

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4/20/99

one count larceny

one count forgery

one count larceny

three counts false tax returns

4/30/99

5/6/99

5/26/99

William Turtle

one count larceny over $250

Patricia Romano

one count larceny over $250

Robert Federico

five counts perjury

John Lennon

one count bribery

one count delivering articles to an inmate

CASE CONVICTIONS/DISPOSITIONS JULY 1, 1998 TO JUNE 30, 1999

DATE

DEFENDANT'S NAME

6/22/98 Wanda Estes

Found guilty of one count of larceny over $250 and one count of making false representa-
tions, sentenced to two years in the House of Correction, suspended for five years proba-
tion, ordered to pay $21,679 restitution and perform 300 hours of community service.

7/2/98 Glenn Essler

Plead guilty to 30 counts of larceny over $250; seven counts of procurement fraud; four
counts of making false claims; one count of forgery; one count of uttering a forged
instrument; one count of filing false tax returns; one count of failure to appear after
release on bail; and three counts of failure to file an income tax return. Sentenced to a
total of nine to 1 1 years in state prison.

8/5/98 Paul Cacchiotti

Found not guilty on two counts of attempted extortion. Foimd guilty on one count of
attempted extortion. Sentenced to two years in the House of Correction committed.

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CRIMINAL BUREAU

Found guilty on one count of larceny over $250 and one count of tax evasion. Sentenced to
one year in the House of Correction to run concurrent. Found guilty of one count of filing false
tax return. Sentenced to two years probation from and after his sentence. Ordered to com-
plete 200 hours of community service each year during the probation period. Also ordered to
pay restitution to the extortion victim when able. Defendant plead guilty to two counts of false
tax returns after trial. Sentenced to 30 days committed to the House of Correction to run
concurrent with other committed sentences.

8/12/98 Brian Kelly

Plead guilty to one coimt of assault on a public employee; one count of disrupting court

proceedings; and one coimt of resisting arrest. Sentenced to two years in the House of

Correction, committed, with four years probation; ordered to undergo drug and alcohol

counseling.

8/98 Raymond Blanchard

Plead guilty to six coimts of tax evasion; and six counts of filing false tax returns. Sen-
tenced to a two year House of Correction term, suspended for two years; 300 hours of
community service; and a $9,000 fine.

8/98 Joseph McCarthy

Plead guilty to six counts of tax evasion; and six counts of filing false tax returns. Sen-
tenced to a two year House of Correction term, suspended for two years; 300 hours of
community service; and a $13,000 fine.

8/98 John Kowalski

Admitted to sufficient facts of four counts of false tax returns. Case continued without a
finding for two years and defendant ordered to pay $3,000 in court costs and perform 300
hours of commimity service.

8/98 Patrick Toshach

Admitted to sufficient facts of four counts of filing false tax returns. Case continued
without a finding for two years and defendant ordered to pay $2,000 in court costs and
perform 1 00 hours of commimity service.

8/28/98 William Michael Batson

Nol Pros entered on assault and battery on a minor.

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9/2/98 Ruthanne Farnsworth

Admitted to sufficient facts of six counts of false tax returns; six counts of tax evasion.
Case continued without a finding for two and a half years; defendant ordered to pay
$15,000 in court costs and perform 300 hours of community service.

9/16/98 Paul Lo Conte

Plead guilty to six counts of filing false tax returns; six counts of tax evasion. Sentenced
to two years in the House of Correction, suspended for two years; a $12,000 fine and 300
hours of community service.

9/25/98 Frederick Hamlett

Plead guilty to two counts of larceny over $250; one count of creating false corporate
records; and procurement fraud. Sentenced to serve six to eight years in state prison; and
restitution.

9/25/98 J. Russell Tillman

Plead guilty to two covmts of larceny over $250; one count of creating false corporate
records; and procurement fraud. Sentenced to serve six to eight years in state prison; and
restitution.

10/98 Robert Shell

Plead nolo contendere to two counts of accepting illegal gratuities. Sentenced to one year
in the House of Correction, 60 days to serve, the balance suspended with 300 hours of
community service as a condition of probation.

10/16/98 Gaetano Morello

Plead guilty to defrauding the state. Sentenced to 30 days in jail, suspended with one
year probation; $5,000 fine and community service.

11/6/98 Timothy Sousa

Plead guilty to one count of altering or substituting examination papers. Sentenced to
one year probation and a $200 fine.

11/12/98 David A. Lee

Found guilty of procurement fraud. Sentenced to two years probaUon; 500 hours of
community service and a $10,000 fine.

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CRIMINAL BUREAU

11/30/98 Randolph Mogren

Plead guilty to one count of larceny over $250; one count of false written statements; and
one count of false claims. On the larceny charge, sentenced to two years in the House of
Correction, suspended for two years probation; $4,273 restitution; $5,000 fine; 100 hours
of community service. On the false written statement charge, one year in the House of
Correction, suspended for two years to run concurrent with the larceny charge. On the
false claims charge, two and a half years in the House of Correction, suspended for two
years, $60 victim witness fee, to run concurrent with the other charges.

12/2/98 Edward Mello

Plead guilty to one count of altering or substituting examination papers. Sentenced to
one year probation and a $200 fine.

12/18/98 Charles Sillari

Plead guilty to one count of possession of betting apparatus; two counts of unlawful use
of telephone. Sentenced to two years in the House of Correction, suspended; $3,000 fine
on the possession of betting apparatus charge. On the unlawful telephone use charge,
three months in the House of Correction, suspended, with two years probation to run
concurrent with the betting apparatus charge.

12/29/98 Brown University

Admitted to submitting inaccurate invoices and payment vouchers to the state. Agreed to
pay $300,170 to the Commonwealth in a civil settlement.

1/25/99 Paul Hicks

Found not guilty on larceny over $250; and false claims.

1/25/99 Rosemarie Hicks

Found not guilty on larceny over $250; and false claims.

1/27/99 Stephen Sirabella

Plead guilty to larceny; submitting false claims; procurement fraud; and filing false tax
returns. Sentenced to three years probation; 55.000 fine; and full restitution.

2/1/99 Joseph Rotondi

Plead guilty to three counts of larceny; one count of conflict of interest; three counts of

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CRIMINAL BUREAU

submitting false claims; one count of procurement fraud; and three counts of filing false
tax returns. Sentenced to three years probation; $5,000 fine; and full restitution.

2/8/99 Sothat Sisouthone

Found guilty of illegal possession of a firearm and conspiracy for illegal possession of a
firearm. Sentenced to two years in the House of Correction, one year committed manda-
tory.

2/8/99 Tan Phuoc Le

Found guilty of illegal possession of a firearm. Sentenced to two years in the House of
Correction, one year committed mandatory.

3/4/99 Richard Pimental

Found guilty of larceny of one or more firearms. Sentenced to two years probation.

3/8/99 WilUam Jewer

Found not guilty of larceny over $250; false claims; larceny of a motor vehicle; forgery
assignment of title; false statement of application for title; fraud in motor vehicle insur-
ance claim; fraud by city officer; and false written statements.

4/8/99 John Colton

Found not guilty of interference with a witness; false written reports; and obstruction of
justice.

4/26/99 James Bourget

Plead guilty to larceny over $250. Sentenced to two years to two years and a day, from
and after his current committed sentence.

4/27/99 Mark Langevin

Case continued without a finding for six months on assault, and breaking and entering in
the daytime.

5/3/99 Anthony Ellison

Placed on pre-trial probation for one year for assault and assault and battery; alcohol and
marital counseling for six months.

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5/6/99 Lawrence Shetler

Defendant found in default and remains a fugitive on procurement charges.

5/10/99 Mario Lewis

Plead guilty to larceny. Sentenced to two years in the House of Correction, suspended for
a two year period of probation and $10,000 fine.

5/13/99 Patricia Romano

Plead guilty to larceny and uttering charges. Case continued without a finding for six
months.

5/13/99 William Turtle

Plead guilty to larceny and uttering charges. Six months suspended sentence, one year
probation; and $8,176 in restitution.

6/11/99 Francis Noone

Found not guilty on 27 armed robbery and related charges.

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SAFE NEIGHBORHOOD INITIATIVE

Established in February, 1993, by the Attorney General's Office, the Suffolk County District
Attorney's Office, the Mayor's Office of the City of Boston and the Boston Police Department,
the Dorchester Safe Neighborhood Initiative (SNI) celebrated its sixth anniversary in February of
1999. Successful SNI models have also been established in Grove Hall, Brockton, Chelsea,
Taunton and the Turners Falls Village of Montague.

The SNI has developed into a truly effective coalition among community residents, state and
local government officials, law enforcement personnel and human service providers to solve a
variety of community problems. Based on the premise that no one group can resolve all the
problems faced by urban neighborhoods, the SNI model works to stem violence and improve the
quality of life by developing multi-disciplinary approaches to community issues.

Since those who live in a community know best what problems neighborhoods face and how
they can be addressed, residents are vital members of SNI partnerships which revolve around the
core principles of coordinated law enforcement, prevention, intervention and treatment and
neighborhood revitalization. The richness of the SNI is a direct result of the program compo-
nents and the individuals involved who collaborate in numerous ways, existing not as discrete
entities but as essential pieces of the big picture of community health and safety. Thus, our
projects often overlap in ways that significantly enhance the SNIs ability to respond to commu-
nity needs.

While we worked to nurture new SNI efforts across the Commonwealth, the more mature
projects continued to grow and flourish during Fiscal Year 1999. Our model project in
Dorchester continues to be led by zealous community leaders who put forth considerable efforts
to sustain the peace and well-being of the SNI target area and its residents. Our Grove Hall
project has come a long way. By cementing formerly tenuous relationships between community
partners and law enforcement officials, the GHSNI enjoys a great deal of success in reaching
more and more community residents and addressing pressing issues in that community. In
addition to the four-year Byrne grant from the Executive Office of Safety received by the
Brockton SNI last year, they have received "Official Recognition" from the Executive Office for
Weed and Seed. The grant submission for the Brockton Weed and Seed site is currently in the
budget process and funding notifications will happen soon. The Taunton SNI has once again
experienced positive results in Fiscal Year 1999. From 1995 to 1998, the City of Taunton's
overall crime statistics decreased 33% and the number of juvenile complaints decreased from

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CRIMINAL BUREAU

1,335 to 75 1 . Our newest SNI effort in Montague gets much of its structure and focus from SNI
Prosecutor, Assistant Attorney General Linda DelCastilho, who has done a tremendous job over
the last year to move that project forward.

Throughout the year, the SNI had the fortunate opportunity to work with Catherine M. Coles,
J.D., Ph.D., of Harvard University's John F. Kennedy School of Government to generate an
outcome measurement development process for the SNI. Her work is funded by the National
Institute of Justice. Catherine divided her time among four SNI programs in the greater Boston
area: Grove Hall, Dorchester, Chelsea, and East Boston. Participation in Catherine's project was
very high - citizens, neighborhood development organizations, government partners, police,
prosecutors and court representatives all played an active role in cultivating the outcome mea-
surement process.

The exciting conclusion from Catherine's project is that the SNI program is working for
communities. Each SNI has a different approach to problems - some are law enforcement driven
while others are community driven, but all of the programs are infused with the three core prin-
ciples: neighborhood revitalization, coordinated law enforcement and prevention, and interven-
tion and treatment. Common themes that emerged as the programs considered the ftiture of the
SNI were: the need to institutionalize the Safe Neighborhood Initiative; improve the overall
quality of life for each community; increase safety and the perception of safety in the target
areas; and revitalize the economy.

STATEWIDE EXPANSION EFFORTS

INNOVATION GRANTS

In Fiscal Year 1998, the Office of the Attorney General awarded SNI Innovation Grants to
ten cities across the state. Taunton, New Bedford, Fall River, Lowell, Maiden, Somerville,
Lawrence, South Boston, Springfield, and Pittsfield were the beneficiaries of this funding. The
Attorney General's commitment to youth issues prompted the decision to focus the Innovation
Grants on the needs of young people. Agencies in each of the selected cities were asked to
develop concept papers detailing how they would creatively utilize funds to provide prevention,
intervention and/or treatment services for youth in their communities.

The first to receive an Innovation Grant, the Taunton Department of Human Services,
utilized their funds to provide random drug testing and electronic monitoring for offenders at
Taunton Juvenile Court as well as providing Spanish language courses for police officers. The

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funding allowed for 156 random drug screenings for 93 court involved adults and juveniles, 122
days of electronic monitoring were provided to home confined offenders, and an eight- week
course in conversational Spanish was made available to Taunton Police Officers.

The YMCA of Southeastern Massachusetts developed a program called "Youth Night Out"
that took place in their child care facility in New Bedford. Youth ages 9-15 were invited to
participate in weekly night sessions from 6:00-9:00 p.m. on Wednesdays. Attendance varied
from 1 5 to 30 youngsters each session. As the program developed, one night each month was
designated as a special event - in October, there was a Halloween party with a magician and in
June, a cookout. The project was successful in providing a safe place for youth from the neigh-
borhood to gather together and take part in fun, multi-cultural activities.

Big Brother/Big Sister of Greater Lowell extended their "ADAM Project", a program to
engage at-risk young men in life skills training, violence prevention and leadership development,
including Outward Bound excursions. Of the 45 young men enrolled in the program, 30% are
first time offenders, 15 % are foster children or DSS involved and 65% are from single parent
homes. The program helped the youth with academics, communication skills and community
outreach. The YMCA interviews all participants three times a year to gather input about the
program and also tracks the students' academic achievements.

Fall River's Innovation Grant was awarded to the YMCA of Greater Fall River to initiate the
"Streetwise Players," a 25-member teen performing arts troupe addressing substance abuse. The
Troupe is open to all teens between the ages of 1 3 - 1 7, with special recruitment efforts targeting
low income 13-15 year old teens fi^om culturally diverse backgrounds. The plays, followed by
teen developed discussion activities, have been presented as a service to 1 ,000 sixth through
eighth grade students. Subjects explored in the plays are: peer pressure, using substances to
escape difficult realities, addiction in the home and its effects on the family, substance abuse and
: driving, and where to find resources for help with substance abuse. In addition to the performing
I arts troupe, the teens are implementing a community-wide campaign, "Fall River Free" to reach
I 30,000 youth and their families with information on the dangers of substance abuse. The cam-
! paign will use 250 posters, 30,000 flyers, two radio ads and two TV broadcasts to spread their
message.

Holy Family Hospital in Lawrence developed a program to address the issue of adolescent
dating violence with students at Lawrence High School. Both male and female students partici-
pated in the program to learn the signs of an abusive relationship, various types of abusive

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behavior, and the effects on children who witness domestic violence. The program ran from
October through May, but attendance was a problem from the start. When students did come to
class, participation was high, but the same students did not attend regularly. Despite this ob-
stacle, the program ended up educating twice as many students as originally anticipated.

Young women from the Newiand Street and Linden Public Housing Developments in
Maiden were the targets of the Maiden YMCA Innovation Grant. The women were involved in a
peer intervention program combining peer leadership, adventure-based activities, and art-based
learning experiences to foster self-expression, self-esteem, trust, communication, and problem-
solving skills. The program aimed to increase adolescent girls" resiliency to substance abuse,
interpersonal and dating violence and other related risks facing young women today. The pro-
gram combines adventure activities such as hiking, cross country' skiing, snow shoeing, mountain
biking, rock climbing, canoeing and ropes courses vvith expressive arts activities such as
storytelling, journal writing and self portraits. Sixty-eight girls participated and the program was
a rousing success.

Springfield's South End Community Center utilized their Innovation Grant to double the
capacity of their Community Access Project and train young people to become community
leaders. The community center has a three-year plan to develop after school programming and
expand their "safe passage" zone which is a coordinated law enforcement effort to create a safe,
crime-free area through which residents can go to work and school. A part-time coordinator and
part-time communit\' organizer were hired to oversee the program. Reports from area residents
indicate that the Community Access Project is a success - there is less graffiti in the neighbor-
hood, out of state cars are less prevalent around the project, strangers are not hanging around as
much and children are safer as a result of the After School Program.

One hundred young people were employed \\-ith Innovation Grant funding awarded to the
South Boston Neighborhood House for their "Rent-a-Kid" youth worker program. In addition to
employment opportimities, the program also provided the young people with weekly counseling
sessions around issues such as suicide, grief, substance abuse, conflict resolution and stress
management. Additionally, the program placed 1 0 interns in local part-time positions with area
businesses.

Youth in Somerville's Mystic Public Housing Development operated the "Teen Choice
Club." The suicide of a young man in the development prompted youth to speak up about the
lack of productive after school activities in the area, resulting in a club to provide recreational.

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educational, leadership development, and self esteem-enhancing activities for youth in the
development. The Club is staffed by an adult advisor and three peer leaders. They meet on
Tuesdays, Thursdays and Fridays from 6:00 - 9:00 p.m. at the new Mystic Activity Center. So
far, a total of 120 youth, ages 11-19, have participated in various activities that include: com-
puter literacy workshops, field trips, video screenings, photography training, reading groups,
HIV/ AIDS prevention efforts and game/movie nights.

In total, the SNI Innovation Grants will assist more than 550 young people across the Com-
monwealth.

ACCOMPLISHMENTS UNDER SNI CORE COMPONENTS
PREVENTION, INTERVENTION AND TREATMENT

SNI JOBS FOR YOUTH PROGRAM

One of the major efforts aimed at prevention and inter\'ention is our Safe Neighborhood
Initiative Jobs for Youth Program. The program, which started in 1996, has grown from employ-
ing 23 youth in five communities to employing more than 100 young people in 1 1 conmiunities
throughout the state. Massachusetts communities have placed youth issues at the top of their
agenda. To embrace this effort, the Office of the Attorney General supported enrichment and
employment programs for youth this year.

Eighteen youth from SNI target areas in Grove Hall, Fields Comer and Uphams Comer are
employed through Boston Communit>- Centers (BCC). Partnering with local businesses and
agencies, BCC places young people in a variet>' of capacities allowing them to learn a multitude
of skills including entrepreneurship, leadership and civic duty. Boston CommunitN- Centers
recently conducted a survey of current and former SNI Jobs for Youth participants and discov-
ered that youth who have participated in the program are more likely to be in school, have higher
grade point averages, and are more likely to secure sustainable employment.

The Old Colony YMCA in Brockton just completed their third year of Jobs for Youth fund-
ing. Over the three years, they employed 27 teens beuveen the ages of 14-17. This year, they
employed five interns who were placed in various communit>' based agencies. All the teens are
currently in high school and four of them have plans for attending college. All of the youth who
participated in this program were able to market their new skills to secure jobs in the private
sector.

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This year marks the fourth year of funding for the Chelsea Jobs for Youth program. Through the
Department of Health and Human Services, the city provides positions for seven Chelsea teens at several
area businesses and city agencies including: Chelsea Cable TV, the Chelsea YMCA, the Chelsea Public
Library, the Chelsea Human Services Collaborative, and Chelsea Neighborhood Housing Services. The
teens' responsibilities include community service, office support and clerical assistance. The SNl Jobs for |
Youth program participants also receive instruction on writing resumes, career exploration, peer leader- 1
ship, and confl ict resolution. I

Ten young people are placed in year-roimd jobs through the Taunton Department of Human j
Services. The 10 youth workers were assigned to the following human service agencies: the I
Department of Human Services, the Boys and Girls Club, Taunton High School, Bristol Ply-
mouth Regional Technical High School, the Old Colony YMCA in Taunton, and the Taunton '
Public Library. The partnerships created from this have been tremendous. Melissa, a graduate
of the SNl Jobs for Youth program and now a college student, was hired as a "Youth Supervisor"
for the program and notes that, "The Jobs for Youth Program awakened in me a new confidence
in my abilities and a sense of pride in my city."

"Buen Trabajo" is the program developed by the Holyoke Youth Alliance for implementation i
of their SNl Jobs program. This program reinforces literacy by training 12 youth to be teen j

educators and to read to young children in the waiting room of a large pediatric practice in the
city. The Holyoke Youth Alliance reports that 1 00% of their participants went on to jobs in the
private sector, 85% completed the year-long program, and 57% of the students went on to col-
lege.

The 1999 Jobs for Youth program in the City of Worcester enjoyed an outstanding year. In
only the second year of funding, 14 youth were employed throughout the city. More impressive
is that each of the youth employees accumulated 1200 hours of volimteer work. All together, the
youth volunteered a total of 16,800 hours throughout the course of the school year. During the
course of the summer, four teens from the Worcester program will attend the YMCA Interna-
tional Youth Exchange Program in Scotland. The other 10 youth workers will be attending a
week-long leadership development conference in New York.

The city of Lynn collaborates with Girls Inc. to provide a thorough job preparedness program
for seven students in Lynn. These seven students are provided quality training through the Girls
Inc.'s Career Learning Center. The teens are taught about effective communication, problem
solving, computer information and decision making. Upon completion of their training, students

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are employed at the Community Minority Cultural Center as well as Lynn Arts, Inc. and Raw Arts, Inc.

Twenty-five young people in New Bedford receive comprehensive job readiness training
through UMass Dartmouth's Neighborhood College. Training provided is specific to the needs
of area employers who actually pay the salaries of the young people, rather than relying on grant
funds. The New Bedford program reports that of those young people who attended this pre-
employment training which included a "real-world" internship experience, 80% are now em-
ployed.

The Springfield SNI Jobs for Youth program is implemented through the Springfield South-
west Community Health Center. The program is called VISIONZ, which is a six member, peer
health education group that utilizes plays, city-wide special events and outreach as its mechanism
for disseminating violence prevention and public health information. The peer educators write,
direct and star in skits used as teaching tools on such issues as HIV/ AIDS, teen pregnancy, self
esteem, decision making, and youth violence.

The SNI Jobs for Youth program is a solid demonstration of the Attomey General's commit-
ment to young people and comprehension that prevention is one of the best and least expensive
ways for communities to reduce juvenile crime. In addition to reducing juvenile crime, the
program also enhances self-esteem, life skills, work ethic and decision-making abilities of young
people allowing them the opportunity to make a successful transition into adulthood.

DORCHESTER SNI

Dorchester continues to be Boston's most culturally diverse neighborhood. Now in its sixth
year, the Dorchester SNI continues to focus on issues that have consistently plagued the area -
truancy and youth violence. The Boston Police Department targets the truancy issue while other
subcontracted programs provide enhanced opportunities for young people to effectively use the

i time when they are not in school through an array of recreational and educational programming.
Additionally, community workers strive to empower and comprehensively address the needs of
the large and growing Cape Verdean and Vietnamese communities. To supplement these under-

, takings that are critical to the overall health and well-being of the target area, the Dorchester SNI
has also created a strong network of support for other emerging immigrant groups, children who
witness violence and the local business community.

The Dorchester SNI Advisory Council continues to meet regularly. A top agenda item again this

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year was funding. At the beginning of April, SNI Division Chief Susan Spurlock received word that
Dorchester's Executive Office of PubHc Safety Byrne grant funding would be cut significantly. In
response, members of the Dorchester SNI, including representatives from each subcontracted agency
and the Attorney General's Office, met with the Director of the HOPS Programs Division, Michael
O'Toole; Assistant Director of the Programs Division, Kevin Sullivan; and the HOPS Program Coordi-
nator for the Dorchester Project, Jane Zuroff The Dorchester community members made presentations
about the devastating effects any funding cuts would have on the community. Michael O'Toole commit-
ted to making the recommendation to Jane Perlov, the Secretary of Public Safety, that the project not
be cut but receive level funding. Mr. O'Toole's recommendations were accepted - The Dorchester
SNI received level funding of $250,000 with a dollar for dollar hard cash match.

As mentioned above, there continues to be concern about the violence erupting in the Cape
Verdean community. The Dorchester SNI has been trying to address this issue through coordi-
nated law enforcement and community service efforts. The Cape Verdean community is very
close-knit and distrustful of many of the efforts of law enforcement officials. This lack of trust
and communication between the Cape Verdean community and law enforcement has slowed
investigations and the acquisition of solid information about the "riffs" in this community. The
Dorchester SNI Advisory Council is working on ways to facilitate better relationships and
improve communication to help prevent further violence.

The truancy project with the Grover Cleveland Middle School worked well in identifying
chronically truant youth - in fact, it worked so well that the project received more referrals than
expected. There has been continued discussion about expanding the project to other police
districts to help ensure that youth who live outside of the target area still have access to services.

The Dorchester Safe Neighborhood Initiative continues to work effectively to address quality
of life issues identified by the community. Through a productive coalition of community stake-
holders, problems are identified, discussed and then plans for improvement are implemented.
The Dorchester Safe Neighborhood Initiative continues to set an example for other, newer SNIs
throughout the state.

GROVE HALL SNI

The Grove Hall Safe Neighborhood Initiative (GHSNI) has made tremendous strides this
year. The success of this project can be attributed to its persistence in addressing issues in a
coordinated community and law enforcement partnership effort. During 1 999, the GHSNI

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received $250,000 from the Department of Justice, Executive Office for Weed and Seed. The
money funded several community-based programs that helped to address needs and concerns
identified by the community.

This year, as a part of our Weed and Seed grant, the GHSNI was able to fund several out-
standing programs through both the Seed-Mini Grant and the Special Emphasis Initiative grant
funds. The Roxbury Multi-Service Center's Community Programs Against Sexual Assault
(CPASA) services as many as 35 people per month through this program. CPASA addresses
violence prevention education and intervention strategies to empower elders in the community
and further reduce incidences of victimization in the Grove Hall community.

Children's Services of Roxbury received a $9,000 grant from the GHSNI to address the issue
of domestic violence by providing education and training to middle and high school students.
They worked closely v^th the Jeremiah Burke High School and the Martin Luther King, Jr.
Middle School to provide training on domestic violence, violence prevention, and conflict
resolution.

The "WAR" project out of Roxbury Comprehensive Health Center, another GHSNI funded
program, reported that 1200 people received service. The WAR project was designed to provide
HIV/ AIDS outreach, service, and education to women in the sex industry in the Grove Hall area.
They also provided information to known "Johns" and addicts in the area.

The Youth Development and Early Intervention Program (YDEIP) of the Grove Hall Resi-
dents Association and the Franklin Park Development I & II assessed its increased one-to-one
academic tutoring. The results have been extremely positive regarding the enroUees' general
academic performance. Since the implementation of the tutoring program, not one student has
received a failing grade. On average, 25-30 students participate in the program per month.

The Jewish Memorial Hospital and Rehabilitation Center convened a Safe Seniors/Safe
Neighborhoods educational seminar and luncheon for seniors. The hugely successful workshop
taught seniors how to identify elder abuse, how to recognize and stop fraud against seniors, and
provided information about senior health and safety issues.

A significant predictor of future criminal activity, truancy, is another issue that was addressed
in our Grove Hall target area this year. Through implementation of the initiative Opening Doors,
the Boston Urban Youth Foundation (BUYF) has an active case load of 86 young people in its

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program. The Foundation is pleased to report that 90% of the young people involved in the program
improved their attendance by 35%. BUYF states that 50% of their participants also improved their
grades.

COORDINATED LAW ENFORCEMENT

SNI COMMUNITY PROSECUTION

Our community prosecution program is critical to our coordinated law enforcement compo-
nent. SNI prosecutors at the Superior and District Court levels continued to serve in non-tradi-
tional roles, allowing them to provide outstanding service to target communities and perform as
even better advocates for the Commonwealth. Attending community meetings and special
events, developing joint initiatives with other law enforcement agencies, and utilizing sentencing
and probation options not only to penalize offenders but also to rehabilitate them so they do not
return to the criminal justice system are just a few of the ways SNI prosecutors work to serve
their respective target communities.

AAG Shelley Richmond is a strong testament to the depth of involvement SNI prosecutors
have in the community. AAG Richmond consistently looks to the commuruty for impact state-
ments to help in the sentencing phase of many of her cases. As a result, judges often treat cases
that would otherwise seem routine much more seriously. The community's input has had a
tremendous impact on the residents' sense of participation in the justice system and the direct
impact on their neighborhood. There are noticeably fewer street level drug and gang activities in
the target area. AAG Richmond has also been cultivating a powerfiil working relationship with
Boston Police detectives to solve several unsolved crimes. Similar efforts were put forth by
AAGs Marcia Jackson, Neil Tassel, and Katherine Hatch who work on the Dorchester project,
and Glenn MacKinley who works on the Brockton SNI. Prosecution teams are critical to the
SNI's efforts to create healthier communities and to demonstrate that community residents
should play an active role in the justice process.

Another key element of the SNI's coordinated law enforcement component is community
policing. High-ranking police officials are actively involved in SNI Advisory Councils and meet
regularly with community groups and individual residents to address concems. Community
policing projects of SNI target areas have demonstrated a strong impact on crime statistics in
target communities. In addition to falling crime rates, an unprecedented level of cooperation and
collaboration with the police is reported by residents, merchants and social service agencies.

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The Grove Hall project is using its coordinated law enforcement approach to address illegal
rooming houses and other "hot-spots" in the target area. Through our effective law enforcement
intervention, including community impact statements, the Carousel Lounge and an unlicensed
lodging house were shut down. The Carousel Lounge was notorious for illegal activity and the
illegal rooming house at 146 Stan wood Street was the site of two stabbings in a six-week period
prior to the collaboration between the community and law enforcement to close the building.

As part of its coordinated law enforcement efforts, the Brockton SNI executed 75 search
warrants, 80% of which have been in the SNI target area. This intense effort resulted in over 187
arrests for violations of the Controlled Substance Act. Additionally, 14 firearms have been
seized during the year, resulting in 30 defendants being charged with weapons offenses. There
have been approximately 75 narcotics investigations conducted within the city of Brockton, 90%
of which were within the SNI target area. These narcotic investigations resulted in 76 arrests. In
addition to the drug-related arrests, there were also 28 arrests for sexual conduct for a fee.

Joint investigations with federal agencies are another important piece of our coordinated law
enforcement component. A good example of this type of joint investigation is "Operation Scor-
pion" run out of the Grove Hall project. The Boston Police Department, Area B2, utilizes the
combined resources of state and federal agencies including the state police and the Drug Enforce-
ment Agency. The operation will target drug distributors, dealers and buyers.

NEIGHBORHOOD REVITALIZATION

ABANDONED PROPERTY PROJECT

A major part of our neighborhood revitalization efforts throughout the various SNI communi-
ties is the Abandoned Property Project. The project aims to use a Receivership Statute enacted in
[Massachusetts in 1993 to undertake and oversee the rehabilitation of residential properties with
persistent, unremedied code violations or properties being used for illicit activities, such as drug
dealing. The legislation was originally intended to permit tenants and other occupants of residen-
tial properties to seek the appointment of a receiver who would have the independent authority to
authorize repairs, after notice and an opportunity to cure was provided to the landlord and credi-
tors of record. The most significant features of the statute are twofold: 1) it provides a limited
scope of receivership liability related solely to the work actually undertaken at the property; and
2) the costs and expenses incurred by the receiver become a priority lien, recoverable against

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both the landlord and the property prior to any pre-existing liabilities other than outstanding real estate !
taxes. j

I
Stuart Rossman, the former Chief of the Attorney General's Business and Labor Protection I
Bureau, successfully implemented this project throughout the state, targeting Dorchester, New |
Bedford, Roxbury (Grove Hall), Worcester, Orange, Chelsea, Montague, Taunton, Springfield, '
Brockton and Melrose. Individuals from throughout the Office of the Attorney General partici-
pate in the various cities and towns. Teams consisting of AAGs, civil investigators, paralegals
and staff are assigned to specific communities. We continue to get support and approval from
Housing Court and District Court judges in jurisdictions across the Commonwealth. The Aban-
doned Property Project was the subject of a Massachusetts Continuing Legal Education Seminar
Program held in October, 1998. Working with former Representative Charlotte Golar Richie, we :
were able to secure a line item in the Housing Bond Bill to set aside monies to be used to frmd
receiverships. The Attorney General's Office co-sponsored a bill to expand and improve upon
procedural elements of the Receivership Statute based upon the knowledge gathered throughout
Abandoned Property efforts. The bill was reported favorably out of the Housing and Urban
Affairs Committee, but never reached the House of Representatives. We hope to refile again this ;
year.

In addition to the prospect of restoring properties that have been blights in the community,
the other exciting aspect of this initiative is that the community is guided through the process by
the Attorney General's Office in order to enhance the community's implementation of the neces-
sary procedures on its own. By providing this guidance, the community becomes empowered
which is vital to our efforts to increase the sustainability of the project.

CONCLUSION

Fiscal Year 1 999 was distinguished by many successes. SNI community partners worked tirelessly
to ensure that the SNI projects are continued and sustained with full integrity. We also sought ways to
undertake new initiatives to broaden the scope and services of the SNIs throughout Massachusetts and
to foster new growth. The SNI continues to be a strong model of how communities and law enforce-
ment can work together effectively to improve the quality of life for community residents throughout the
Commonwealth.

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SAFE NEIGHBORHOOD INITIATIVE STAFF

Staff members assigned to the SNI as of the end of FY99 are Division Chief Susan Spurlock;
Assistant Attorneys General Marcia Jackson, Neil Tassel, Katherine Hatch, Shelley Richmond, Glenn
MacKinlay, and Linda DelCastilho; SNI Program Coordinators Sandra McCroom and Marcy Bouley;
Administrative Assistant Nancy Tavilla; and Community-Court Liaisons Christina Dilorio-Sterling and
Lori Parris.

SPECIAL INVESTIGATIONS AND NARCOTICS DIVISION

The Special Investigations and Narcotics (SI&N) Division coordinates and prosecutes com-
plex, multi-jurisdictional criminal cases targeting non-traditional organized criminal entities and
career felons for prosecution. In addition, the Sl&N Division investigates and prosecutes large-
scale drug trafficking organizations and individuals or groups involved in the illegal sale or
possession of firearms. The Division also proactively investigates traditional organized crime
groups for offenses ranging from "murder for hire" plots to extortion networks to gaming enter-
prises. SI&N further aids in the drafting of narcotics and gang-related legislation and the devel-
opment and implementation of community education and outreach programs.

The SI&N Division, through its Asset Forfeiture Unit, initiates and pursues civil and criminal
forfeiture and nuisance actions of property related to the sale, distribution, and facilitation of
drug-related offenses. Funds recovered by the Unit are disbursed in accordance with the
Commonwealth's forfeiture laws. A percentage of the amount forfeited is used for community-
based drug awareness and education programs.

OrSTSION ORGANIZATION AND OBJECTFV^S

The Division presently consists of seven attorneys and two full time support staff personnel.
Members of the Division for all or part of FY99 were: William F. Bloomer, AAG, Chief; David
Breen, AAG; Carole Conley, Support Staff; Eliot Green, AAG; John Grossman, AAG; Joanna
Kennifick, Support Staff; Karen Kleiman, AAG; Ramon Melendez, AAG; Gregory Motta, AAG;
Lori Parris, AAG; Robert Sikellis, AAG, former Chief; and Karen Wells, AAG.

Approximately one dozen Massachusetts State Troopers are assigned to the Sl&N Division
within the Attorney General's Office. That unit falls under the direction of Detective Lieutenant

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Mark Delaney. Lieutenant Stephen Matthews, second-in-command, and Lieutenants Joseph
Flaherty and Frank Matthews, with the assistance of Sergeants Richard Prior and Thomas
Coffey, form the central core of the command structure.

Among the general categories of crimes the SI&N Division investigated and/or prosecuted
during FY99, were the following: narcotics trafficking and related offenses, extortion, weapons
trafficking and related offenses, identification fraud, arson, money laundering, solicitation to
commit murder, possession of counterfeit currency, intimidation of witnesses, threats, fraud,
habitual criminals, breaking and entering, larceny, receiving stolen property, gaming, and utter-
ing forged instruments.

By way of background, in 1994, the Criminal Bureau's Narcotics and Organized Crime
Division merged with the Special Investigations Division to form the unit that is now entitled the
Special Investigations and Narcotics Division. Eventually, two subunits ~ the Asset Forfeiture
and High Technology Crime Units — emerged to meet the demands placed on law enforcement
by these rapidly growing areas of law.

With the change of administrations in January of this year, the Division underwent an organi-
zational restructuring. Though the Asset Forfeiture Unit remains an integral part of SI&N, the
High Technology Crime Unit became a separate entity known as "The High-Tech and Computer
Crimes Division" imder the direction of AAG Gregory Motta. Both divisions continue to work
closely with one another in investigating and prosecuting computer crimes as well as organiza-
tions that use computers to facilitate a broad array of traditional criminal activities.

The advent of the new administration also ushered in a different approach to dismantling
illegal drug operations. The SI&N Division has shifted its previous focus on narcotics "street
sweeps" — investigations targeting small, street-level drug distributors in specific geographic
areas — to identifying, investigating, and prosecuting the large scale organizations that supply
these street dealers with illicit contraband.

An effort to broaden the scope of the Division's responsibilities is also underway. The SI&N
Division recently pledged its assistance to the Massachusetts State Police Gang Unit, the State
Fire Marshall's Office, and the State Police Violent Fugitive Arrest Squad. The primary goal of
this initiative is to assist these police agencies in proactive investigations and prosecutions, and
to assist in addressing crimes committed in these organizations' respective areas of concern
which occur in multiple counties.

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INVESTIGATIVE INITIATIVES

ELECTRONIC SURVEILLANCE

A significant weapon that the Division utilizes to penetrate and dismantle complex illegal
enterprises is electronic surveillance. Over the past year, troopers assigned to this Division have
on numerous occasions equipped themselves with electronic body wires, pursuant to so-called
Blood warrants, to intercept and record criminal conversations with unsuspecting targets. These
recordings have proven invaluable in securing the convictions of narcotics and firearms traffick-
ers.

Since April of 1999, the SI&N Division has executed court authorized wiretap warrants on
four cellular telephones. The warrants authorized law enforcement officers to intercept, monitor,
and record criminal conversations occurring over these cellular phones. Individuals fi-om two
separate but related organizations, utilized these telephones to further extortion activities and to
distribute vast quantities of percocet pills, designer "ecstasy" pills, and hundreds of pounds of
marijuana, in and around the Greater Boston area.

During the course of that investigation, members fi-om the Division also applied for and
received court permission to install and monitor a "Global Positioning System" (GPS) and a
"roving cellular bug" inside a target's motor vehicle. The GPS allows law enforcement officials
to calculate the position of a vehicle through a system of satellites, while the roving bug permits
officers to intercept and record oral communications within the vehicle by means of a cellular
transmission device.

Most noteworthy, in the course of that investigation, members of the SI&N Division received
court authorization to conduct electronic surveillance of communications occurring over the
target's "Interactive Paging Device" (IPD). An IPD is a portable wireless communication device
which has a read-out screen and a fiill alphabetical and numerical keypad that enables its users to
communicate with one another similar to an e-mail system. The wiretap warrant in this investi-
gation authorized law enforcement personnel to intercept and record criminal communications
occurring over these Interactive Paging Devices by means of a "clone pager" and a specially
designated e-mail site. Based on information obtained from a number of law enforcement
sources and the carrier of the IPD itself, it is believed that the wiretap of these communication
-devices was the first of its kind in the country.

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The electronic surveillance, coupled with traditional investigative techniques, pierced these highly ')
secretive organizations and ultimately led to their demise. The SI&N Division will continue to avail itself j|
of this potent investigative tool.

INVESTIGATIVE HIGHLIGHTS |

I
i

As described above, members of the SI&N Division conducted a two-year investigation into j
drug trafficking and extortion that included the use of electronic surveillance. The investigation I
commenced in Middlesex County under the direction of then District Attorney Tom Reilly, and ]
continued and expanded after his election as Attorney General. At the conclusion of the investi- j
gation in June of 1 999, State Police assigned to the SI&N division executed over 20 search !

warrants in the Greater Boston area. An additional five search warrants were executed in New
Hampshire and Arizona with the assistance of the respective state and local police departments ini
those states. The participation of law enforcement in this collaborative effort resulted in the
seizure of the following contraband and assets: approximately 1,000 pounds of marijuana;
thousands of percocet pills; over 1,000 ecstasy pills; several handguns, with at least one bearing
obliterated serial numbers; hundreds of steroid pills and needles; approximately $250,000 in U.S.
currency; approximately $2,700 in counterfeit currency; one dozen motor vehicles; and one
powerboat.

As a result, 17 individuals stand charged with a variety of offenses including trafficking in
marijuana and percocets, possession of firearms and ammunition, conspiracy, and possession of
counterfeit currency. Assistant Attorneys General Karen Wells and William Bloomer presently
are assigned to the investigation.

Assistant Attorney General Eliot Green is currently prosecuting a case against three individu-
als who were arrested by State Police in August of 1 998 as a result of an undercover narcotics
investigation. During this investigation. State Police assigned to the Attorney General's Office
conducted controlled purchases ranging from one to four ounces of cocaine from each of the
three defendants. At the conclusion of the investigation. State Police executed search warrants at
five locations where nearly four kilograms of cocaine, over $250,000 in cash, three vehicles, and
two motorcycles were seized. The cenfral target of the investigation stands charged with traf-
ficking in over 200 grams of cocaine, which carries a mandatory minimum of 1 5 years in state
prison, while the two remaining individuals each face a mandatory minimum 10 year term of
imprisonment for trafficking in over 100 grams of cocaine.

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In May of 1 999, the Division obtained indictments against two Hampshire County men for running
illegal bookmaking operations. These individuals were each charged with possession of betting appara-
tus, illegal use of a telephone, and two counts of conspiracy. The indictments stemmed from a lengthy
investigation into illegal gaming in Hampshire and Hampden counties conducted by the State Police
Special Services Section, the Hampden County District Attorney's Office, and the Office of the Attor-
ney General. This investigation, which made extensive use of court-approved wiretaps, has akeady
netted the convictions of several individuals on illegal gaming charges. Assistant Attomeys General John
Grossman and Matthew Shea are handling the two remaining prosecutions.

CRIMINAL CASE HIGHLIGHTS

In 1998, the Attorney General's Office agreed to prosecute an individual for narcotics traf-
ficking at the behest of the Drug Enforcement Administration. The defendant in that case en-
gaged in two hand-to-hand sales of over 200 grams of cocaine per transaction with a cooperating
informant. In early April of 1999, following a week-long trial before a jury. Assistant Attorney
General Lori Parris secured guilty verdicts on both counts. The defendant was sentenced to a
minimum mandatory term of 1 5 years in state prison.

In 1997, then District Attorney Tom Reilly commenced the prosecution of 10 individuals for
the gang-related murder of a 17-year-old Hispanic youth in Lowell. William Bloomer, an assis-
tant district attorney at the time, headed the prosecution against 10 members of a street gang
called the "Laos Boyz" or "LBZ". On November 20, 1 997, the Commonwealth alleged, the
defendants went "hunting" for members of rival gangs to attack. After flipping a car onto its side
and smashing hs windows, and after attacking the family of a member of the rival "Tiny Rascal
Gang", the defendants lined up alongside a diner in a darkened alleyway armed with makeshift
weapons. Their faces disguised by bandanas and ski masks, the defendants waited in ambush for
the victim, who was not a member of any gang, and his two unsuspecting friends. As the three
youths walked passed the diner, the defendants attacked the trio with two hammers, a shovel, the
"Club" anti-theft device, and boards. The victim was knocked to the ground and smashed repeat-
edly in the head by the individuals wielding the hammers and shovel. After the attack, the group
drove to an eating establishment and ordered food while bragging and celebrating about their
accomplishments. The victim died three days later of multiple blunt trauma to the head. Follow-
ing a month long trial in November and December of 1998 that featured the testimony of three of
the participants in the attack, the jury convicted the two hammer wielding assailants of first
degree murder. They were sentenced to life without parole. Thereafter, the defendant who
struck the victim repeatedly with the shovel pleaded guilty to murder in the second degree and

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was sentenced to life in state prison. With the change of administrations in January, Assistant Attorney
General Bloomer continued the prosecution of the four remaining gang members in his capacity as a
special assistant district attorney. In April and May of 1 999, these defendants each plead guilty to the
charge of manslaughter and received sentences ranging from five to 1 4 years in state prison.

In mid-May of 1 999, Assistant Attorney General David Breen prosecuted an individual for
trafficking in over 200 grams of cocaine and possession with intent to distribute cocaine within
1 ,000 feet of an elementary school. The Commonwealth proceeded against the defendant in that
case under a joint venture theory — alleging that he stood "guard" over a large quantity of co-
caine in a stash pad while his co-conspirators left to consummate deals on the street. At the
completion of the nearly two-week trial, a jury returned guilty verdicts on both counts. The
Court then sentenced the defendant to a minimum mandatory of 1 5 years in state prison on the
trafficking count with an additional two years from and after the 15-year period of incarceration
for the school zone violation.

That same month. Assistant Attorney General Philip McGovem, on assignment from the
Economic Crimes Division, tried a case before a jury in Suffolk Superior Court and convicted
the defendant of trafficking in over 100 grams of cocaine. The Court sentenced the defendant to
a minimum mandatory term of 10 years in prison.

LANDLORD TRAINING PROGRAMS

Under the previous administration, the Division's Asset Forfeiture Unit conducted landlord
training seminars. These seminars were designed to educate landlords about their rights and
responsibilities with respect to tenants who are utilizing property as a drug distribution site. The
SI&N Division will continue to offer these trainings to interested organizations such as Section 8
Housing Administrators.

In conjunction with these landlord training seminars, the Asset Forfeiture Unit distributes
manuals for reference. These manuals, which include discussions ranging from proper tenant
screening methods to the legal consequences for landlords who fail to evict drug-dealing tenants,
have proven highly useftil and popular in the past.

LAW ENFORCEMENT SUPPORT

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CRIMINAL BUREAU

Assistant Attorneys General, State Police Officers and investigators assigned to the SI&N Division
also continue to work with and provide technical, legal, and other forms of investigative support and
assistance to numerous federal, state, and local law enforcement agencies. These agencies include the
Federal Bureau of Investigation, Bureau of Alcohol, Tobacco and Firearms, United States Customs
Service, Drug Enforcement Administration, Internal Revenue Service, United States Postal Service,
Department of Corrections, District Attorneys' offices, court house security personnel and various state
and local police departments and task forces throughout the Commonwealth and in some circumstances
across the country. These joint undertakings include investigations of major money laundering and drug
distribution organizations, identification fraud enterprises, and counterfeit currency producers.

Presently, the Division is establishing an ongoing relationship with the State Police Gang
Unit, the Violent Fugitive Arrest Squad, and the State Fire Marshal's Office. The goal of the
development of these interagency relationships is to enhance law enforcement's effectiveness in
(1) dealing with gang intervention and prosecution, (2) capturing and prosecuting violent fiigi-
tives from justice, and (3) investigating arson rings and so-called arson-for-hire plots and ensur-
ing successful prosecution.

NON-CASE RELATED INITIATIVES

Members of the Division also participate in a number of training programs to enable them to
better serve the law enforcement community and the public in general. In April of 1999 for
example. Assistant Attorneys General John Grossman and Eliot Green attended a three-day
course on arson investigations and prosecutions. Also, in June of 1999, Assistant Attorney
General William Bloomer attended a week-long course in Washington D.C. sponsored by the
National Association of Attorneys General which addressed the proliferation of computer crimes
and the use of computers to facilitate fraditional criminal acfivity as well as the proposed strate-
gies for dealing with "cyber criminals."

In addition to performing their traditional duties as prosecutors. Assistant Attorneys General
assigned to SI&N Division also act as point persons for the office on a variety of topics that
require specialized knowledge in certain areas of law. For instance. Assistant Attorney General
John Grossman provides advice and assistance to attorneys and police officers across the state in
rendition matters. In addition. Assistant Attomey General William Weinreb fields inquiries
directed to the Division on matters concerning the Criminal Offender Records Information
(CORI) Act.

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CRIMINAL BUREAU

Similarly, Assistant Attorneys General assigned to SI&N Division provide service and assistance
both in and out of the office that exceed the scope of traditional prosecutorial responsibilities. Assistant
Attorney General William Bloomer presently serves on a legislative subcommittee that is gathering
information and studying various legislative and programmatic issues within the area of gang prevention,
intervention, and prosecution. Assistant Attorney General Eliot Green is the Division's Intem Coordina-
tor who supervises and monitors the progress of the legal interns assigned to the SI&N Division.

SUMMARY OF SI&N DIVISION ACTIVITIES

During FY99, the SI&N Division initiated over 80 separate criminal cases. The Division
also disposed of approximately 92 criminal cases during this time period.' At any given time, the
Division generally has 50 prosecutions or more pending in various courts throughout the Com-
monwealth, over 15 ongoing investigations, and a handful of post trial motions that require
written responses and court appearances. Also during FY99, the SI&N Division's Asset Forfei-
ture Unit initiated 29 separate drug related civil forfeitures.

This figure is based upon an extrapolation of data from January through July of 1999.

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FAMILY AND COMMUNITY
CRIMES BUREAU

Victim Compensation and Assistance Division

FAMILY AND COMMUNITY CRIMES BUREAU

Family AND Community Crimes Bureau

The Family and Community Crimes Bureau develops and coordinates policy, programs,
legislation and training for law enforcement, educators and other professionals on behalf of the
Attomey General in the following areas: family violence, juvenile justice and youth violence
prevention, victim rights, and the protection and education of children. The Bureau also houses
the Victim Compensation and Assistance Division which reviews and awards claims for com-
pensation filed by victims of violent crimes.

Throughout FY'99, the Family and Community Crimes Bureau continued its efforts to
provide training and assistance to law enforcement. In September, the Attomey General hosted
the Eighth Annual Domestic Violence Conference titled "Domestic Violence Enforcement:
Where Do We Go From Here?" Over 300 police officers from across the state attended the
conference. In the Fall, the Bureau consulted with Project Harmony, a non-profit cultural organi-
zation which implements training and education programs for law enforcement and criminal
justice experts in Russia and the Ukraine. An Assistant Attomey General assigned to the Bureau
was a team member from Massachusetts which provided training to multi disciplinary providers
in Kiev and Odessa, Ukraine as part of their Domestic Violence Community Partnership Pro-
gram. In July, 1998, a staff member, along with the Jewish Community Relations Council,
Combined Jewish Philanthropies, and others from Massachusetts presented a Domestic Violence
Training Program in Haifa, Israel. Training efforts continued as the Attomey General's staff
participated in a Hate Crimes Training Seminar for police in Lowell MA, sponsored by the
Department of Justice on March 10, 1999. Victim rights and victim compensation training was
provided to police officers at Tufts University and Norwood Police academies in March and
April 1999 by a member of the staff at a training program for sexual assault detectives. The
Bureau continued to respond to issues facing law enforcement and criminal justice professionals
by providing a Domestic Violence Update in the Law Enforcement Newsletter which was distrib-
uted to police departments across the state.

j As part of its ongoing efforts on behalf of crime victims, members of the Bureau participated
in the Annual Victim's Rights Conference sponsored by the Massachusetts Office of Victim
Assistance (MOV A). In addition to attending the conference. Bureau staff members participated
on panels at the conference workshops. Additionally, a staff member serves on the Crime
Victims Working Group of MOV A, which is reviewing the state of victim services in Massachu-
setts.

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FAMILY AND COMMUNITY CRIMES BUREAU

The Office continued its commitment to youth safety and education by pubUshing its bi-annual Safe
Schools Newsletter. The newsletter informed school administrators about safety issues and programs
and provided an update on pertinent legal issues. In Fall 1 998, the Attorney General hosted a confer-
ence entitled " Safe Schools: Beyond the Metal Detector" for school administrators and law enforce-
ment officials. It addressed a variety of issues including at-risk youth and effective prevention and
intervention strategies. The Bureau published a resource guide for schools and communities, "More
Than Child's Play: Preventing Truancy and Promoting Success," and a guide to community based
services for truant youth. Bureau staff contributed to the Boston Bar Association's Report on Truancy
issued in the summer of 1 998. The report outlined specific recommendations to prevent truancy in the
Boston Public Schools.

The Bureau actively participated in several organizations throughout the year. The Bureau
joined other employers to support "Employers Against Domestic Violence". This organization,
under the leadership of the Boston law firm, Mintz, Levin, Cohen, Ferris, Glovsky and Popeo,
provides training, education and guidance to employers on protecting victims of domestic vio-
lence and responding to their needs.

Assistant Attorneys General continued to represent the Attorney General on, and actively
participate in, the work of the Governor's Commission on Domestic Violence. Bureau staff
members continue to attend and actively participate in Commission sponsored subcommittee
meetings. These subcommittees include the Legislation, Community Education, and Training
Subcommittees and the Children's Working Groups. Additionally, Bureau members attend
monthly Statewide Prosecutor and Advocate Group meetings. These meetings address domestic
violence issues raised by advocates and prosecutors working in this area. Further, members of
this organization participate in the planning for the Annual Statewide Conference, scheduled for
November 1999.

The Bureau continued to review and draft legislative proposals. Some examples include the
information sharing bill, designed to enhance inter-agency communication in criminal proceed-
ings regarding juvenile and youthful offenders. To further protect victims of domestic violence,
a proposal was introduced to protect the confidentiality of addresses and telephone number of
individuals who obtain abuse prevention orders.

Bureau attorneys were active in the passage of the new gun control law, passed on July 23,
1998 and effective October 21, 1998. The comprehensive statute. An Act Relative to Gun
Control in the Commonwealth, made significant changes to the then-existing firearms law. In an

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FAMILY AND COMMUNITY CRIMES BUREAU

effort to aid police departments in understanding and implementing the provisions of the new act,
Bureau staff prepared and distributed to the law enforcement community documents summariz-
ing the law and its major provisions. In addition, the Bureau participated in a seminar on the
new firearms law, sponsored by the Massachusetts Chiefs of Police Association.

Bureau staff also participated, along with staff members of other bureaus, in the development
of the new sex offender registry law, An Act Improving the Sex Offender Registry and Establish-
ing Civil Commitment and Community Parole Supervision for Life for Sex Offenders. As part
of this process, Bureau attorneys considered and analyzed legal issues arising out of the proposed
legislation. The staff also reviewed and commented upon related bills sponsored by various
members of the Senate and House of Representatives.

The Child Witness to Domestic Violence Project, a collaboration of the Office of the Attor-
ney General and the Child Witness to Violence Project at Boston Medical Center, continued the
trainings that were started in January 1998. The goals of the conferences were to raise awareness
among multi disciplinary providers of the impact of exposure to domestic violence on children,
to increase identification of these children, to enhance the skills of multi disciplinary providers to
intervene safely and effectively with them, and to foster collaboration on the community level
and knowledge of existing resources. In Fall 1998, four one-day regional trainings were pre-
sented in the Bristol, Cape and Islands, Norfolk, and Plymouth counties, completing the goal of
providing one in each county throughout the Commonwealth. A total of over 2300 providers
fi-om the fields of law enforcement, domestic violence, health, mental health, education, commu-
nity services, early childhood education, legal services, and child protection participated. Each
training was developed and implemented in coordination with the local District Attorney, the
Department of Social Services' Domestic Violence Unit, and area programs. Three two-day
clinical seminars were presented for providers in Northeastern, Southeastern, and Western
Massachusetts. Over 1 70 mental health providers participated in this advanced course on inter-
vention strategies with children and families exposed to domestic violence.

In January 1999, the Office of the Attorney General and Child Witness to Violence Project at
Boston Medical Center issued a Project Report which contained the information gathered on a
I regional basis fi-om conference participants. This information included the unmet needs of
I providers in helping families affected by domestic violence within their communities and poten-
f tial action steps that they could take on a local level. The report was distributed to all members
■ of the Governor's Commission on Domestic Violence, presenters at the conferences, and other
providers within the Commonwealth.

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FAMILY AND COMMUNITY CRIMES BUREAU

The Child Witness to Domestic Violence Project is funded through a federal Violence Against
Women Act grant administered through the Executive Office of Public Safety, hi October 1998, a
proposed Phase II was funded through November 1 999, enabling the project to continue its clinical
trainings and to expand upon its efforts to give providers guidance within their particular fields. In May
1 999, over 60 mental health providers participated in a clinical seminar. The development of specialized j
trainings for law enforcement and school professionals, to be presented in Fall 1 999, was started.

In June 1999, the Project Coordinator participated in and presented the Child Witness to
Domestic Violence Project's accomplishments at Safe from the Start: A National Summit on
Children Exposed to Violence, sponsored by the United States Department of Justice and the
United States Department of Health and Human Services.

VICTIM COMPENSATION AND ASSISTANCE DIVISION

The Victim Compensation and Assistance Division provides financial compensation, refer-
rals and other assistance to victims of violent crime. Most significantly, it assists qualifying
victims and their families in paying for out-of-pocket medical expenses, lost wages, funeral and
burial and other crime-related expenses. Since 1 994, the Division has assumed legal and admin-
istrative responsibility for receiving, investigating and determining all compensation claims in
accordance with the requirements of G. L. C. 258C. Previously, compensation claims were
determined through a litigation-based process in the district courts.

Fiscal Year 1 999 reflects a general consistency with previous years in expenditures, numbers
of claims received and claims processing patterns. Despite the fact that fewer violent crimes were'
committed in the Commonwealth, and the program operated throughout much of the year with a
reduced number of staff, the Division was able to maintain a stable caseload, most likely due to
expanded outreach efforts.

The Victim Compensation Program received an Innovations award at the annual Victim
Rights Conference at the State House. The staff were honored for programmatic reforms, making:
the process of applying for compensation less cumbersome.

CLAIMS ACTIVITY

The Victim Compensation and Assistance Division received 1 125 claims in FY 99. This
figure reflects a slight decrease from the previous year (1139).

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FAMILY AND COMMUNITY CRIMES BUREAU

I Of all of the claimants who were determined eligible during the year, 626 were awarded
compensation for crime-related expenses. There were 477 claims reopened this year for compen-
sation of additional expenses. This number reflects a 23% increase over last year's reopenings.

Under G. L. C. 258C, claimants who are not satisfied with decisions made on their claims,
either to award or deny compensation, have the opportunity to request an administrative and/or
judicial reconsideration of their claim. In 1999, 63 claimants, approximately 5% of all claimants,
requested administrative review. Forty one of those claims were reviewed and decisions were
affirmed. The remaining 22 were modified or reversed. Only three claimants requested judicial
review.

! The number of homicide claims increased slightly from 1 12 last year to 116 this year. Six-
teen percent (19) of these homicides were related to domestic violence.

EXPENDITURES

In FY 99, the Commonwealth paid $2,246,954 in compensation claims to crime victims. This
marks a reduction of $496,203 from last year and the third consecutive year there has been
adequate fimding to support expenditures.

Although claimants are statutorily able to receive up to $25,000 for compensable expenses,
only 25 claimants received the maximum allowed during FY 99. Compensation for lost wages
^ and loss of support continues to be the category of expense with the highest expenditure (39%).
Hospital, medical and dental is the second highest expenditure (31%), and mental health counsel-
ing expenses next (13%).

OUTREACH AND TRAINING

Outreach and training remained a primary focus for FY 99. Training was provided to numer-
ous programs including Clinical and Support Options, the Victims of Violence Program, Cam-
; bridge Hospital's Community Crisis Response Team, Beth Israel/Deaconess, Behavioral Health
i Collaborative, Charles River Hospital, Mothers Against Drunk Driving, Lowell General Hospital
and Noble Hospital.

I Victim Compensation staff provided training to several of the District Attorneys' Victim Witness

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FAMILY AND COMMUNITY CRIMES BUREAU

Assistance programs and advocates in the Department of Correction's Victim Service Unit. Victim
Compensation staff also did presentations for several police departments and police training academies.

With Victim of Crime Act (VOCA) fianding, additional outreach materials were printed:
8,000 posters, 50,000 pocket cards, 26,000 applications in English and Spanish and 2,000 calen-
dars for distribution at the Victim Rights Conference.

Letters from the Attorney General, with materials, were sent to all of the police chiefs,
district attorneys and victim/witness program directors. A radio public service announcement
was produced and distributed throughout the Commonwealth.

AUTOMATION

The Division invested a great deal of time and effort to implement a newly created, auto-
mated claims processing system. With one complete year of operation, staff will continue to
work to refme the processing of claims.

PROGRAM EVALUATION

An applicant survey is sent to each claimant with decisional letters. The Division received
426 completed surveys from claimants. Surveys were overwhelmingly positive, with more than
90% of claimants agreeing or strongly agreeing that applications are easy to complete, letters
easy to understand, victim compensation staff treated them with courtesy and respect, their
questions were answered, they were satisfied with the decision on their claim and the amount of
time it took to process their claim.

LEGISLATIVE ACTIVITY

A bill to further amend the Victim Compensation Law was filed by Representative John
Rogers. This bill would expand certain benefits under G. L. c. 258C. The Division will continue
to seek passage of this bill which would assist crime victims to pay for most requested crime-
related costs.

158

GOVERNMENT BUREAU

Administrative Law Division

TrialDivision

Environmental Protection Division

GOVERNMENT BUREAU

Government Bureau

The Government Bureau provides representation for the Commonweakh and its agencies and
officials in all types of civil litigation, and for employees of the Commonwealth with respect to
certain civil claims made against them resulting from the performance of their duties. The
Attorney General's environmental enforcement function also falls within the Goverrunent Bu-
reau. In addition, the Bureau includes a special unit that focuses on civil cost recovery in the
$10.8 billion Central Artery/Tunnel Project.

A major priority of the Bureau is improving the fimctions of government. Many of the cases
and initiatives discussed below reflect that priority. In addition, bureau attorneys have advised
agencies in nimierous ways how to reduce accidents and legal errors, thereby eliminating liability
and injury to the public. The Bureau also provides general advice and consultation to officials
with respect to legal issues arising in connection with their official functions, particularly in
instances where such advance consultation may serve to prevent uimecessary litigation. As in
previous years, the Bureau in fiscal year 1 999 continued and expanded its efforts to develop and
maintain close working relationships with agency counsel and to provide them with information
and advice on matters of broad common interest. A meeting with all agency general coimsel was
held in May of 1999.

The Government Bureau consists of an Administrative Law Division, a Trial Division and an
Environmental Protection Division. During fiscal year 1 999, several attorneys were assigned
permanently to work in more than one division, and we continued to assign a sampling of cases
from each division to attorneys in the other, so as to broaden the exposure of the attorneys to the
full range of cases the divisions handle. In addition, a number of particularly complex and
significant cases were handled by teams assigned to multiple divisions. All three divisions
initiate affirmative litigation on behalf of state agencies and the Commonwealth and submit
briefs amicus curiae in cases presenting issues of law affecting the Commonwealth's interests.

The Administrative Law Division defends suits concerning the legality of governmental
operations, particularly those seeking injunctive or declaratory relief The division is also re-
sponsible for the legal review of all newly enacted town by-laws; the preparation of legal opin-
ions for constitutional officers, heads of agencies, and certain other officials concerning issues
arising from the performance of their official duties; and the review of proposed statewide
initiative and referendum questions imder amendment article 48 of the Massachusetts Constitu-
tion to determine whether such questions are of the type that may lawfully appear on the ballot.

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GOVERNMENT BUREAU

The Trial Division defends suits seeking damages or other relief for alleged wrongful acts of govern-
ment officials or employees, particularly contract-related disputes, real estate matters, torts, civil rights
violations, employment disputes and environmental damage claims. The Trial Division also reviews
certain contracts, leases, bonds and various conveyancing documents submitted by state agencies for
approval as to form.

The Environmental Protection Division represents the Commonwealth's environmental
agencies in affirmative litigation to enforce envirormiental laws and in defensive litigation
challenging those agencies' regulatory and enforcement activities. The Envirormiental Protec-
tion Division also plays a key role under the Clean State initiative to ensure that the
Commonwealth's ovm agencies abide by state and federal environmental laws, and in doing so
the Division may bring enforcement actions against those agencies where the Attorney General,
in his enforcement discretion, deems such action necessary. There is significant overlap between
the other divisions of the Government Bureau and the Environmental Protection Division in
substantive legal issues addressed in litigation, the nature of the litigation and interactions with
agencies. The organization of these divisions within one bureau promotes the sharing of re-
sources and expertise, and the coordination of positions taken in cases. In addition, this organi-
zation makes the substantive expertise of the Environmental Protection Division more readily
available to other agencies in environmental matters.

Finally, the work of the Central Artery/Tunnel Project ("CA/T Project") Civil Cost Recovery
unit, presently made up of an attorney director and support staff, often is performed jointly with
the Criminal Bureau or the Business and Labor Protection Bureau. The unit has diverse respon-
sibilities with respect to the CA/T Project in addition to the investigation and prosecution of
fraud cases and other cost-recover>' matters, including: participation in the activities of the CA/T
Project Oversight Coordination Commission; working with CA/T Project personnel and counsel
to implement effective cost-contairmient and anti-fraud measures, including procedures to reduce
the incidence and cost of defensive litigation; and the promotion of legislation that would facili-
tate civil cost-recovery actions by the Commonwealth.

AFFIRMATIVE LITIGATION

The Government Bureau maintained an active docket of affirmative litigation in fiscal year
1 999 to assert the public interest and the interests of its state agency clients.

In Commonwealth v. Harvard Pilgrim Health Care, the Attorney General filed suit in state

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GOVERNMENT BUREAU

court challenging the federal Medicare preemption of Massachusetts laws requiring outpatient prescrip-
tion drug benefits for senior citizens enrolled in Massachusetts health maintenance organizations. In a
companion case, Mass. Assoc, of HMO's v. Commissioner of Insurance, the federal court ruled that
the Massachusetts laws were preempted. The Attorney General has filed an appeal in the First Circuit
Court of Appeals. In Commonwealth v. TLT Construction Co., an action filed on behalf of the Trial
Court and the Division of Capital Asset Management to recover damages for the poor indoor air quality
arising fi-om the renovation of the exterior of the Suffolk County Courthouse, the Commonwealth
received nearly $1.5 million in partial settlements with the architect and product manufacturer. The
remainder of die case is scheduled for trial in October, 1 999.

I In Attorney General v. McHatton, a quo warranto action challenging whether a candidate
elected as a Chelsea City Councillor could take office despite city charter provisions making
persons previously convicted of misconduct in office ineligible to serve, the Supreme Judicial
Court held that the defendant was barred from taking office.

I After extensive discovery and mediation in Commonwealth v. Ruggles Center Joint Venture
etak, the Commonwealth received a settlement of more than $4.5 million in compensation for its
losses in connection with the indoor air quality problems that required the Registry of Motor
Vehicles to vacate its headquarters at Ruggles Center. As part of the same settlement. Common-
wealth employees received an additional million dollars to compensate them for their losses.

In the Electric Mutual Life Insurance Company (EMLICO) litigation, the Supreme Judicial
Court denied the Commissioner of Insurance's petition to establish a Massachusetts receivership
for EMLICO, a Massachusetts insurer that moved to Bermuda. The Commonwealth has appealed
the Superior Court's decision in Commonwealth v. Smith (Robie Properties) that the Massachu-
setts Highway Department was not entitled to recover the costs of environmental cleanup at a site
taken by eminent domain.

In Attorney General v. MHRI, the Commonwealth is seeking to recover proceeds from the
development of medical products at the state's biological laboratories. In Commonwealth v.
Boston Community Services, Inc., the Attorney General filed suit against a Boston non-profit
group for allegedly overcharging more than $200,000 under state contracts to provide clinical
and residential mental health services to clients of the Department of Mental Health, Department
of Mental Retardation, Department of Public Health, Department of Social Services, and the
Massachusetts Rehabilitation Commission.

The Unisys litigation, in which the Attorney General raised contract and performance issues

161

GOVERNMENT BUREAU

arising from a computer system installed for the Secretary of State, was successftilly settled.
AMICUS CURIAE BRIEFS

The Attorney General filed an amicus curiae brief in the Supreme Judicial Court in the case
of Commonwealth v. Maxim, supporting the enforcement by the District Attorney of a shell
fishing regulation for the Town of Bourne. The Court held that the statute authorizing local
towns to regulate shell fishing did not authorize them to regulate subsistence shell fishing by
Native Americans.

Tuper V. North Adams, SJC. In this case of first impression in which the Attorney General
filed an amicus curiae brief, the court decided that, based upon the clear and unambiguous
language of G. L. c. 151, §46, a discharged employee could not use an administrative decision by
the Department of Employment and Training offensively against his former employer in a
subsequent civil action for wrongftil termination.

ADMINISTRATIVE LAW DIVISION

The Administrative Law Division has three functions: (1) defense of lawsuits against state
officials and agencies concerning the legality of governmental operations, particularly those
seeking injunctive or declaratory relief; (2) legal review of all newly enacted town by-laws; and
(3) preparation of legal opinions for constitutional officers, heads of agencies, and certain other
officials concerning issues arising from the performance of their official duties. During fiscal
year 1999, significant events occurred in each of these areas.

DEFENSIVE LITIGATION

During fiscal year 1999, the Division opened 1,114 cases and closed 1,391 cases. At the
close of the fiscal year, 2,312 cases were pending in the Division. Cases handled by Division
attorneys resulted in 24 reported decisions of the Supreme Judicial Court, 14 reported decisions
of the Massachusetts Appeals Court, 5 reported decisions of the United States Court of Appeals
for the First Circuit, and 10 reported decisions of the United States District Court for the District
of Massachusetts. Division attorneys also were involved in many cases in those courts and in
state trial courts that resulted in unpublished decisions.

Fiscal year 1999 marked the termination of three 25-year-old consent decrees, in King v.

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GOVERNMENT BUREAU

Greenblatt and Williams v. Lesiak, governing the administration of the Bridgewater Treatment
Center for sexually dangerous persons. Early in the fiscal year, the Court of Appeals for the First
Circuit upheld the District Court's modification of the decrees to allow the Department of Cor-
rection to assume responsibility for the Treatment Center in place of the Department of Mental
Health, as provided by a state statute. At the end of the year, after discovery and an evidentiary
hearing, the District Court terminated the decrees entirely, finding that the constitutional harm
underlying the decrees had been remedied and that the defendant state officials had complied
with the decrees in good faith for a reasonable period of time.

This year, the Division again spent significant time and resources defending the sex offender
registry statute and other sex offender related litigation. In John Doe, Sex Offender Registry
Board No. 972 v. Sex Offender Registry Board, the Supreme Judicial Court held that the Sex
Offender Registry Board itself, rather than the Superior Court, may hold the constitutionally
required evidentiary hearings before classifying sex offenders' risk of reoffense for purposes of
community notification. The court further held that the Board may use the preponderance-of-
the-evidence standard in determining an offender's risk of reoffense, rather than the clear-and-
convincing evidence standard advocated by the plaintiff offenders. In John Doe. Sex Offender
Registry Board No. 5350 v. Sex Offender Registry Board, the Supreme Judicial Court reversed
an order of a Single Justice of the Appeals Court refusing to allow the Board to voluntarily
dismiss an interlocutory appeal. In a case involving security classification of prisoners, Lyman
V. Commissioner of Correction, the Appeals Court upheld as constitutional, under federal and
state constitutional provisions concerning self-incrimination, ex post facto laws, equal protection,
and double jeopardy, a policy of the Department of Correction requiring a sex offender to admit
guih to crimes for which he was incarcerated as a condition of moving to a lower security classi-
fication.

In two other cases brought by prisoners, the Division, along with the Criminal Appeals
Division of the Criminal Bureau, successfully defended cases challenging the constitutionality of
a statute requiring DNA testing of certain convicted felons. In Landry v. Attorney General, the
Supreme Judicial Court held that the involuntary collection of a blood sample under the provi-
sions of the DNA database statute did not constitute an unreasonable search and seizure and
therefore vacated a preliminary injunction enjoining the implementation of the statute. In
Murphy v. Department of Correction, the Supreme Judicial Court upheld, under the equal protec-
tion provisions of the state and federal constitutions, the application of the statute to a prisoner
who was originally incarcerated for a covered offense and remained incarcerated, although for an
I uncovered offense, on the effective date of the statute.

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GOVERNMENT BUREAU

As in prior years, the Division handled many heaUh-care related cases. In RoUand v.
Cellucci, nursing home patients with mental retardation seek declaratory and injunctive relief
against various state officials, requiring the state to provide community-based services and
placements to members of the plaintiff class. At the end of this fiscal year, the United States
District Court denied our motion to dismiss, holding that plaintiffs had stated a claim for such
relief under the Americans with Disabilities Act and under various provisions of the Medicaid
Act.

In other Medicaid cases, the Supreme Judicial Court upheld, in Briggs v. Commonwealth, the
Commonwealth's methodology for calculating Medicaid reimbursement for services rendered to
certain individuals who are also Medicare beneficiaries and, in Massachusetts Eve and Ear
Infirmarv v. Commissioner of the Division of Medical Assistance, invalidated regulations of the
Division of Medical Assistance governing reimbursement for inpatient, as opposed to outpatient,
services. In Haverhill Municipal Hospital v. Commissioner of the Division of Medical Assis-
tance, the Appeals Court held that the Division appropriately denied Medicaid reimbursement for
sterilization services because the patient had not executed the required consent form but inappro-
priately denied reimbursement for labor and delivery services performed at the same time.

In another major health-related case, Philip Morris, Inc. v. Harshbarger, handled by the
Division along with attorneys from the Public Protection Bureau, the Court of Appeals for the
First Circuit affirmed a preliminary injimction entered by the District Court, enjoining the imple-
mentation of the Massachusetts Tobacco Ingredient Disclosure Law on the ground that plaintiffs
had a likelihood of success on their claim that the statute effects a "taking" of their property
without just compensation in violation of the Fifth Amendment. In yet another health-related
case, Veksler v. Board of Registration in Dentistry, the Supreme Judicial Court held that the
Board was required to hold a hearing prior to imposing disciplinary sanctions on a dentist, where
the dentist did not contest her culpability but did wish to present evidence relevant to the sanc-
tion to be imposed by the Board.

In fiscal year 1 999 the Division was also involved in several cases involving elections issues.
In Hurst v. State Ballot Law Commission, plaintiffs challenged the inclusion of a referendum
question on the statewide election ballot on various procedural grounds, all of which were ulti-
mately rejected by the Supreme Judicial Court. First, the court upheld the Commission's conclu-
sion that the positioning on the petition form of the required summary of the challenged law and
the names and addresses of the first 10 signers of the referendum petition did not violate the

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referendum provisions of the Massachusetts Constittition. Second, the court held that petition
forms that bore extraneous pre-printed or hand-stamped information were not "exact copies" of
the forms provided by the Secretary of State as required by the applicable statute and constim-
tional provision; however, the court did not apply that holding to invalidate the petitions at issue
in that case. Finally, after remanding the case to the Commission for ftirther evidentiary pro-
ceedings, the court affirmed the Commission's decision that the plaintiffs had improperly pre-
sented challenges to certain signatures. In another case challenging the same referendum peti-
tion on substantive grounds, Miller v. Secretary of the Commonwealth, the Supreme Judicial
Court held that the Attorney General correctly determined that the petition was not excluded
from the referendum process by constitutional language barring referenda on appropriations for
the Commonwealth or its departments, boards, commissions, or instimtions. Accordingly, the
referendum in question, concerning the Electric Industry Restructuring Act, appeared on the
ballot in the November 1 998 statewide election.

The Division also reviewed two initiative petitions in fiscal year 1999, approving one and
disapproving the other as required by amendment article 48 of the state constitution.

The Division also continued to handle various environmental challenges to the Central
Artery/Third Harbor Tunnel Project. In Airport Impact Relief. Inc. v. Wykle. the United States
District Court held that the Federal Highway Administration's approval of changes to the project
without requiring a Supplemental Environmental Impact Statement was not arbitrary and capri-
cious and that the changes did not violate a federal statute limiting transportation projects affect-
ing public parks. Other environment cases handled by Division attorneys during fiscal year 1 999
included Massachusetts Division of Marine Fisheries v. Daley, in which the Court of Appeals for
the First Circuit affirmed the District Court's decision setting aside, as unsupported by the
administrative record, a federal state-by-state quota for scup fishing that disadvantaged Massa-
chusetts fishermen; Silva v. Director of Division of Marine Fisheries, in which the Appeals Court
held that the Division's suspension of plaintiff s lobster permit did not constitute double jeop-
ardy or violate his procedural due process rights; and Baker v. Coxe (handled jointly with the
Trial Division), in which the United States District Court entered summary judgment for the
defendants on plaintiffs' claim that state officials denied their application for a permit to build a
pier in retaliation for plaintiffs' opposition to environmental legislation and their litigation
against a scientist who negatively reviewed their permit application.

The Division continued to handle many cases involving children and families. In Adoption
of Astrid, the Appeals Court held that the trial court's findings of parental unfitness were sup-

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ported by clear and convincing evidence, including the father's conviction for child endanger-
ment in connection with the death of the parents' first child, the mother's abandonment of other
children, the parents' inability to nurture any of their children; and their failure to participate in
any of the proceedings involving Astrid. On the other hand, in Care and Protection of Ian, the
Appeals Court held that the trial court's findings were stale and did not support its conclusion of
current unfitness and that the trial court erroneously placed the burden on the mother to demon-
strate her fitness; the court also held that the trial court applied an incorrect legal standard in
ordering that visitation with the mother occur only if "therapeutically appropriate." In L.G.G. v.
Department of Social Services, the Supreme Judicial Court held that the Department of Social
Services could not be required, via a writ of mandamus, to commence a care and protection
proceeding. In Mannor v. Mannor, the Appeals Court held that a Ohio divorce judgment, includ-
ing child and spousal support orders, was enforceable and could not be overridden by a tempo-
rary order of the Massachusetts Probate Court.

During fiscal year 1999, Division attorneys handled many bankruptcy matters on behalf of
state agency creditors. Two such matters, involving state taxation, resulted in reported decisions.
In Adams v. Coveney, the United States Court of Appeals for the First Circuit held that an
individual who was the president and chief operating officer of a bankrupt corporation was not
personally liable for the corporation's unpaid state taxes, where he authorized his partner, the
corporate treasurer and an attorney, to take charge of paying the corporation's taxes. In Workers'
Compensation Trust Fund v. Saunders, the United States District Court for the District of Massa-
chusetts held that a claim asserted by the state Workers' Compensation Trust Fund to recover
sums that the Fund had paid to the debtor's injured employee prior to the debtor's bankruptcy
filing was not entitled to priority as a claim for an "excise tax."

Division attorneys also handled a substantial number of appeals from Appellate Tax Board
decisions in the state appellate courts, several of which raised constitutional issues. In Commis-
sioner of Revenue v. MuUins, the Supreme Judicial Court held that the Commonwealth's Con-
trolled Substances Tax constitutes "punishment" for purposes of the Fifth Amendment's Double
Jeopardy Clause and, as a result, carmot be imposed in addition to a criminal sentence. In Aloha
Freightwavs v. Commissioner of Revenue, the Supreme Judicial Court upheld a corporate excise
tax on an out-of-state common carrier on the grounds that the carrier had sufficient contact with
Massachusetts to support the minimum excise tax and that the minimum excise tax statute
satisfied Commerce Clause requirements. In Prudential Insurance Co. of America v. Commis-
sioner of Revenue, the Supreme Judicial Court upheld the validity, under the equal protection
provisions of the state and federal constitutions, of the methodology used by the Commissioner

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of Revenue to calculate taxes on insurance premiums of a foreign insurer.

Other tax cases handled by Division attorneys this year included Commissioner of Revenue
V. Cargill, in which the Supreme Judicial Court held that a corporation that does no agricultural
business in the Commonwealth is nevertheless entitled to an agricultural tax investment credit,
based on the value of the corporation's qualifying property in the Commonwealth; Associated
Testing Laboratories v. Commissioner of Revenue, in which the Supreme Judicial Court held
that certain testing equipment was exempt from the sales and use tax where the testing occurs
before the item is sold; A.W. Chesterton Co. v. Commissioner of Revenue, in which the Appeals
Court reversed, as unsupported by substantial evidence, an Appellate Tax Board ruling on the
timeliness of the Commissioner's assessment of an excise tax; and Farrell Enterprises, Inc. v.
Commissioner of Revenue, in which the Appeals Court held that a holding company that filed
consolidated returns could not use the individualized net operating loss deduction belonging to
one of its subsidiaries when that subsidiary could not use the deduction in a particular tax year.

Several cases dealing with retirement benefits, handled by Division attorneys, resulted in
reported decisions during the last year. In Dunn v. Contributory Retirement Appeal Board,
involving competing claims to a decedent's pension benefits, the Appeals Court held that the
Contributory Retirement Appeal Board ("CRAB") was not bound by the findings of the local
retirement board and therefore remanded the matter to the CRAB for a de novo hearing. In
Hollstein v. Contributory Retirement Appeal Board, the Appeals Court affirmed a CRAB deci-
sion denying plaintiffs claim for interest on improperly withheld retirement deductions, as
unauthorized by the applicable statute. In Evans v. Contributory Retirement Appeal Board, the
Appeals Court upheld CRAB's ruling that a teacher's summer school wages were not "regular
n compensation" within the meaning of the retirement statute.

Three employment-related cases handled by Division attorneys in fiscal year 1999 resulted in
I reported decisions. In Commissioner of the Department of Employment & Training v. Dugan,
the Supreme Judicial Court held that the factual findings of a hearing officer in a prior disciplin-
ary proceeding against a former court clerk, which resulted in her discharge, should have been
given preclusive effect in a subsequent proceeding before the Department of Employment &
^ Training on the former clerk's application for unemployment compensation. In P & JV of
Kingston v. Massachusetts Commission Against Discrimination, the United States District Court
dismissed an employer's claim that he was entitled to remove an employment discrimination
proceeding from the MCAD to Superior Court immediately after an employee filed her com-
plaint with the MCAD.

Two cases in which the Division represented the State Racing Commission resulted in re-

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ported decisions in fiscal year 1999. In Wonderland Greyhound Park. Inc. v. State Racing
Commission, the Supreme Judicial Court held that televising of live races constitutes "simulcast-
ing" within the meaning of the applicable statute and that unredeemed vdnnings from bets placed
on such races should therefore be paid over to the State Treasury in accordance with that statute,
rather than retained by the racetracks. In Hotchkiss v. State Racing Commission, the Appeals
Court reversed a Superior Court decision vacating the Commission's ejection of the plaintiff, a
mutuel clerk, from Suffolk Dovms based on his pending state and federal indictments for fenc-
ing, receiving stolen goods, and other theft-related charges. In so doing, the Appeals Court
faulted the Superior Court for failing to accord sufficient deference to the Commission's factual
findings and interpretation of its regulatory authority.

Cases in which Division attorneys represented the Alcoholic Beverages Control Commission
included Chebacco Liquor Mart. Inc. v. Alcoholic Beverages Control Commission, in which the
Supreme Judicial Court upheld the reasonableness, and hence the constitutionality, of a statutory
exception to the Sunday closing laws for package stores located in municipalities within ten
miles of the New Hampshire or Vermont border. In Fran's Lunch. Inc. v. Alcoholic Beverages
Control Commission, the Appeals Court upheld the ABCC's conducting of "sting operations" as
a means of enforcing the prohibition on serving liquor to minors. In Massachusetts Food Asso-
ciation V. Sullivan, the United States District Court granted our motion to dismiss plaintiffs'
claim that a state statute limiting an entity to three retail liquor licenses violates the federal
antitrust laws and denied motions to intervene filed by trade associations of liquor wholesalers
and retailers.

Among the insurance-related cases handled by Division attorneys during the past year were
DiBiase v. Commissioner of Insurance, in which the Supreme Judicial Court held that a policy
holder's constitutional challenge to the legislative conversion of the savings bank life insurance
system to a single stock company was barred by the applicable statute of limitations and that the
policy holder had no right to any greater notice than that provided by the legislation itself; and
Nercessian v. Board of Appeal on Motor Vehicle Liability Policies & Bonds, in which the
Appeals Court held that the scope of judicial review over the Board's decisions to uphold motor
vehicle insurance premium surcharges under the Safe Driver Insurance Plan is limited to correct-
ing errors of law.

In fiscal year 1999, as in prior years, most of the cases handled by Division attorneys in-
volved appeals from agency decisions under the State Administrative Procedure Act. In addition
to many of the cases described above that fall into that category, these cases also included

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Cablevision Systems Corporation v. Department of Telecommunications & Energy, in which the
Supreme Judicial Court dismissed, for lack of standing, Cablevision's appeal from the
Department's order allowing Boston Edison to establish a holding company.

The Division attorneys also handled other significant cases in the federal courts during fiscal
year 1999. In National Foreign Trade Council v. Baker, the United States District Court held
that a nonprofit organization advocating for open international trade had standing to challenge
Massachusetts' "Burma Law," which generally prohibits the Commonwealth from purchasing
goods or services from companies or individuals doing business with Burma, and further held
that the Burma Law unconstitutionally impinges on the federal government's exclusive authority
to regulate foreign affairs. That decision was affirmed by the United States Court of Appeals,
which frirther found that the Burma Law violates the Foreign Commerce and the Supremacy
Clauses of the United States Constitution. In Stem v. Supreme Judicial Court for the Common-
wealth, in which the United States Attorney sought to enjoin individual district court judges from
enforcing a Massachusetts Rule of Professional Conduct against federal prosecutors, the United
States District Court upheld the application of the state ethical rule. In Trustees of Boston
University v. ASM Communications, the United States District Court held that there is no private
right of action to enforce a criminal statute prohibiting the sale of term papers.

MUNICIPAL LAW UNIT

The Attorney General's Office is required by statute to review most legislative actions taken
by the more than 300 towns throughout the Commonwealth, consisting mostly of general, zon-
ing, and historic district by-laws. Under G.L. c. 40, § 32, the Attorney General exercises a
limited power to disapprove local legislative action if found to be inconsistent with the laws and
the Constitution of the Commonwealth. The Attomey General has 90 days from the date on
which the by-law amendments are received to complete his review. Under the Home Rule
Procedures Act (G.L. c. 43B) the Attomey General is required to render an opinion on every
proposed new charter or proposed charter amendment adopted by any city or town in the Com-
monwealth. These reviews are performed by the attomeys in the Municipal Law Unit within the
Administrative Law Division of the Government Bureau, with the assistance, as necessary, of
attomeys from the other bureaus of the Attomey General's Office.

During fiscal year 1 999, the Municipal Law Unit reviewed 660 general by-laws, of which 568 were

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approved (86. 1 %), 25 were disapproved (3.8%), nine were approved with partial deletion (1 .4%), and
58 were returned with a finding that no Attorney General action was required (8.8%); 1 ,065 zoning by-
laws, of which 938 were approved (88 . 1 %), 93 were disapproved (8.7%), 26 were approved with
partial deletion (2.4 %), and eight were returned with a finding that no Attorney General action was
required (0.8%); 1 60 zoning map amendments, of which 1 53 were approved (95.6%), five were
disapproved (3 . 1 %), and two were approved with partial deletion (1.3%); eight historic district by-
laws, of which six were approved (75.0%), one was disapproved, and one was returned with a finding
that no Attorney General action was required; and 1 7 municipal charter matters.

General by-laws pertain to town governance and the exercise of municipal power under the
Home Rule Amendment and other powers expressly conferred by the Legislature. The principal
subjects of general by-law legislation during the past year included wetlands protection, earth
removal, and First Amendment issues.

Zoning by-laws strike the balance between a property owner's right to use and enjoy private
property and a municipality's exercise of police power to regulate uses of land for the common
good. During fiscal year 1999 the most common subjects of local zoning by-law amendments
were adult businesses, telecommunications facilities, growth control, flexible zoning, and open
space techniques.

The attorneys in the Municipal Law Unit are often assigned initial assessment of lawsuits in
which the legality or constitutionality of state and local laws are challenged and are asked to
make a recommendation as to whether the Attorney General should appear and be heard in the
matter. By court rule and statute, notice to the Attorney General is required wherever such a
challenge is made. In most instances the Attorney General does not intervene, and in these
instances the litigation is monitored by Unit attorneys to ascertain whether any municipal law
issue of state-wide significance emerges in the case that might warrant later intervention and
participation by the Attorney General. In addition to matters currently in litigation.

This has been a busy year for the Municipal Law Unit, which consolidated most administra-
tive and operational ftinctions of the Unit in the Attorney General's Western Massachusetts
Office in Springfield. With assistance fi-om volunteer interns, the Municipal Law Unit has well
under way its project of collecting and cataloguing by-law endorsement letters issued by the Unit
since the time when those letters were first generated on word processors and stored electroni-
cally. The objective is to assemble and catalog Unit work product to facilitate our fiiture by-law
review ftinctions and to enhance our consistency with past determinations. The final product

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will also be a useful tool in personnel training when staff changes occur within the Unit. The
Unit has also begun a process for organizing all closed files for archival purposes in ways that
later facilitate search and retrieval.

In other areas, there has been a dramatic increase this year in the number of public records
requests for by-law endorsement letters. During the fiscal year $2,340.27 was remitted to the
state treasury for searching, copying, and mailing. Unit staff responded to an increased number
of letters and telephone calls from local public officials and from the general public relating to
municipal law issues. Unit personnel represented the Attorney General this year in over fourteen
workshops and seminars conducted for local public officials and municipal attorneys.

OPINIONS

The Attorney General is authorized by G.L. c. 12, §§ 3, 6 and 9, to render formal opinions
and legal advice to constitutional officers, agencies and departments, district attorneys, and
branches and committees of the Legislature. Formal, published opinions are given primarily to
the heads of state agencies and departments. In limited circumstances, less formal legal advice
and consultation is also available from the Opinions Coordinator, as is information about the
informal consultation process. The questions considered in legal opinions must have an immedi-
ate concrete relation to the official duties of the state agency or officer requesting the opinion.
Hypothetical or abstract questions, or questions which ask generally about the meaning of a
particular statute, lacking a factual underpinning, are not answered.

Formal opinions are not offered on questions raising legal issues that are the subject of
litigation or that concern ongoing collective bargaining. Questions relating to the wisdom of
legislation or administrative or executive policies are not addressed. Generally, formal opinions
will not be issued regarding the interpretation of federal statutes or the constitutionality of en-
acted legislation.

Formal opinion requests from state agencies that report to a cabinet or executive office must
first be sent to the appropriate secretary for his or her consideration. If the secretary believes the
question raised is one that requires resolution by the attorney general, the secretary then requests
the opinion.

During fiscal year 1 999, the Attorney General issued one formal Opinion, addressed to the Secre-
tary of the Commonwealth (Opinion No. 98/99- 1 ). In the Opinion, the Attorney General reviewed

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proposed ballot questions transmitted by the Secretary and concluded that, with two exceptions, each
of the proposed ballot questions was a question of "public policy" within the meaning of G.L. c. 53, §
1 9, that could appear on the November 1 998 ballot in the form provided in the Opinion. During the
same time period, the Attomey General issued 3 1 letters providing informal advice or declining to give
advice. (A copy of this formal opinion is included at the end of this report.)

THE TRIAL DIVISION

The Trial Division handles civil cases brought against the Commonwealth and its officers
and employees in torts, real estate, employment, civil rights, contracts and other miscellaneous
areas. In almost all of these cases the plaintiffs are seeking money damages, although in some
they also seek injunctive or declaratory relief The Division's AAGs carry heavy caseloads, and
the work of the Division is determined almost entirely by how many cases plaintiffs file; in fiscal
year 1999 the Division received 537 new cases and closed 529 cases. Most of the Division's
cases that are not dismissed by the courts are settled, as most civil cases are nationwide. The
Division emphasizes early evaluation of cases for settlement, disposition by motion, or more
protracted litigation. The Division encourages alternative dispute resolution whenever possible
and appropriate. In all instances the Division's goals are to present strong and effective defenses
to these lawsuits consistent with ensuring fair and just results for the complaining parties and the
Commonwealth.

TORT CASES

The Division opened 370 new tort cases in fiscal year 1999 and closed 373. The following
descriptions offer a sample of the kinds of tort cases which the Division resolved during the year.

• Deandrade v. State Police (Bristol Superior) After a two day trial of this case in
which a State Police vehicle hit the plaintiffs vehicle in the rear, the jury rendered a
verdict for the defendants, finding that the defendant's negligence was not the proximate
cause of the injury.

• Gero V. T. L. T. Construction Co. and Commonwealth (Essex Superior) The
plaintiff sued for personal injuries that allegedly occurred in 1992 at Taunton State
Hospital. The plaintiff claimed that at the time of the alleged incident he was reporting to
a job site for the defendant T. L. T. when he tripped and injured himself on a duct em-
bankment in a maintenance tuimel. At the end of the second day of trial, the case settled
through a payment made by the contractor.

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Sarao v. MDC (Middlesex Superior) After a three day trial, a jury rendered a
verdict for the Commonwealth in a case in which the plaintiff suffered a depressed skull
fracture after tripping over a rope that crossed a walkway at the Waltham Skating Rink.

Most tort cases do not go to trial, but are either disposed of in pre-trial proceedings or are
settled. The following cases are examples of Division tort cases disposed of v^ithout trial in
fiscal year 1999.

• Dever v. Commonwealth et al (Suffolk Superior) Theplaintiffalleged that two
troopers assaulted and falsely arrested her while she was on a photography assignment at
the State House. The court granted the Commonwealth's motion for summary judgment,
finding that there was insufficient evidence to show that the Commonwealth was negli-
gent in training or supervising the troopers.

• Knight V. Commonwealth (Appeals Court) The plaintiff settled a property damage
claim stemming from a motor vehicle accident during the presentment stage. He then
brought suit for personal injury. The Appeals Court held that the personal injury claim
was barred by G.L. c. 258, § 5 which provides that a public employer cannot be subject to
multiple claims stemming fi-om "the same subject matter."

• Linda McNeil et al v. State Laboratory Institute (Suffolk Superior) The Com-
monwealth settled a case brought by parents of a boy whose blood was tested at a Com-
monwealth facility. The test failed to detect the baby's hypothyroidism. A retest of the
blood sample four months later showed a positive test result, but the test was performed
after the baby had developed serious symptoms.

• Michelle Murray et al v. EOCD et al., Essex Housing Court. The Commonwealth
contributed to the settlement of this lead paint case which the plaintiff had brought on
behalf of two daughters against the Commonwealth under a federal housing program.
The plaintiff had retained several experts who were prepared to testify concerning the
extent to which the children had been poisoned.

• Nieves v. Commonwealth et al (U. S. D. C.) The Commonwealth settled this case
in which a Worcester County inmate sued for damages after a correctional officer was
convicted and sentenced to three years in a federal penitentiary for strapping plaintiff into

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a chair and pouring scalding water on him.

• Smith V. Commonwealth et al (Plymouth Superior) Prior to a hearing on the
Commonwealth's summary judgment motion, the defendants settled this wrongful death
action brought by the estate of a Plymouth County inmate who died after being snagged
by a forage feeder that he was cleaning. The Commonwealth contributed $10,000 to-
wards a settlement of $75,000.

REAL ESTATE CASES

The Trial Division handles many different kinds of real estate cases. The cases with the
largest potential exposure to the Commonwealth and the most complexity often involve the
taking of land by eminent domain where landowners are entitled to jury trials in cases where they
are not satisfied with the award the Commonwealth has made to them in the land taking process.
The Division opened 70 cases in fiscal year 1999 and closed 89. The following descriptions
offer a sample of the kinds of real estate cases which the Division resolved in fiscal year 1999.

• Anderson v. MHD (Plymouth Superior) Theplaintiffovmed a commercial building
in Marshfield at the time the Highway Department widened Route 139. The Department
acquired a strip of land which the plaintiff owned, paying the plaintiff $23,000. The
plaintiff claimed that he was entitled to $250,000 because he had to move parking spaces,
reconfigure his parking lot, and could not expand his building. After a three day trial, the
jury reached a verdict which awarded the plaintiff $42,000.

• Colbert v. Commonwealth (Middlesex Superior) The plaintiff sued the Common-
wealth after the Metropolitan District Commission had paid the plaintiff $20,000 when it
took a two-acre parcel of land which the plaintiff owned in Arlington. The Common-
wealth had the property appraised again in preparation for trial and that appraisal valued
the property at $4,300. The plaintiffs expert testified to damages in the amount of
$205,000. The jury reached a verdict of $ 11 ,900.

• Glavickas v. Commonwealth (Worcester Superior) This suit involved a taking on
Route 20 in Worcester. On the day of trial the plaintiff reduced his demand of $68,000 to
$17,500 and the case settled.

• Jaffe V. Commonwealth (Middlesex Superior) The plaintiff brought this suit after
the Highway Department took interests in land on which plaintiff operated an auto tire

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business. The Department made this taking to facilitate the Route 85 improvement
project in Marlborough. The plaintiff demanded an additional payment of $50,000, plus
interest, due to the takings and the serious disruption of his business during construction.
The Commonwealth had paid the plaintiff $6,000, and the case settled for an additional
$16,500.

• Marketplace Center v. Commonwealth (Suffolk Superior) After a two day trial,
the jury awarded the plaintiff $3 1 2,200 in damages, excluding interest, in this case in-
volving the taking of interests in land located in Boston for the purpose of constructing
the Central Artery. The Highway Department's appraiser testified that the plaintiffs
damages were no more than $92,000; the plaintiffs appraiser testified that damages were
$394,000.

• Rite Media, Inc. v. Massachusetts Highway Department et al (SJC) Plaintiff, a
billboard owner, sued the Commonwealth for damages it allegedly incurred as a conse-
quence of the taking of land on which the billboard stood. The plaintiff leased the land
and argued that the billboard was real property that had been taken by eminent domain
with the underlying land. The Commonwealth argued that the billboard was personal
property and that the plaintiff was only entitled to its leasehold interest for which it
suffered no damage. The court, in a 4-2 decision, affirmed a lower court ruling and held
that a lessee's billboard, subject to removal by the lessee, is personal property- as a matter
of law which was not taken in the eminent domain proceeding, and that the plaintiff had
not been damaged by the taking of the leasehold.

• Zora Enterprises, Inc. v. Commonwealth (Appeals Court) The Court affirmed the
grant of summary judgment for the Commonwealth in this case where Zora claimed a
regulatory taking due to the delay in providing an administrative hearing on a wetlands
permit application. The court reasoned that such delays commonly occur and do not
constitute a regulatory taking and that nothing in the record indicated that the delay was
either unreasonable or extraordinary.

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EMPLOYMENT CASES

The Division opened 29 new employment cases in fiscal year 1 999. The following descriptions
offer a sample of the kinds of employment cases which the Division resolved during the year.

• Damery v. Commonwealth (Norfolk Superior) After a three-day trial, a jury handed
down a verdict in favor of the plaintiff, a state trooper, who claimed that his removal from the
State Police SWAT team was in retaliation for a whistleblower letter the plaintiff sent to his
supervisor regarding safety concerns.

• Hwang V. Roxbury Community College (Suffolk Superior) A jury returned a
verdict in favor of the College in this employment discrimination case. The plaintiff, a
Chinese-American woman whose contract as an administrator in the Math and Science
Division had not been renewed, had sued the College, which has a predominantly Afri-
can-American administration, for discriminating against her on the basis of her race and
national origin as well as for retaliating for complaining about the allegedly discrimina-
tory actions of an African- American faculty member who ultimately succeeded her as the
administrator.

• Monahan v. Commonwealth (Suffolk Superior) After a three-week trial, the jury
returned a verdict in favor of the plaintiff on a claim under the whistleblower statute and
awarded plaintiff $250,000 for emotional distress and $900,000 for economic loss. The
court found for the individual State Police defendants on plaintiffs claims for violation of
his First Amendment rights.

• Peguero v. DMR et al (Suffolk Superior) The plaintiffs in this class action suit
alleged race-based disparate impact and disparate treatment with respect to layoffs at the
Femald State School due to privatization. After a three week trial, the jury returned a
verdict for the Department as well as the individual defendants.

• Sinai v. Department of Social Services (Suffolk Superior) The court granted the
Department's motion for summary judgment dismissing the plaintiffs claims that he was
discriminated against on the basis of his national origin and age because he was denied
interviews with the Department for social worker positions.

. Syilman v. Administrative Office of the Trial Court (U.S.D.C.) The court
affirmed the trial court's motion to dismiss plaintiffs claims for failure to prosecute. The

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plaintiff alleged that she was discriminated against on the basis of race and sex when she
was fired from her position as a file clerk at the Newton District Court.

CIVIL RIGHTS CASES

Civil rights cases, defended in both the Trial Division and the Administrative Law Division, present
jmyriad legal problems and can subject the Commonwealth to significant financial liability. Civil rights
[damage awards are not limited by statute, and successfiil litigants may recover interest, costs and
i attorneys fees. The Trial Division opened 1 9 new civil rights cases in fiscal year 1 999. The following
descriptions offer a sample of the kinds of civil rights cases which the Division resolved during the year.

• Davis V. Rennie et al. (U. S. District Court and First Circuit Court of Appeals) The
plaintiff, a client of the Department of Mental Health, brought this suit against eight
mental health workers, a nurse, two former commissioners of the Department and a
former chief operating officer of Westborough State Hospital (the latter three being
referred to as the Supervisors). The plaintiff alleged that his civil rights were violated
when he was physically restrained by several mental health workers. The plaintiff also
contended that one of the health workers struck the plaintiff in the head and the other
workers and the nurse failed to prevent or stop it. The plaintiff alleged that the Supervi-
sors had been deliberately indifferent to the plaintiffs rights by allowing the hiring of the
mental health worker who allegedly assaulted the plaintiff and who was a convicted
felon. Assistant Attorneys General represented all of the defendants except for the mental
health worker who had allegedly assaulted the plaintiff and the nurse. After a four week
trial, a federal jury reached a defendants' verdict in favor of the Supervisors and two of
the mental health workers, but found that five of the mental health workers (including the
mental health worker who had allegedly assaulted the plaintiff) and the nurse had vio-
lated the plaintiffs civil rights, and the jury assessed compensatory and punitive damages
against these defendants. The Commonwealth is appealing the judgment on behalf of the
nurse and the four mental health workers who were not involved in the assault.

• Hvnes v. Commonwealth et al (Suffolk Superior) The court awarded summary
judgment to two defendant social workers on claims of federal civil rights violations
stemming from the placement of the plainUff with her uncle in 1982. Plaintiff claimed
that after the placement her uncle sexually abused her. The court held that the social
workers were entitled to qualified immunity as they did not violate any "clearly estab-
lished" right of the plaintiff of which the defendants should have had knowledge.

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• Judge V. City of Lowell, et al (First Circuit) The court upheld the dismissal of an
equal protection claim against policy officers and a state medical examiner stemming
from allegations that had plaintiff not been black, the defendants would have investigated
her brother's suspicious death with more care and she would have been treated differ-
ently. The court wrote a major decision on the pleading standard necessary to support a
civil rights claim.

• Kellev V. Downey (U. S. D. C.) The plaintiff alleged that the State Police mistak-
enly arrested him for operating under the influence when he had actually suffered a
stroke. He was held at the station for several hours before being transported to the hospi-
tal. The plaintiff asserted that the delay in treatment resulted in permanent left side
paralysis. Plaintiff brought suit for civil rights and ADA violations against five troopers,
the Town of Norwell, and the Commonwealth. After a ten day trial, the jury rendered a
verdict for all of the defendants.

• Meehan v. Trial Court and Chief Justice for Administration & Management

(U. S. D. C.) Plaintiff challenged an order of the Administrative Office of the Trial Court
which barred the plaintiff indefinitely from the Worcester County Courthouse and its
buildings and grounds after he had engaged in a campaign of letters, newspaper advertise-
ments, leafletting, and demonstrations against the probate judge who had denied him
legal custody of his child and limited his visitation. The case was settled for reasonable
attorney's fees after a substitute order was fashioned which merely barred plaintiff from
entering the probate judge's courtroom.

CONTRACTS CASES

The Trial Division opened 45 new contracts cases and closed 43 during fiscal year 1999.
The Division defended a number of cases involving state contracts during the year, including
construction contracts, leases entered into by state agencies, and contracts for the purchase of
goods and services. The following descriptions offer a sample of the cases resolved during the
year.

• Acme Construction Co v. TLT Construction Co. v. Commonwealth (Suffolk Superior)
After mediation, the parties settled a series of claims arising out of the rehabilitation of the
Suffolk County Courthouse. The Commonwealth paid Acme $ 1 00,000 in settlement of

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plaintiff s claims which amounted to approximately $300,000.

• Commonwealth v. Ruggles Center Joint Venture et al (Suffolk Superior) After an
extensive mediation, the defendants settled this multi-party litigation arising out of the air
quality problems at the Registry of Motor Vehicles office at Ruggles Center by paying
the Commonwealth approximately $4.5 million.

• Maxvmillian v. Commonwealth v. Conrail (Suffolk Superior) The court granted
the Commonwealth's motion for summary judgment on a claim for $125,000 in addi-
tional costs arising out of the removal of a ledge on a bridge repair project over Conrail
tracks.

• Mui V. Salem State College (Essex Superior) The plaintiff, a college student sus-
pended for one semester, obtained an injunction against his suspension, pending a deter-
mination of his claims for violation of due process, contract and defamation. The plain-
tiff did not proceed with his case until the College informed him that he could not gradu-
ate until his suspension was served. The plaintiff then moved for an injunction to compel
the College to let him graduate. The court denied the injunction, finding that the plaintiff
would be unlikely to succeed in his claim and had waited too long to litigate it.

• New England Independent Truckers Association, Inc. v. International Brother-
hood of Teamsters et al (U. S. D. C.) The court granted the Commonwealth's motion
to dismiss this case involving various claims under the Labor Management Relations Act
arising out of the provision of health and pension benefits to truckers on the Central
Artery Project.

• Pierce v. Massport v. DCPO et al (Suffolk Superior) The plaintiff was injured
during a fall on the roof of the State Transportation Building. A jury entered verdicts for
all defendants. Massport then sought contractual indemnification from DCPO for its
attorney fees under a contractual provision in which DCPO agreed "to hold the Authority
harmless from any such claims and to defend the Authority from any claims from third
parties resulting from any such defects. . ." The court, after a bench trial, agreed with the
Commonwealth's position that this open-ended pledge of the Commonwealth's credit
violated Amended Article 62, section 1 of the Massachusetts Constitution and was there-
fore unenforceable against DCPO.

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• SCC/Kullman Industries, Inc. v. Commonwealth (Suffolk Superior) The plaintiff
sought approximately $4.5 million in damages incurred when the Commonwealth sus-
pended work for several months on the construction of modular buildings for the
Middlesex Community College due to fiscal problems. After several days of mediation,
the Commonwealth settled the case for approximately $1.8 million.

• T Equipment v. Commonwealth (Suffolk Superior) After a five day trial, the jury
returned a verdict for the Commonwealth on several claims arising during the rehabilita-
tion of the McCormack Building garage. The claims primarily involved the installation
of a cathodic protection system designed to prevent corrosion of the concrete. The
plaintiff sought to recover more than $150,000 for extra costs incurred in the installation
of the system.

MISCELLANEOUS MATTERS

The Division handles a number of cases that do not fit neatly into the categories listed above.
The Division opened 52 and closed 24 of these cases in fiscal year 1999. The cases which were
closed during the year included the following:

• Azubuko V. Attorney General (SJC for Suffolk County) The court dismissed a
chronic pro se litigant's petition for a writ of mandamus seeking review of an injunction
"precluding him from filing any new acfion without prior written approval of the Civil
Regional Administrative Justice of the Suffolk County Superior Court." In entering the
injunction, the lower court found that the plaintiff repeatedly filed the same claims
against the same or related parties. The court ruled that mandamus is not the proper
vehicle to seek appellate review of an injunction issued by the Superior Court.

• Clemente v. State Board of Retirement (Plymouth District Court) The court
affirmed the Board's decision which revoked plaintiffs state pension benefits based upon
plaintiffs participafion in a criminal scheme to defraud the Commonwealth by stealing
police promotional examinations, giving or selling them to other police officers, and
breaking into state offices to alter test scores so that police officers could obtain promo-
tions and salary increases.

• Cramar v. PET (Appeals Court) Plaintiff voluntarily dismissed its appeal of a DET
ruling which found that individuals who worked for plaintiff, a home inspection company, were
employees and not independent contractors for the purposes of tiie unemployment insurance

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fund.

ABANDONED HOUSING PROJECT.

Several members of the Trial Division have been actively involved in the Attorney General's
Abandoned Housing Project. This past year, Assistant Attorneys General have been successful
in having the courts appoint receivers in Brockton and Boston, while the project's work contin-
ues in these and other cities with respect to other properties. The project is designed to assist
local community groups in choosing and appointing their own people to take over abandoned
houses which, due to the absentee owner's indifference, has created a health, safety and crime
hazard for the community. The Assistant Attorney General's role consists of assisting the com-
munity groups by petitioning the respective court in the name of the Attorney General for an
order permitting the community to appoint their receiver and take charge of the blighted prop-
erty, for the benefit of the neighborhood. Once the receiver is appointed, the community itself
(and its receiver) takes over the actual repair and rehabilitation.

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ENVIRONMENTAL PROTECTION DIVISION

The Environmental Protection Division (EPD) serves as litigation counsel on environmental issues for
various state agencies, particularly those within the Executive Office of Environmental Affairs. EPD
handles the Commonwealth's civil litigation to enforce environmental protection programs established by
state statutes and regulations, including laws governing air pollution, water pollution, water supply,
waterways, wetlands, hazardous and solid waste. EPD also plays a key role under the Clean State
Initiative to ensure that the Commonwealth's own agencies abide by state and federal environmental
agencies, and in doing so the Division may bring enforcement actions against those agencies in court
where the Attorney General, in his enforcement discretion, deems action necessary. Based on the
Attomey General's broad authority to protect the environment of the Commonwealth, EPD initiates and
intervenes in state and federal litigation, and participates in administrative proceedings before federal
agencies on significant environmental issues. EPD defends lawsuits challenging the actions of state
environmental agencies and the legality of state environmental laws.

During fiscal year 1999, EPD handled enforcement proceedings leading to judgments requir-
ing future payments to the Commonwealth of $3,269,416. These are figures for penalties and
cost recovery awarded in fiscal 1 999, whether or not actually paid in fiscal 1 999. Actual pay-
ments received by EPD, in fiscal year 1999, were $2,817,539 for civil penalties and $1,886,688
for hazardous material cost recovery, for a total of $4,704,228. Other cases resulted in court
judgments requiring private parties to undertake costly cleanups of environmental problems for
which they were legally responsible — a savings of millions of dollars to the Commonwealth. In
fiscal year 1 999, the Division opened 45 new cases or matters and closed 1 45 cases or matters.

STATE ENFORCEMENT AND COST RECOVERY LITIGATION

One of the most important functions of EPD is to bring litigation to enforce state and
federal statutes. In the past fiscal year EPD handled numerous major enforcement cases includ-
ing the following:

AIR POLLUTION

Significant air pollution matters during the fiscal year included Commonwealth v. Borden &
Remington Corporation. The defendants, a Fall River Company and one of its owners, agreed to
pay $375,000 in civil penalties for operating without air permits, under-reporting emissions of volatile

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organic chemicals, failing to install a wastewater pretreatment system for naphthalene, discharging
heated water from its industrial processes into Mount Hope Bay without a permit, and violating hazard-
ous waste management regulations. The defendants agreed to pay an additional $ 1 00,000 to the
Massachusetts Environmental Trust to be used for a water-related program to benefit development in
Fall River. They also agreed to conduct comprehensive environmental auditing of their facilities.

In Commonwealth v. Bay State Sterling. Inc., a Westborough company agreed to pay a
$850,000 civil penalty to settle the Commonwealth's allegations that it had violated state air
pollution and hazardous waste laws. The consent judgment in the case required the company to
come into full compliance and to implement an environmental mitigation package that includes
conducting an envirormiental audit and reducing or eliminating the use of eleven toxic chemicals.

The final judgment entered in Commonwealth v. Churchill Coatings Corporation required a
Massachusetts company that pre-stains and pre-paints wood siding for use in the building indus-
try to pay a $150,000 civil penalty and to reduce over time its overall emissions of volatile
organic compounds. The company failed to obtain fi-om DEP all of the air pollution permits
required for its two facilities in Worcester and Palmer. This was the third in a series of
woodcoater cases designed to encourage members of the Massachusetts woodcoating industry to
adopt new materials and processes to reduce their emissions of volatile organic compounds.

In Commonwealth v. Boston Edison Company, the first enforcement matter based on a
company's Continuous Emissions Monitoring System (CEMS), Boston Edison agreed to pay a
civil penalty of $205,000 for violations of its air permit at its Mystic Power Station in Everett.
The CEMS data revealed that the plant had substantially exceeded permit limits for nitrous
oxides and carbon monoxide.

We brought an action in Attorney General v. Massachusetts Department of Highways,
against a state agency, state contractors, and other parties for environmental violations relating to
demolition of 150 Causeway Street in Boston for the Central Artery Project. The suit alleges
unlawful asbestos abatement practices in violation of the Massachusetts Clean Air Act and
disposal of asbestos at an unapproved site in violation of the Solid Waste Disposal Act.

I In Attorney General v. Executive Office of Transportation and Construction, we filed suit
: against two state agencies alleging violations of Department of Environmental Protection regula-
tions that require the completion of various transit improvement projects as mitigation for the air quality
llimpacts of the Central Artery Project.

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We obtained a judgment in Commonwealth v. Consolidated Smelting and Refining Corpora-
tion, in order to prevent additional contamination. The judgment permanently enjoins the defendant
from operating its smelting equipment without Department of Environmental Protection approval,
emitting lead and cadmium pollution in violation of DEP regulations, or reactivating or dismantling its
contaminated equipment except pursuant to OSHA regulations.

HAZARDOUS MATERIALS

EPD brings lawsuits against responsible parties to remediate conditions caused by oil or
hazardous materials, including litigation to recover costs incurred by the Commonwealth when it
undertakes cleanup actions. In addition, EPD brings enforcement actions to require proper
management, storage and disposal of hazardous wastes and to collect penalties for violations. In
the last fiscal year, EPD handled the following major hazardous waste cases.

Together with the Department of Justice, the federal Environmental Protection Agency, the
state Department of Environmental Protection, the City of Pittsfield and other federal and state
agencies, we reached an agreement-in-principle in September of 1 998 with the General Electric
Company regarding the clean up of PCB contamination at the GE plant and elsewhere in
Pittsfield, and in the Housatonic River. Under the agreement, GE will also pay $ 1 5 million for
the restoration of damaged natural resources, undertake various other natural resource restoration
or enhancement projects, and provide brownfields economic redevelopment benefits for the City
of Pittsfield worth several million dollars. Since September of 1998, the office has been in-
volved in extensive negotiations to effectuate the agreement-in-principle through the filing of a
federal consent decree.

In Commonwealth v. PQ Corporation, the U.S. District Court approved a consent decree
concerning the matter involving the Nyanza Superfund Site in Ashland. Together with the
federal government, we sought recovery of cleanup costs and natural resources damages fi-om a
group of operators at the site. The decree requires the parties to pay $8 million of which approxi-
mately $1 .4 million will be paid to the Commonwealth in reimbursement of cleanup costs. The
Commonwealth trustee for natural resources will be paid $230,000 for injury to groundwater at
the site.

We filed a complaint against, and entered into a settlement with, the MBTA in Attomey General v.
MBTA regarding asbestos and oil contamination at an abandoned power plant in South Boston. The

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consent judgment requires that the contamination at the site be abated and the building demoHshed in
accordance with a set schedule.

In Commonwealth v. City of Waltham & Mantakara, we settled an action charging the defendants
with failing to report a large spill of fuel oil at the Waltham High School. About 1 6,000 gallons reached
wetlands behind the school, substantially damaging the vegetation and wildlife. The City will assess and
clean up the site, remedy the environmental damage, audit the school department's environmental
compliance, and implement an environmental management system for the school department. In addi-
tion, the City and a school official will pay civil penalties.

In Commonwealth v. Edward Lyons, Jr.. the Attorney General successfully enforced a
Suffolk Superior Court final judgment and collected $25,000 owed for response costs incurred
by DEP to clean up a site in Roxbury.

In Commonwealth v. Sak Recycling, the defendants agreed to pay a $50,000 civil penalty in
settlement of the Commonwealth's allegations regarding hazardous waste violations at a site in
South Boston.

WATER POLLUTION/WATER SUPPLY

In Commonwealth v. Perini Corporation, we settled an action against a Central Artery con-
tractor involving unlawful discharge of a grouting material into the Fort Point Channel. The
contractor, Perini/Kiewit/Cashman, is constructing a portion of the Interstate-93 northbound
tunnel that will run along Atlantic Avenue and underneath the South Station subway station. The
complaint alleged that soon after grouting began, some of the waste grout was allowed to enter a
i system of sedimentation tanks that ultimately discharge into the Fort Point Channel. Under the
terms of the settlement, Perini will pay a $40,000 civil penalty. The contractor also agreed to
have a qualified environmental or civil engineer inspect on a daily basis discharge points to the
i Boston Harbor.

j The Tovm of Marshfield entered into a consent judgment in Commonwealth v. Town of
Marshfield that resolves certain allegations that it violated the state Clean Water Act by discharg-
ing sewage into groundwater and the South River. The consent judgment requires the Town to install a
wastewater treatment plant at its high school complex that will help protect groundwater that feeds into
i nearby municipal water supply wells. Since the filing of the Commonwealth's lawsuit, the town has also

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disconnected a pipe at another school site that discharged sewage directly into the South River and
replaced the septic system at that site, and has brought enforcement actions against town businesses to
bring their failed sewage disposal systems into compliance with the septic system regulations known as
Title 5.

We filed a settlement agreement and agreement for judgment in Attorney General v. Adjutant
General. Massachusetts National Guard for the Guard's violations of the Public Drinking Water
Act at Massachusetts Military Reservation (MMR) on Cape Cod. Despite violation notices from
the Department of Environmental Protection and an administrative consent order, the Guard had
failed to purchase a parcel of land around its primary drinking water well at MMR so as to
protect the well from contamination. Pursuant to the judgment, the Guard has filed legislation to
acquire die parcel or take it by eminent domain and has begun negotiations with the owner to
purchase the land.

We settled an action against three construction companies in Commonwealth v. Kajima
Engineering and Construction Company, in connection with a fish kill in Quincy. While work-
ing on an approved Army Corps of Engineers flood control project, the defendants diverted water
fi-om the Town River during rainbow smelt spawning season, an action specifically prohibited by
the Department of Environmental Protection. The defendants' actions allegedly caused the
destruction of millions of rainbow smelt eggs in what is one of the most productive runs for this
valuable sport and commercial fish. Under the settlement, the defendants agreed to pay $75,000
to the state Natural Resources Damages Fund for compensation for injured, killed or damaged
fish or fish spawn. The defendants also paid a $50,000 civil penalty for violations of the Massa-
chusetts Wetlands Protection Act and Clean Water Act.

After a trial in Commonwealth v. Three M Homes Corporation, the court found an owner of a
mobile home park in contempt for failing to comply with a preliminary injunction that required
the defendant, among other things, to pump out three times per week the failed septic system at
the Heritage Village Mobile Home Park in Warren. The injunction was entered in an effort to
avoid fiirther breakouts of raw or under-treated sewage, which the park's residents have suffered
with for years.

We notified the Department of Justice (pursuant to 22 U.S.C. sec. 1365), in Commonwealth
V. Veterans Affairs Medical Center/West Roxbury. of our intent to file suit against the West
Roxbury VA for federal Clean Water Act violations. Following our notice, we represented
MWRA in the negotiations that resulted in the VA's achieving compliance with discharge limits

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for inter alia, formaldehyde, silver and mercury.
WETLANDS

Judgment was entered against the defendants in Commonwealth v. Triton Construction
Corporation for $35,000 in civil penalties for wetlands violations at their residential subdivision
in Southborough. During construction, the defendants failed to use necessary siltation and
erosion control measures at the site, causing wetlands damage. Before judgment was entered, the
defendants were required to install appropriate siltation control measures. In addition to the civil
penalty payment, the judgment required the defendants to restore the damaged wetlands.

We settled an action against homeowners in Dover in Commonwealth v. McCormack, who
allegedly cut wetlands vegetation, altered a stream bed, and filled approximately an acre of
wetlands on their property with soil and woodchips, all without a permit. Under the terms of the
settlement, the defendants will restore the altered wetlands and pay a civil penalty of $12,000.

SOLID WASTE

We filed a complaint in Commonwealth v. Hub Construcfion and Maintenance Co., Inc., for
dumping of solid waste on the defendant's property abutting Striats Pond in Hull, an area of
crifical environmental concern, in violation of the Solid Waste Disposal Act. The court granted a
temporary restraining order enjoining the defendant from accepting, processing, or disposing of
solid waste on the property. An agreed-upon preliminary injunction was entered in late January.

PESTICIDES

In August 1998, we notified 64 Massachusetts pest control companies of our concems that
their yellow pages advertising, which includes claims of safety or environmental harmlessness,
violates tlie Massachusetts Consumer Protection Act, G.L. c. 93A. We then met with the pest
control companies to discuss our concems. We are negotiating assurances of discontinuance
with the alleged violaters in this joint Department of Food and Agriculture/Attorney General's
Office project that we hope will result in nearly universal voluntary compliance with respect to
advertising by pesticide applicators.

CLEAN STATE INITLATIVE

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The Attorney General continues to exercise his enforcement discretion to bring actions I

against agencies and authorities. EPD began a number of enforcement actions against state
agencies and authorities this year. They have involved ongoing harm to the environment, failure to
comply with the terms of administrative consent orders, failure to meet Clean State-ordered deadlines
and matters that failed to make the Clean State list at all.

Pursuant to his authority under G.L. c. 12, §11D, the Attorney General sent to the Legislature
an annual report on the Clean State Initiative. The report discussed the successes of the Clean
State Initiative in the previous year, such as the concerted effort to address the Commonwealth's
underground storage tanks. It also discussed the environmental problems that state agencies and
authorities have failed to correct, the cleanup deadlines that have been missed and the numerous
problems originally ranked as "priorities" that have been relegated to lesser status. The report
pointed out that the list of problems requiring remediation had grown by over 50% in four years
and is expected to increase dramatically as environmental audits of state facilities are completed.
The report noted that the professional auditing that was being done of state agency compliance,
which was started in response to recommendations made by the Attorney General in 1995, comes
extremely late in the program and that agencies and authorities will therefore have little time to
deal with these problems before the June 30, 2000 deadline for the resolution of all matters.

The report also criticized the lack of long-range planning and the failure to adopt specific
action plans for resolving the problems. It documented the failure expeditiously to develop and
match cost estimates for each problem with existing funding, and pointed out that over 40% of
the matters do not have funding identified. The report concluded that the year 2000 goal will be
difficult to reach without a renewed commitment by the Administration and the agencies to
Clean State. Lastly, it urged agencies and authorities to develop environmental management
systems that will enable them to stay in compliance once they have achieved it.

MASSACHUSETTS MILITARY RESERVATION

While the Massachusetts Military Reservation ("MMR") on the Upper Cape is well known as
one of the Commonwealth's worst environmental disasters, it is also a tremendously valuable
state resource. Because of the Cape's growing population and demand for drinking water, and
because much of the Upper Cape's aquifer has been damaged by past military activities, it has
become clear that the groundwater under Camp Edwards - the relatively undeveloped northern
portion of the base - is critical to the Upper Cape's future. Though the ongoing EPA-mandated

GOVERNMENT BUREAU

study of Camp Edwards groundwater has revealed some explosives contamination, this groundwater is
the best remaining option for supplying additional water to the Upper Cape. With some 14,000 acres
of open space (the largest undeveloped parcel of state land on the Cape), Camp Edwards also has
unique value as wildlife habitat and a buffer to increasing development.

The Office of the Attomey General has continued to provide Cape citizens and officials with
(advice on legal issues relating to land use at Camp Edwards, as they plan for the best future use
of the land. The Office provided substantial input into the Community Working Group's Master
Plan for the future use of the base, and has also given technical assistance to legislators who have
been drafting legislation to protect and develop drinking water supplies at Camp Edwards.

This past winter, the Attomey General entered into a Memorandum of Agreement v^th the

Air Force and other federal and state agencies to form a Natural Resource Trustee Council for

MMR. This Council will conduct an assessment of damages to natural resources caused by

contamination from MMR, and will seek to restore or replace these resources. A central part of

the Council's mission will be to replace water supplies lost or damaged by MMR contamination.

The Office has, so far, succeeded in obtaining funding from the Air Force for the Council and

v^ll continue to press the Air Force to fund a thorough natural resource damage assessment.

DEFENSrV^ CASES

One of the critical functions of the Attomey General's Office is the defense of lawsuits
challenging the regulatory and enforcement actions of state environmental officials and agencies.
These cases involve numerous challenges to state permitting decisions, as well as challenges to
the legality of state environmental regulations.

The court upheld DEP's decision in American Reclamation Corporation v. Department of Environ-
mental Protection, to deny plaintiff ("Amrec") a determination of beneficial use for a product called
LANLOC-7, a mixture of petroleum-contaminated soil, asphalt and clay, for use as final landfill cover.
The court affirmed that Amrec was not entitled to an adjudicatory hearing on DEP's denial and upheld
DEP's decision on the grounds that Amrec did not meet its burden of showing that LANLOC's use
would cause no adverse impact.

The case of Water Works Laboratories Inc. v. DEP involved a challenge to DEP's decision to
decertify this laboratory company from performing analyses of public water supplies.

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DEP decertified the lab for one year for submitting falsified data to support the lab's application.
We successfully defeated the plaintiflTs motion for a preliminary injunction. The company subsequently
dismissed its suit with prejudice.

In Quirk v. Department of Environmental Protection, the owner of a large automobile dealership
challenges DEP's issuance of a permit to the Town of Quincy and aprivate developer for ajoint devel-
opment of a golf course and recreational complex on land in Quincy formerly used as a landfill. The
permit allows the developers to test soil excavated fi-om the Central Artery before using it to cover the
former landfill. The plaintififcomplains that the traffic and construction impact associated with this large
project has damaged his business.

The Supreme Judicial Court issued a decision in General Electric v. Department of Environ-
mental Protection, regarding GE's efforts to obtain certain documents from the Department of
Environmental Protection. While the Court upheld the lower court ruling that DEP had not
waived its ability to withhold certain documents by sharing these documents with the federal
government, it denied DEP's ability to withhold documents based solely on the attorney work
product privilege, holding that that privilege had been abrogated by the enactment of the state
public records law.

In East Ashland Street Realtv Trust v. DEP, we achieved the dismissal of a party's appeal of
the assessment of an administrative penalty based on the plaintiffs failure to comply with the
procedural requirements of the Administrative Penalties Act.

In Burkhard Corporation v. Rojo, the plaintiffs, proponents of a hotel development in Arling-
ton, sued several residents for defamation based on comments made by the residents in connec-
tion with an appeal of a wetlands permit for the project. We filed an amicus brief in support of
defendants' special motion to dismiss pursuant to G.L. c. 231, § 59H. The Attorney General's
brief supported the residents' argument that the defamation action should be dismissed as it was
a SLAPP (strategic lawsuit against public participation) suit. Subsequent to our filing the brief,
the parties to the litigation settled the action.

Litigation concerning the right of a developer to construct a landfill in the Town of Douglas
was declared moot by the Supreme Judicial Court in Douglas Enviroimiental Associates v.
Department of Environmental Protection, et al., after the site was taken pursuant to chapter 22 1
of the Acts of 1998. Because the question remains relevant to the valuation of the site, the Court

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nevertheless reviewed and endorsed the Superior Court's decision that the developer would have been
entitled to a permit.

NEW LEGISLATION - BROWNFIELDS

The Attorney General's legislative efforts focused on securing passage of a brownfields bill
to spur clean ups and redevelopment, especially in areas of economic need. The Attorney Gen-
eral worked closely with members of the Joint Committee on Natural Resources and Agriculture,
the House and Senate Committees on Ways and Means, and an appointed Conference Committee
to secure passage of the Brownfields Act (St. 1998, c. 206), which was signed into law on Au-
gust 5, 1998. Since that time, the Attorney General has worked to implement the new law,
including promulgating regulations for a new brownfields covenant not to sue program that was
mandated by the Legislature at the recommendation of the Attorney General. We also continued
to push for brownfields development opportunities at locations across the Commonwealth. For
example, pursuant to a consent judgment we negotiated, we oversaw the sale of property owned
by a defunct rustproofmg company in Medford. DEP had removed cyanide-contaminated soil
from the site in the 1980s and the property has been vacant since. This property then sold for
$549,000, with the sale proceeds split among DEP, the City of Medford, and a mortgagee who
took the lead the marketing the property. The property was purchased by an autobody repair
business that plans also to rent space to other businesses.

NATIONAL AIR POLLUTION ISSUES

The Office of the Attorney General is deeply involved in many Clean Air Act issues of
national importance.

Ozone &: Fine Particulate NAAOS

In American Trucking Association v. Environmental Protection Agency, the Court of Appeals for the
B.C. Circuit issued a ruling overturning EPA national ambient air quality standards for ozone and fine
particulates. Because we believe that EPA's tougher standards are needed to protect public health,
Massachusetts is an intervenor in that case in support of EPA's actions. EPA, joined by Massachusetts,
and New Jersey have filed Petitions for Rehearing, With Suggestion for Rehearing In Banc.

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Interstate Air Pollution Transport

In Petition to Reduce Emissions from Ohio River Valley Power Plants, EPA issued its technical
findings on the petitions of 8 states, including Massachusetts, for reductions in omissions of nitrogen
oxides by power plants and other large industrial sources in upwind States. On Massachusetts' petition,
EPA found that power plants in West Virginia and Ohio were contributing significandy to violations of
the new ozone standard in Massachusetts. Because EPA had already proposed to revoke the old
standard in Massachusetts, it declined to make a finding regarding contributions to violations of the
standard in Eastern Massachusetts, but it found that sources in West Virginia were contributing to
violations of the old standard in Western Massachusetts. EPA also established a default remedy that
will take effect by May, 2000, if the States in which the target sources are located do not propose
acceptable action plans sooner.

We intervened with other Northeastem states in State of Michigan v. Environmental Protection
Agency, in defense of EPA's rule calling upon 23 States to revise their Clean Air Act section 1 26
implementation plans to reduce emissions of nitrogen oxides, which react in the atmosphere in the
summer to form smog. The D. C. Circuit Court of Appeals has stayed the rule pending review; the case
will be argued to the Court in September, 1 999.

Low Emission Vehicle Requirements

In American Automobile Manufacturers Assn. v. Department of Environmental Protection,
the Court of Appeals for the First Circuit issued a ruling in our appeal of a District Court judg-
ment invalidating a rule requiring the automobile manufacturers to produce and deliver zero
emissions vehicles (i.e., electric cars) in 1998-2000. The Court referred some key questions to
the federal Environmental Protection Agency based on primary jurisdiction. We filed written
corrmients with EPA concerning these questions.

We filed a brief amicus curiae in Avers v. Environmental Protection Agency, in support of a
petition contesting EPA regulations establishing a national low emission vehicle program. We
argued that the NLEV program has diverted northeastem states from the effort to adopt the
cleaner California program, and has thereby resulted in dirtier air in the Northeast even if it will
lead to cleaner air somewhere else. After we filed our brief, we were informed that the petition-
ers had tentatively settled the case for commitments by EPA to promote development of "alterna-
tive technology vehicles."

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CENTRAL ARTERY/TUNNEL PROJECT CIVIL COST RECOVERY

The Central Artery /Tunnel Project Civil Cost Recovery unit was established in the Govern-
ment Bureau in December 1997, as a part of enhanced state oversight efforts on the multi-billion
dollar Central Artery/Tunnel Project ("CA/T Project"). Earlier that year, the Legislature had
provided dedicated funds for the Attorney General, the State Auditor, and the Inspector General
to supplement their ongoing activities with respect to the CA/T Project, and to coordinate those activi-
ties through the CAyT Project Oversight Coordination Commission ("the Commission"). The Attomey
General has asked the Legislature to renew this dedicated fiinding, as the CA/T Project now proceeds
in its peak construction period.

The CA/T Project Civil Cost Recvoery unit in the Government Bureau is presently made up
of an attomey director and support staff. Its work often is performed jointly with the Criminal
Bureau and the Business and Labor Protection Bureau.

The unit director investigates allegations of wrongdoing on the CA/T Project; pursues civil
cost recovery actions; works with Criminal Bureau and Business and Labor Protection Bureau
attomey s on criminal matters; coordinates CA/T Project activities within the Office; participates
in the activities of the Commission; proposes cost-containment and anti-fraud measures to the
CA/T Project; and takes part in drafting and promoting state False Claims Act legislation.

THE CENTRAL ARTERY/TUNNEL PROJECT

The CA/T Project, which is now being run by the Massachusetts Turnpike Authority, has
been described as the largest, most complex, and technologically most challenging highway
project in the history of the United States. Among other things, the Project will replace Boston's
deteriorating and inadequate elevated Central Artery (part of Interstate 93) with an eight-lane
vmderground expressway, will extend the Massachusetts Turnpike (Interstate 90) to Logan
Airport via the Ted Williams Tunnel under Boston Harbor, and will create 27 acres of open
space in the heart of the city. The Project is designed to improve traffic flow and traffic safety in
one of the country's oldest and most congested cities, utilizing a number of state-of-the-art
engineering and constmction techniques.

The estimated total cost of the CA/T Project, the time anticipated for its completion, and the
portion of the total costs to be paid by the Commonwealth have grown substantially over the past
decade. In 1 989, CA/T Project management estimated that constmction would be completed in

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GOVERNMENT BUREAU

1 998 at a cost of $4.4 billion. Project management now targets completion in 2004, at a cost of $ 1 0.8
billion, and this figure has been criticized as overly optimistic. The federal government previously had
assumed responsibility for approximately 90 percent of the Project's costs, but a new federal fimding
formula requires the Commonwealth to pay a larger share of the costs. All of these factors make
effective oversight, criminal enforcement, and cost recovery activities even more critical for Massachu-
setts taxpayers.

FISCAL YEAR 1999 CA/T PROJECT OFFICE ACTIVITIES

Over the past several years, the Attorney General has engaged in numerous investigations,
civil actions, and criminal prosecutions to protect the public interest in the CA/T Project. The
CA/T Project Civil Cost Recovery unit in the Government Bureau allows for enhanced coordina-
tion of activities within the Attorney General's Office, and a more focused relationship with CA/
T Project management and with others involved with the Project outside the Office.

As in the past, the range of matters in the Office relating to the CA/T Project during fiscal
year 1999 has been diverse. Several matters reported by informants are imder investigation. The
Office has prosecuted a procurement fraud matter (the defendant is now a fugitive), and has
resolved allegations of improper billing. The Administrative Law Division has defended the
decisions of agencies and agency officials in matters including the Blue Line MBTA station and
the adjacent East Boston roadways and parks, and the use of excavation materials to cap and
close landfills. The Environmental Protection Division ("EPD"), among other things, has
brought actions against other state agencies and private businesses for alleged violations of
environmental requirements. The Trial Division has defended the Commonwealth in a number
of contract and tort actions arising out of the CA/T Project, including a challenge to a require-
ment that contractors contribute to union benefit funds, and several contractor claims for addi-
tional payments. In eminent domain cases, the Trial Division has saved the CA/T Project more
than $37 million during the past year, and more than $109 million to date, in inflated compensa-
tion claims brought in connection with property takings for the Project.

In the Business and Labor Protection Bureau, the Fair Labor and Business Practices Division
has criminally prosecuted a number of businesses and individuals for violating the prevailing wage laws,
and has advised Project personnel and employers about the governing laws and recent amendments.
The Insurance Fraud Division likewise has prosecuted several cases of worker's compensation fi^ud,
an area in which the Office has taken a "zero tolerance" approach in order to deter such offenses fi^om
occurring once the CA/T Project's construction activities begin to wind down.

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GOVERNMENT BUREAU

OVERSIGHT COORDINATION COMMISSION

The Attorney General, the State Auditor, and the Inspector General make up the C A/T Project
Oversight Coordination Commission, a body charged by the Legislature with responsibility for coordi-
nating oversight efforts among the three ofiBces. Senior staff from each office, including the director of
the Government Bureau's C A/T Project Civil Cost Recovery unit, meet monthly to discuss activities and
plans, consistent with each oflBce's confidentiality requirements. The Commission invites legislators to
attend special meetings that are held quarterly.

The Commission is soliciting detailed information from other public construction "mega-
projects" (costing more than $1 billion) throughout the country regarding anti-fraud and cost-
containment measures that they are employing. This survey, prepared with input from each of
the Commission member offices, is intended to generate information that can be put to use on the
CA/T Project.

OTHER ANTI-FRAUD AND COST CONTAINMENT MEASURES

The Attorney General's Office has established a toll-free 24-hour telephone "hotline" to help
identify fraud, waste, and abuse on the CA/T Project. The Attorney General's Big Dig Fraud
Hotline - 1-888-TIP-BGDG (1-888-847-2434) - is answered by staff during business hours and
by voicemail at all other times.

Through June 1999, the Hotline has logged more than 150 calls. Calls that can be better
addressed by the Project itself, or by another state officer such as the State Auditor or the Inspec-
tor General, are referred accordingly. All calls to the hotline are confidential.

The unit also works with Project management to encourage the implementation of measures
that will tend to reduce the incidence of fraud and abuse, and to reduce the incidence and cost of
defensive lifigation.

FALSE CLAIMS ACT LEGISLATION

An important objective of the CA/T Project Civil Cost Recovery unit is the enactment of
state False Claims Act legislation. The False Claims Act would significantly enhance the ability
of the Commonwealth to recover state funds that are obtained improperly through the submission
of false claims or false statements to the Commonwealth, to its agencies or contractors, and to

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GOVERNMENT BUREAU

state authorities like the MBTA and the Turnpike Authority. The legislation would be of special signifi- ,
cance with regard to the extraordinarily costly CA/T Project, which involves billions of dollars and I

thousands of personnel.

The False Claims Act would authorize the Commonwealth to recover treble damages, civil
penalties, costs, and attorney's fees from defendants found to be liable for submitting false j

claims and false statements for funds. The statute also would authorize the Attorney General to
compel the production of documents, testimony, and interrogatory responses before a case is
litigated, in order to determine whether allegations warrant further action. A key provision of the
legislation would meaningfully encourage individuals to come forward with information about
fraud, by allowing them to share in the Commonwealth's recovery and by protecting them from
retribution by their employers.

During 1998, the Senate passed a similar bill, but the legislation died in the House at the end
of the session. A new bill was introduced in the 1999 legislative session, incorporating several
changes designed to facilitate the its enactment and implementation. Attorney General Tom
Reilly testified in support of this bill before the Joint Committee on the Judiciary, on May 25,
1999.

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PUBLIC PROTECTION
BUREAU

Civil Investigations Division

Civil Rights and Civil Liberties Division

Consumer Protection and Antitrust Division

Public Charities Division

Chief Prosecutor

Regulated Industries Division

Public Protection Bureau

The Public Protection Bureau manages and oversees civil and criminal affirmative litigation
on behalf of the Commonwealth and its citizens, the development of policy, legislative and
regulatory proposals, and persoimel for five divisions: Consumer Protection and Antitrust Divi-
sion, Regulated Industries Division, Civil Rights and Civil Liberties Division, Public Charities
Division and Civil Investigation Division. In addition, the Bureau has an office of the Chief
Prosecutor, which brings criminal actions in appropriate cases. The divisions and the chief
prosecutor's office also conduct investigations and publish reports in areas of interest arising out
of their activities. The Bureau also includes the Consumer Complaint and Information Section
and oversees the Local Consumer Aid Fund, which provides grants to local community groups to
mediate and resolve consumer complaints at the local level.

The Bureau has an office of the Legislative Liaison, which coordinates testimony for hear-
ings before the Legislature on issues of concern to the Bureau. This past year, the Bureau testi-
fied on a variety of legislative items, including: (1) medical records confidentiality; (2) access for
individuals with disabilities; (3) establishment of a registry of abusive home care providers; (4)
health warnings on the advertising of alcoholic beverages; (5) health insurance benefits for
domestic partners of public sector employees; (6) electronic shelf pricing; (7) community rein-
vestment by insurance companies; (8) health club industry practices; (9) telemarketing fi-aud;
(10) harming assault weapons; and (11) automatic teller machine surcharges. The Legislative
Liaison also monitors legislation that impacts the work of Bureau.

Bureau persoimel also coordinate and staff the Attorney General's Student Conflict Resolu-
tion Experts (SCORE) Program, a nationally-recognized peer mediation program created to
reduce violence in schools and foster safer learning environments for students. The SCORE
program provides grants for the development of school mediation programs using trained student
mediators to resolve violent and potentially violent conflicts among their peers. The SCORE
program forges partnerships between educators and mediators to establish quality smdent-
centered mediation programs in the Commonwealth's schools to prevent disputes from escalating
into violence. In addition, Bureau staff oversee a Conflict Intervention Team (CIT) of specially
trained community mediators, who mobilize on a moment's notice to provide emergency media-
tion service to schools in crisis or on the verge of crisis.

Bureau personnel engaged in two historic battles this year over tobacco and handgun regula-

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PUBLIC PROTECTION BUREAU

tion. The Tobacco Unit of Consumer Protection and Antitrust Division settled a multi-billion
dollar cost-recovery case against the tobacco industry. This settlement will result in benefits to
Massachusetts citizens throughout the forseeable future. The Bureau also defended a legal
challenge to regulations it had issued to prevent the sale of unsafe handguns. The Attorney
General's authority to issue such regulations was recently upheld by the Supreme Judicial Court.

The Public Protection Bureau continued its charge of coordinating efforts and taking the lead
in the areas of elder issues and health care. The Bureau continued its work with the Attorney
General's Home Care and Home Health Care Task Force, working to ensure that the laws,
regulations and business practices of the home care and home health care industries in Massa-
chusetts are standardized to ensure the delivery of quality, reliable care to home health and home
care patients. This working group is comprised of representatives of consumer advocacy groups,
the home care and home health care industries, government agencies, parents with disabled
children and others who require home health and home care services. As a result of the task
force's work, a comprehensive legislative package was passed to (1) amend the Criminal Of-
fender Record Information (CORI) statute for home health care and home care employees and
volunteers; (2) provide home health care and home care employers with immunity for sharing
information regarding former employees; (3) establish a registry of abusive home health workers;
and (4) establish procedures for reporting and investigating allegations of abuse, neglect, mis-
treatment and misappropriation of home care consumers' property. In addition, the Bureau
represented the Attorney General on the Nursing Homes Admission Contract Task Force, created
to address findings that some nursing facility admission contracts failed to comply with regula-
tions promulgated by the Attorney General and the federal government. The Bureau also as-
sisted the Department of Public Health in amending its patient abuse regulations and will assist
with training nursing facility staff in the upcoming year.

The Bureau oversees the Attorney General's Community Benefits Guidelines for both hospi-
tals and HMOs. This initiative was staffed by members of the Regulated Industries Division, the
Consumer Protection and Antitrust Division and the Public Charities Division. Members of the
Consumer Protection and Antitrust Division and the Public Charities Division oversee reporting
under the hospital Guidelines. A member of the Regulated Industries Division oversees both
reporting under the HMO Guidelines and the Attomey General's Community Benefits Advisory
Task Force, convened in June 1998 for the purpose of advancing the goals of the Community
Benefits Guidelines.

The Bureau furthered its priority in the guardianship area by continuing to participate as a

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PUBLIC PROTECTION BUREAU

member of the Massachusetts Guardianship Task Force and the Committee on Guardianship
Reform. As a Massachusetts Guardianship Task Force member, the Bureau testified before the
Legislature in support of legislation to establish a public guardianship commission and reform
the guardianship statutes. The Bureau also assisted the Committee on Guardianship Reform,
which includes the Attorney General, probate judges, elder and disabled persons advocates and
private bar attorneys, on drafting and filing in the Legislature Article 5 of the Uniform Probate
Code to revise the state guardianship laws.

Bureau staff continued to participate in the steering committee of the Inter- Agency Task
Force on Long-Term Care Financing. This statewide Task Force is a bipartisan effort led by the
Attorney General and the Governor to develop strategies to increase the private financing options
for nursing home and other long-term care, and to provide financial security to elders while
easing the burden on Medicaid. This past year, Bureau staff played a lead role in drafting major
revisions to the Division of Insurance's long-term care insurance and life insurance regulations,
which expand private options for covering the costs of long-term care. These revised regulations
are set to be promulgated early in the next fiscal year. In the coming year, the Task Force will
focus on designing consumer education and disclosure materials.

The Attorney General's Elder Hotline (1-888-AG-ELDER), a state-wide toll-free hotline,
handled over 5,000 calls from elders and their families. The hotline provides information,
mediation services, and referrals for senior citizens and their families on a wide range of elder
issues. The Bureau also has an internal task force of Elder Law Advocates comprised of Assis-
tant Attorneys General and office Investigators in areas of elder law, including long term care
issues, protective services, financial exploitation of elders, and home health care services. These
advocates work in conjunction with the Elder Hotline to address specific elder protection con-
cerns.

The Bureau continued its multi-faceted approach to combating home contractor fraud. Fol-
lowing its June 1998 law enforcement conference, Bureau personnel successfully prosecuted
several fraudulent contractors, and provided assistance to police and assistant district attorneys
on how best to approach this type of case. The Bureau also continued its efforts to educate
consumer and elder groups about how to avoid home contracting fraud.

The Bureau continues to be actively involved with consumer issues. In recognition of the
emerging problem of identity fraud. Bureau personnel drafted legislation criminalizing identity
fraud. This bill became law in March of 1999. The Bureau also continued its participation with

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PUBLIC PROTECTION BUREAU

the American Association of Retired Persons (AARP) in various initiatives, including serving on
the Senior Health Care Coalition, a consortium of consumer groups that has worked with the
Division of Medical Assistance and Executive Office of Elder Affairs on drafting the
MassHealth Senior Care Options (SCO) proposal for dually eligible senior citizens to the Health
Care Financing Administration. The Bureau also increased its efforts over the past year to
prevent telemarketing fraud, through consumer education targeted at elders and increased investi-
gative coordination with federal, state and Canadian law enforcement agencies.

The Public Protection Bureau also has a liaison to the lesbian and gay community who serves
as a point of intake and outreach on lesbian and gay issues. The liaison convenes quarterly
meetings with an advisory group of lesbian and gay law enforcement advocates to discuss issues
and concerns of mutual interest. The Attorney General's gay liaison also coordinates testimony
for legislative hearings on gay issues and serves as a member of the Attorney General's
Workforce Diversity Committee, which was created to promote dialogue and identify strategies
for addressing workplace diversity issues.

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PUBLIC PROTECTION BUREAU

CIVIL INVESTIGATION DIVISION

The Civil Investigation Division conducts investigations primarily for divisions within the
Public Protection and Government Bureaus. In addition, CID also investigates cases or matters
within the Family and Community Crimes and Business and Labor Protection Bureaus and, on
occasion, for the Executive Bureau, or in conjunction with the Criminal Bureau.

The major duties of Division investigators are: locating and interviewing victims, witnesses,
subjects and others; obtaining and reviewing documentary evidence from numerous sources
including individuals, corporations, and federal, state, county and municipal agencies; conduct-
ing surveillance, background checks and asset checks; analyzing financial records and perform-
ing other forensic accounting functions; and, testifying before the Grand Jury and at trial.

Investigators worked closely with other state attorneys general's offices, district attorneys,
local and state police departments, the U. S. Attorney's Office, the U.S. Postal Inspection Ser-
vice, the Federal Bureau of Investigation and the Federal Trade Commission.

In fiscal year 1999, the Division initiated 389 investigations in the following major areas:

PUBLIC PROTECTION

CONSUMER PROTECTION AND ANTITRUST

Investigators continued to perform their traditional role by assisting the office in bringing
G.L. c. 93 A enforcement actions against businesses and individuals in major consumer areas
such as: automobile sales and repair, debt collection and credit repair services, billing schemes,
travel services, health spas, retail sales, computer scams, advance fee loan scams, asset search
firms, immigration services and employment schemes. Areas also included numerous issues
affecting the elderly and vulnerable populations, such as the unauthorized practice of law, mort-
gage lending, investment and home improvement scams.

The Division also initiated several investigations and surveys to determine compliance with
existing laws and regulations pertaining to numerous consumer areas. Some were multi-state
and nationwide and included areas such as fraudulent sweepstakes promotions, telemarketing
scams and the sale of tobacco to underage consumers.

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PUBLIC PROTECTION BUREAU

CIVIL RIGHTS/LIBERTIES

The Division investigated "hate crimes," allegations of police misconduct and other viola-
tions of the Massachusetts Civil Rights Act. Investigations were also conducted into allegations
of discriminatory housing and employment practices, as well as investigations to determine
compliance with the rules and regulations established by the Americans with Disabilities Act
and the Architectural Access Board. Division staff interviewed victims, witnesses and, where
appropriate, subjects of such investigations. Investigators obtained and reviewed police reports,
court documents and other available evidence.

PUBLIC CHARITIES

The Division investigated individuals associated with organizations who raised funds from
the public in violation of Massachusetts law. Investigators interviewed victims, usually business
people, who made donations to a charity based on the representations of a solicitor. In some
instances, solicitors posed as law enforcement or other public officials or otherwise misrepre-
sented themselves or the charity's purpose. Investigators worked with other law enforcement
personnel in locating "couriers" who picked up donations. The Division's financial investigators
reviewed and audited books, records and financial reports of many non-profit organizations.

REGULATED INDUSTRIES

Investigators continued to work with PPB and RID attorneys to review and investigate
businesses and organizations that withheld employees contributions for health insurance premi-
ums, but failed to actually purchase the health insurance coverage. Other cases investigated
included unlawful sales practices also known as "churning," and the sale of fraudulent or costly
life and health insurance policies.

BUREAU PROSECUTOR

Investigators worked with the Bureau Prosecutor on numerous cases which resulted in indict-
ments and convictions against individuals for violations of the Commonwealth's criminal laws.
Cases included larceny against the elderiy and vulnerable by financial advisers, attorneys, home
improvement contractors and auto dealers. Cases also involved investigations relative to the
unlicensed practice of medical professions, health care fraud, telemarketing fraud, illegal chari-

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PUBLIC PROTECTION BUREAU

table fundraisers and embezzlement from non-profit organizations.
GOVERNMENT BUREAU

ENVIRONMENTAL PROTECTION

[ The Division's role in EPD cases primarily involved locating and identifying assets of poten-
ftially responsible parties liable for paying costs incurred by the Commonwealth in the clean-up
of polluted or hazardous waste sites. Investigators also located former employees and officers of
defunct companies responsible in part for such violations, and reviewed, evaluated and analyzed
financial documents and prepared ability to pay analyses.

TRIAL

The Division played a major role in tort actions filed against the Commonwealth by investi-
gating allegations of abuse, mistreatment and deaths of individuals in state care; alleged wrong-
ful termination of state employees; and, personal injuries and other damages which occurred on
state-owned property and/or in accidents on state roads or involving state cars. The Division also
investigated cases involving contract disputes and eminent domain proceedings.

CRIMINAL BUREAU

SAFE NEIGHBORHOOD INITL\TIVE (SNI)

The Division continued its assistance to the office's Abandoned Properties project by con-
ducting research on target properties, primarily to determine the status of ownership and exist-
ence of encumbrances of the buildings, and, also in some instances, assisted in inspecting proper-
ties scheduled for renovation.

BUSINESS & LABOR PROTECTION BUREAU

INSURANCE FRAUD DIVISION

In conjunction with the protocols established by the Attorney General's Task Force to Re-
duce Waste, Fraud and Abuse in the Workers' Compensation System, the Division continued to

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PUBLIC PROTECTION BUREAU

investigate allegations that state employees or employees of self-insured companies were fraudu-
lently receiving workers' compensation benefits or other insurance benefits.

Investigators worked with the Insurance Fraud Bureau of Massachusetts in a joint effort to
investigate instances of premium avoidance by employers attempting to defraud insurers of
premiums owed for workers' compensation coverage.

Investigators also participated in the efforts to reform the disability pension system.

STATISTICS

The Division opened 389 investigations in Fiscal Year 1999, with 344 investigations ongo-
ing as of June 30, 1999. Case distribution by division and/or bureau is as follows:

DIVISION/BUREAU

OPENED

ONGOING AS

DURING FY '99

OF 6/30/99

Consumer Protection/ Antitrust

Civil Rights

Public Charities

Regulated Industries

PPB/Criminal

Government

Environmental Protection

Trial

278

195

Insurance Fraud

TOTAL

389

344

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PUBLIC PROTECTION BUREAU

CIVIL RIGHTS AND CIVIL LIBERTIES DIVISION

THE MASSACHUSETTS CIVIL RIGHTS ACT

The Civil Rights and Civil Liberties Division continues to enforce aggressively the Massa-
chusetts Civil Rights Act (MCRA). The MCRA authorizes the Attorney General to seek injunc-
tive relief when the exercise of a person's civil rights is interfered with by threats, intimidation,
or coercion based on that individual's race, color, national origin, ethnic background, gender,
sexual orientation, disability, age, or religious affiliation. A violation of a civil rights injunctive
order constitutes a criminal offense, punishable by a maximum often years in a state prison if the
victim suffers bodily injury, or up to two and a half years in a correctional facility if no bodily
injury results.

In fiscal year 1999, the Division's mission to deter and prevent hate crimes resulted in the
issuance of seven preliminary injunctions by the Superior Court against seventeen defendants,
where it was alleged that the defendants had interfered with the rights of forty two residents of
Massachusetts on the basis of their race, sexual orientation, gender, religion, and national origin.
In addition, a number of in-depth civil rights investigations of possible MCRA violations were
conducted by the Division.

GENDER BIAS

The Division has continued its efforts to protect women from hate motivated violence in
dating relationships. The Division prevailed in its first landmark MCRA case involving allega-
tions of civil rights violations on the basis of gender in 1994. In December 1998, in Common-
wealth V McGrath, a preliminary MCRA injunction was obtained from the Worcester County
Superior Court against a twenty seven year old Hopedale man for his alleged nine year history of
violence and abuse against women. This is the third gender bias MCRA case in Massachusetts,
all brought by the Division. The defendant is alleged to have repeatedly physically and sexually
abused his female victims, and taunted them with vulgar and demeaning obscenities, reflecting
animus against women as a class. One of the alleged victims was thirteen years old when she
met the defendant. The preliminary injunction prohibits the defendant from engaging in gender
based threats or violence against three women specifically named in the Division's court com-
plaint as well as with any other woman with whom he may have a dating relationship with in the
fiiture.

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PUBLIC PROTECTION BUREAU

RACIAL, NATIONAL ORIGIN, AND RELIGIOUS BL\S

A striking example of the Division's strong response to racial violence is the MCRA case
titled Commonvyealth v. McPherson. In this case, the Division obtained a preliminary civil
rights injunction from the Suffolk County Superior Court against three defendants for several
alleged race based brutal attacks on a fifteen year-old Somalian youth in the Charlestown section
of Boston. In a series of incidents that occurred in a six month period, the defendants allegedly
beat, intimidated, and threatened the Somalian youth while yelling racial slurs. The victim
suffered substantial physical injuries from these attacks that occurred in the victim's own neigh-
borhood with one incident happening on the stairwell leading to his apartment. The injunction
contained strict language which prohibits the defendant, or anyone acting on their behalf, from
knowingly engaging in further race or national origin based harassment, threats, or violence
against the victim or any other person, and from knowingly approaching within fifty feet of the
victim's apartment building.

In Commonwealth v. Quinn, the Division entered into an agreement with a juvenile defen-
dant, where he agreed to participate in an Anti-Defamation League Youth Diversion Program
that included four weeks of workshops on civil rights, multiculturalism, and diversity and ten
hours of service in a community setting. In this case the defendant, along with three unidentified
white males, allegedly drove near one adult and three teenage religious Orthodox Jews wearing
traditional religious garb, while they walked to synagogue during the holiday of Passover. The
defendant allegedly yelled out profanities and made gestures from his car and then pulled up
adjacent to the victims, shouting more profanities, while a passenger threw a lit cigarette directly
at two of the victims before driving off.

ANTI-GAY BL\S

In fiscal year 1999, the Division continued to obtain injunctive relief against gay bashers,
demonstrating its continued commitment to combating hate crimes directed at individuals based
on their actual or perceived sexual orientation. In December 1998, in Commonwealth v. Archer,
the Division obtained a preliminary injunction from the Bristol County Superior Court, prohibit-
ing sixteen year old juvenile defendant from threatening, intimidating, or harassing the victim or
anyone else due to their perceived or actual sexual orientation. In this case the juvenile defen-
dant allegedly threw a large rock at the seventeen year old victim's head, which knocked the
victim to the ground. The defendant is alleged to have then kicked the victim while yelling anti-
gay epithets. The attack left the victim with a broken nose and a concussion. Prior to the attack.

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PUBLIC PROTECTION BUREAU

the defendant told two friends that he hated gay people and that they should be beaten up. In
addition to the charges brought by the Division, the defendant was convicted on criminal civil
rights charges.

In addition, the Division has engaged in a number of in-depth investigations of other pos-
sible hate crimes against individuals because of their actual or perceived sexual orientation.

ANTI-ASIAN BIAS

In fiscal year 1999, the Division obtained two preliminary injunctions against ten alleged
perpetrators, and conducted three additional in-depth investigations into matters involving
alleged hate crimes targeting members of the Asian-American community. In Commonwealth v
Lauretano, the Division obtained a preliminary injunction from the Norfolk County Superior
Court against four female teenagers who allegedly attacked a Chinese American woman in North
Quincy. The victim, a thirty seven year-old woman who moved to the United States from Hong
Kong ten years ago, suffered cuts, bruises and dizziness when one night while driving home
through North Quincy, four teenaged females allegedly began banging on the trunk of her car.
When the victim stepped out of her vehicle to see what was happening the teenagers allegedly
laimched an improvoked physical and verbal attack on her, while disparaging her Asian ancestry.
The preliminary prohibits the youths from having any contact with the alleged victim for two
years. In addition, the injunction prohibits the defendants from assaulting, threatening, intimidat-
ing or coercing any person in Massachusetts on the basis of race or national origin.

Another case in which the Division enforced the MCRA to protect members of the Asian-
American community occurred in Commonwealth v. Aguiar. In this case the Division obtained
preliminary injunctions from the Bristol County Superior Court against three adults and three
teenagers who allegedly attacked a group of about thirty Asian-American youths, between the
ages of six and eighteen years old, a majority of whom were Cambodian Americans, who were
playing in the yard of St. Luke's church, located in Fall River,. The defendants allegedly
shouted anti-Asian epithets and threw large rocks, bricks, sticks and table legs at the children in
the youth group. In this particularly egregious attack, several of the defendants allegedly waved
baseball bats, while others in the group shouted, "Go back to your own country!" At least two
people were stuck by bricks and rocks thrown during the attack. The injunction bars the defen-
dants, and anyone acting on their behalf, from harassing, threatening, intimidating or attacking
the victims or any person based on his or her race or color and prohibits them from entering the
property of the church where the alleged attack occurred.

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PUBLIC PROTECTION BUREAU

In addition, the Division engaged in extensive outreach and education efforts to various
communities in Massachusetts with large numbers of Asian- American residents, with particular
focus on Quincy, Maiden, Lowell, Revere, Fall River and Boston. These efforts were led by the
Division's liaison to the Asian- American community in Massachusetts. The Division's liaison
spoke at many different venues including at numerous community meetings. In addition, the
Division's liaison participated in panel discussions and conducted a workshop regarding anti-
Asian hate crimes and civil rights. One of the panel discussions aired on a South /Shore Cable
television program involved a collaborative effort involving the Attorney General's Office, the
Governor's Task Force on Hate Crimes, the Boston Police Department's Community Disorders
Unit, the Plymouth County District Attorney's Office, the Anti-Defamation League, and the
Fenway Community Health Center. Another workshop, conducted by the Division's liaison at
the annual Coalition for Asian Pacific American Youth Symposium, focused on educating youth
students from twenty five high schools across the state.

CIVIL RIGHTS IN THE SCHOOLS

The Division has continued to focus on ensuring the civil rights of students attending schools
in the Commonwealth. In fiscal year 1999, the Division swiftly responded to more than eight
allegations of hate or bias-motivated conduct by youngsters which occurred within the Massa-
chusetts school system. With each of these complaints, the Division conducted investigations
and worked with the schools to resolve the conflicts and prevent future recurrence.

The Division provided educational trainings to students, teachers, and administrators on hate
crimes and discrimination as well as sexual, racial, national origin and religious harassment in
the schools. In April 1 999, the Division Chief led a workshop at a Title IX Conference for
education teams from the Boston area and Middlesex County schools, sponsored by the Office
for Civil Rights of the U.S. Department of Education and Project Alliance of the Middlesex
County District Attorneys Office. The workshop focused on how schools can create comprehen-
sive civil rights and anti-harassment policies and programs and develop partnerships with law
enforcement to address hate crimes effectively.

In 1998, the Civil Rights Division drafted a brochure titled "Erasing Hate - A Guide to your
Civil Rights in School," for middle and high school students. In fiscal year 1999, the Division
updated and revised the brochure and then mailed approximately 100,000 copies of the revised
edition to school superintendents, principals, community service organizations and civil rights
advocacy groups throughout the Commonwealth. The brochure defines and describes hate

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PUBLIC PROTECTION BUREAU

crimes and what constitutes unlawful harassment in school, informs students about their civil
rights, and provides them information about the resources available to help them if they believe
their civil rights have been violated.

NATIONAL CIVIL RIGHTS IN SCHOOLS GUIDE

On January 18, 1999, the Office announced the publication of a practical, comprehensive
national guide aimed at helping school officials in Massachusetts and across the country protect
students from hate crimes and harassment. The guide, titled "Protecting Smdents from Harass-
ment and Hate Crime- A Guide For Schools," is a joint publication of the National Association
of Attorneys General ("NAAG") and the Office of Civil Rights, U.S. Department of Education
("OCR"). It was developed and drafted as part of a national project initiated by the Civil Rights
Division. The Chief of the Division served as national co-chair for this project. The guide was
endorsed by the National School Boards Association. The goal of the guide is to help school
districts throughout the country develop policies and practices to identify, investigate and elimi-
nate instances in which hate crimes and harassment based on race, color, national origin, sex,
sexual orientation, and disability, create or contribute to a hostile learning environment for
students in violation of federal laws. The guide provides school administrators and other offi-
cials with step-by-step assistance on how to develop comprehensive civil rights policies, prac-
tices and programs to protect students' civil rights. The guide includes the Division's "Erasing
Hate" brochure in its Appendix.

MASSACHUSETTS HATE CRIMES TASK FORCE

Working closely with the Division, Attorney General Tom Reilly, along with United States
Attomey Donald Stem, jointly decided to expand the Massachusetts Hate Crimes Task Force to
include a broad spectrum of community members with vast experience in hate crimes prevention,
victim assistance, community relations, and human and civil rights advocacy, including numer-
ous nationally recognized experts in these areas. The first session of this newly expanded Task
Force will be held on July 14, 1999. It is anticipated that the expanded Task Force will develop a
comprehensive plan to address and prevent hate crimes most effectively in the Commonwealth.
First organized in 1994, the Hate Crimes Task Force has been limited to federal, state and local
prosecutors and other law enforcement officers. Over the past five years, the Task Force, headed
by the Division Chief, has helped law enforcement officials to more effectively coordinate
enforcement activities, and share information and expertise in combating and prosecuting hate
crimes in the Commonwealth.

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NATIONAL WORKING GROUP ON HATE CRIMES TRAINING |

FOR STATE AND LOCAL LAW ENFORCEMENT !

In fiscal year 1 999, the National Working Group on State and Local Law Enforcement Hate '
Crimes Training, established by Attorney General Janet Reno in July of 1 997, finalized and i

published four model hate crime training curricula for law enforcement throughout the country: i
for patrol officers and responding officers; for investigating officers and detectives; for multi- \
level law enforcement professionals; and a fourth curricula for law enforcement managers. The j
Division Chief is one of the four national co-chairs of the National Working Group. The Work- '
ing Group includes representatives from the U.S. Department of Justice the U.S. Department of
the Treasury, the International Association of Directors of Law Enforcement Standards and :

Training, the International Association of Directors of Law Enforcement Standards and Training,
the International Association of Chiefs of Police and the National Association of Attorneys
General. The Division Chief played a leading role in developing, designing and drafting the new |
national hate crime training program for state and local law enforcement officials. The four hate
crime training curriculum incorporate the best policies, procedures, practices and materials used

to train law enforcement officers. j

]

i
In the fall of 1998, the DOJ and NAAG sponsored, and the Working Group held three day '

regional hate crime train-the-trainer programs to instruct experienced law enforcement and civil i

rights trainers throughout the United States on how to deliver these state-of-the-art hate crime

training curricula. The Division Chief served as a national trainer at two of the three regional

train-the trainer program sites.

CIVIL RIGHTS AND POLICE

In a collaborative effort to promote civil rights, assist the police, and provide departments
with technical assistance, the Division continues to offer and provide civil rights training to law
enforcement covering issues of hate crimes identification, response and prosecution, civil liabil- '
ity, sexual harassment, and racial and cultural awareness.

The Division continues to investigate allegations of police misconduct. It is also regularly
consulted by police departments to assist them in their internal civil rights investigations. The
Division has closely worked with departments to ensure that appropriate remedial steps are taken i
when credible evidence is found which substantiates civil rights complaints. For example, the
Division worked closely with one Department to develop and implement new procedures to

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address effectively the concerns raised regarding strip searches of persons who are arrested and
placed into custody.

In addition, on April 12,1999, the Attorney General, with the assistance of the Division,
drafted and sent a letter to the Senate and House Chairs of the Joint Committee on Public Safety
expressing strong support for the goals of Senate 1 1 80, An Act Providing For the Collection Of
Data Relative to Traffic Stops. The bill requires the collection and analysis of data to determine
whether racial profiling is used by law enforcement when making routine traffic stops in Massa-
chusetts. The letter expressed the Attorney General's strong commitment to having his office
play an integral role in addressing the concerns about the use of racial profiling by law enforce-
ment in the Commonwealth.

HOUSING DISCRIMINATION

The Division continues to enforce effectively the state's fair housing laws which prohibit
discrimination on the basis of race, color, national origin, religion, sex, sexual orientation, famil-
ial status, marital status, source of income (receipt of housing subsidy), age, or disability.

In fiscal year 1 999, the Division fought discrimination in housing by filing ten new civil
actions in Superior Court. These cases involved allegations of discrimination based on race,
familial status, gender, and disability as well as for retaliation. Eleven pending housing discrimi-
ination cases were favorably resolved through court approved consent agreements during this
period. Settlements included broad prohibitory and affirmative relief provisions, as well as
significant compensatory damages to the complainants. Collectively, complainants in the eleven
favorably resolved cases received over one hundred fifty five thousand ($155,000.00) dollars in
jmonetary damages. In addition, two thousand five hundred ($2500.00) dollars to the local
consumer aid fund to be used to educate consumers about discrimination.

Through these and other housing discrimination cases, the Division hopes to modify landlord
and Realtor practices, to educate tenants about the right to fair treatment in the housing market,
and to increase the availability of safe, affordable housing for families with young children.

An important case reflecting the Division's commitment to curtail discriminatory housing
practices is its successful suit in Commonwealth v Davenport Realtv Trust. The realty company,
one of the largest on Cape Cod, allegedly discriminated and retaliated against a tenant by evict-
ing her because she provided foster care services to a mentally disabled man as part of the state's

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foster care program. The Division entered into a settlement approved by the Barnstable County
Superior Court which includes comprehensive prohibitory and affirmative injunctive relief as
well as a very substantial monetary award for the two complainants. The consent judgement
prohibits the defendants from discriminating against or refusing to make reasonable accommoda-
tions for persons with disabilities and from retaliating against individuals who file discrimination
complaints. In addition, the affirmative injunctive relief requires the defendant to report certain
information to the Division about its compliance with the consent judgement as well as ensures
the intensive fair housing training of all of the defendant's employees, supervisors and managers
who deal with rental housing.

In Commonwealth v. Schachter, the Division entered into a comprehensive consent judge-
ment, approved by the Middlesex County Superior Court, which awards thirteen thousand dollars i
to the complainant and prohibits an Everett landlord from reftising to rent an apartment to a
person because the person is pregnant or has a child less than six years of age. The judgment
also requires the defendant to have all twenty- three units in his six rental properties inspected by ;
a licensed inspector and to delead or abate the units found to contain dangerous levels of lead.
The defendant allegedly agreed to rent an apartment to a prospective tenant and accepted a
deposit from her. Upon learning from another that the prospective tenant was pregnant the
landlord allegedly informed her that the apartment might contain lead pain and subsequently
refused to rent the apartment to her.

In Commonwealth v. Echo Hill Townhouse Condominium Trust, the Division obtained a
Final Judgement by consent from the Hampshire County Superior Court in a suit against the
Echo Hill Townhouse Condominium Trust and Congate Enterprises, its management company,
for allegedly rejecting a prospective female buyer because she had young children. The Housing
Discrimination Project intervened in the case on behalf of the complainant. The bylaws of the
Condominium Association's Trust allegedly contained an unlawful provision that restricted
occupants of the condominium development to people over the age of fifty. The provisions
attempted to establish a housing community for the elderly in violation of the state's anti-dis-
crimination law. The final judgement ordered the Condominium Trust to remove the provision
from its bylaws and prohibits it from continuing to refrise to rent or sell units to families with
children in the future. In December 1998 the Trust removed the provision. The defendants
provided the complainant $40,000.00 in settlement of her claims.

In Commonwealth v Neptune Towers, the Division closely monitored compliance with the
comprehensive model agreement entered into with the ovmers and managers of a 330-unit

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federally subsidized apartment complex located in Lynn, and approved by the Middlesex County
Superior Court and the United States Department of Housing and Urban Development in August
1997. The court complaint had alleged race and national origin discrimination by the defendant.
In fiscal year 1999, the agreement's affirmative outreach, advertising and marketing provisions
! significantly enhanced housing opportunities for African- American and Hispanic families at the
complex. A number of blacks and Hispanic families applied for and have been placed into the
apartment complex as a result of the judgement by consent. In addition, the Division conducted
ifair housing training of the defendant's staff and contacted numerous community agencies to
! notify them of housing opportunities at the complex.

EMPLOYMENT DISCRIMINATION

Since fiscal year 1996, the Employment Discrimination Project in the Civil Rights Division
has focused its efforts on addressing allegations of systemic employment discrimination prac-
tices in the Commonwealth. The Project investigates allegations of discrimination or harassment
(race, sex, ethnicity, national origin, age, sexual orientation) in order to determine whether a
particular employer or industry is engaged in a pattern and practice of discrimination, affecting
substantial numbers of Massachusetts employees.

MASSACHUSETTS BAY TRANSPORTATION AUTHORITY

From the effective date of the Agreement in 1997 through fiscal year 1999, the Division
continues to have a significant impact on employment practices at the Massachusetts Bay Trans-
portation Authority (MBTA). In February of 1997, the Division entered into an historic, court
enforceable agreement with the MBTA and twenty-six of twenty-seven of its labor unions to end
years of alleged violations of state and federal fair employment laws and to protect employees
from future discrimination, harassment and retaliatory conduct. The comprehensive agreement
mandated significant changes in policies and practices at the MBTA, and required new systems
to govern the identification, investigation, monitoring and response to allegations of discrimina-
tion, harassment and retaliation at the MBTA. In 1999, the Division continued ongoing monitor-
ing of the MBTA's compliance with the Agreement, responded to numerous complaints from
MBTA employees, engaged in special reviews to determine if there was compliance with par-
ticular provisions of the Agreement, and investigated possible breaches. Some of the Division's
fiscal year 1 999 efforts include the following:

(A) Review and analysis of MBTA's lengthy quarterly reports which are required to
document its compliance with each provision of the Agreement;

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(B) An extensive audit of the Authority's Department of Organizational Diversity,
which is charged under the agreement to investigate and resolve complaints of discrimination,
harassment and retaliation filed by employees, identifying compliance issues and problems; and

(C) Extensive review of all the MBTA's job posting sites to determine whether the
Authority had complied v^th its obligation to post job vacancies and employees' rights under
the agreement at all these sites. A number of areas of non-compliance were identified and
immediate corrective action by the MBTA was undertaken.

SUPREME COURT AMICUS BRIEFS

The Division filed a Brief of Amici-Curiae in the United States Supreme Court, on behalf of
Massachusetts and eleven other states in Wright v. Universal Maritime Corp., on the important
question of whether an arbitration clause in a collective bargaining contract barred union em-
ployees fi-om filing discrimination claims under federal and state law in court. The Division
argued that union employees should not be denied the right to bring their discrimination claims
in court rather than being required to arbitrate them, asserting that discrimination claims should
be litigated in a public judicial forum and not in a private arbitral forum, beyond the reach of
public scrutiny. The United States Supreme Court issued its decision in Wright on November
1 6, 1 998 and held that for an arbitration clause in a collective bargaining agreement to waive
employees right to a judicial forum for statutory discrimination claims, it must clearly and
unmistakenly waive the right. The Court left for another day the question of whether an arbitra-
tion clause is ever enforceable to preclude a court hearing on discrimination claims in the collec-
tive bargaining context.

The Division, on behalf of Massachusetts and seven other states, also filed an Amicus Brief
in the United States Supreme Court in Vaughn Murphy v United Parcel Services, Inc. This case
presented an extremely important issue regarding the appropriate standard for determining
whether a person has a "disability" within the meaning of the Americans with Disability Act
("ADA"). The Division argued that a disability should be evaluated based on the underlying
medical condition of the employee (i.e., diabetes, heart condition, epilepsy, severe hypertension)
without considering the ameliorative effects of medication, prosthetic devices or other forms of
assistance. On June 22, 1 999, the Supreme Court held, however, that ameliorative measures
must be taken in consideration when making the threshold determination of whether a person is
disabled. The decision may deny the protection of the ADA to people suffering from serious
medical conditions which are currently controlled.

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Commonwealth v. Bull HN Information Systems, Inc.

Age Discrimination Claim Under Federal law

In a ground-breaking decision in Commonwealth v. Bull HN Information Systems, Inc.,
the United States District Court denied the defendant's motion to dismiss and held that
the Commonwealth has parens patriae power to enforce federal anti-discrimination laws
in federal court. The district court also found that the Commonwealth could proceed with
its federal age discrimination claims. In fiscal year 1997, the Diyision's Employment
Discrimination Project, along with the EEOC, had filed this precedent setting age dis-
crimination in employment case alleging that Bull HN, a large electronics company,
yiolated the federal Older Workers' Benefits Protection Act ("OWBPA") and the federal
Age Discrimination in Employment Act ("ADEA"), when laying off its workers aged
forty and older. This is the first ever joint enforcement effort of federal employment
discrimination law in the United States between a state attomey general and the EEOC.

The suit alleged that Bull HN violated federal law by requiring laid-off employees
over forty years of age to sign a waiver of rights in order to receive severance benefits.
Further, it alleged that in violation of OWBPA, Bull HN failed to provide statutory
mandated information to laid off employees which would enable them to assess whether
or not they were victims of age discrimination when terminated. This waiver agreement
also provided that in exchange for receiving severance benefits, an employee gave up the
ability to sue for any current or prior claims arising out of the employee's employment. It
further provided that if an employee who executed a waiver later brought or maintained
any claim covered by the agreement, he or she would be required to return all severance
paid and would have to indemnify the employer for all attomeys fees, costs and expenses
associated with defending the complaint or claim.

In its motion to dismiss, Bull HN raised a number of objections to the Attomey
General's participation in the action, many of which presented issues of first impression
in the First Circuit and even the federal courts. With issues of standing now resolved, the
Division continues to actively litigate the age discrimination issues in this case, with the
assistance of EEOC.

Age Discrimination Case Under State Law

In addition to challenging Bull HN's employment practices in federal court under federal

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law, the Division pursued an action in the Massachusetts Commission Against Discrimi-
nation under state law, alleging that Bull HN engaged in a pattern of age discrimination
when terminating its employees pursuant to an ongoing reduction of its workforce. On
January 13, 1999 the parties entered into a detailed settlement agreement, in which Bull
HN agreed to establish or revise policies and procedures to ensure the protection of their
employees from age discrimination. The Agreement will remain in effect for four years,
and policies and procedures for five years. Some of the provisions of the agreement
include the following:

A requirement that Bull HN give notice of future job vacancies to its former employ-
ees who were laid off pursuant to a reduction of workforce and the right to file a com-
plaint if the former employee is not rehired, and believes that he or she has been discrimi-
nated against; that seniority be the tie-breaking factor when Bull HN is faced with a close
decision concerning rehiring or termination amongst employees who are substantially
equally qualified; extensive training of persormel decision-makers on age discrimination
law and the requirements of the Agreement; and additional review by senior level man-
agement when a decision is made to terminate an employee forty years of age or older to
ensure that age is not a factor in the decision.

CIVIL RIGHTS INITIATIVES WITH THE
NATIONAL ASSOCIATION OF ATTORNEYS GENERAL

NAAG'S NATIONAL CIVIL RIGHTS WORKING GROUP

The Division Chief continues to serve as national chair of the National Association of Attor-
neys General's ("NAAG") Civil Rights Working Group consisting of representatives of state
Attorneys General offices from throughout the country. The Working Group's goal is to en-
hance the cooperative relationship between the states and the U.S. Department of Justice in civil
rights enforcement. Pursuant to the NAAG-DOJ Memorandum of Understanding on Affirma-
tive Civil Rights Enforcement, executed in 1995, five NAAG-DOJ civil rights task forces have
been established under the umbrella of NAAG' s Civil Rights Working Group. Among other
things, these task forces are intended to formulate and implement joint enforcement initiatives in.
five substantial areas: bias-related crimes; housing discrimination; mortgage lending discrimina-
tion; discrimination in public accommodations based on disabilities; and, most recently, employ-
ment discrimination. Division staff play a key role in each of the national task forces to address
national policy and enforcement issues in these areas.

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For the past six years since 1994, including in fiscal year 1999, the Division has taken a
leading role in initiating and organizing NAAG's annual Civil Rights Conferences attended by
representatives of state attorneys general offices, the Civil Rights Division of the U.S. Depart-
ment of Justice, United States Attorneys Offices and most recently, the EEOC, to share expertise
and to enhance national, regional and state civil rights enforcement efforts.

DISABILITY RIGHTS

ENSURING EQUAL ACCESS TO PRIVATE BUSINESSES

The Disability Rights Project of the Civil Rights Division continued its extensive efforts to
protect the rights of individuals with disabilities throughout the Commonwealth. For example,
the Project reached an agreement with Starwood Hotels and Resorts Worldwide, Inc., which will
significantly improve access for people with disabilities at the company's eleven Massachusetts
hotels, including the Boston Park Plaza. The settlement agreement resolved allegations of
noncompliance with state and federal disability access requirements at the chain's hotels. Under
the terms of the agreement, Starwood will, over the next several years, increase to five percent
the number of accessible guest rooms at each of its Massachusetts hotels, raising to almost 200
I the total number of its accessible rooms. Starwood will also survey each of the hotels, and will .
develop a remedial plan and time frame for addressing all identified access problems to ensure
that meeting rooms, restrooms, restaurants, health clubs and outdoor areas are more accessible to

! people with disabilities.
In a landmark action, the Massachusetts Attorneys General's Office, along with the U.S.
Department of Justice and the attorneys general offices of Arizona, California, Florida, Illinois,
I Kansas, Minnesota, Pennsylvania and West Virginia, combined their efforts in a first-time ever
I joint federal/state ADA compliance investigation and enforcement action against Wendy's
International Inc., a fast food chain. The matter arose out of Wendy's belief that it was upholding
; the Americans with Disabilities Act ("ADA") by offering separate but equal access to customers
in wheelchairs. However, the Disability Rights Project, along with the Department of Justice and
other state attorneys general offices, concluded that "separate but equal" is just as illegal under
the ADA as it is in racial segregation matters. As a result, Wendy's entered into a major settle-
f ment agreement to widen or eliminate the queue or maze system in its ahnost 1 ,700 fast-food
I restaurants nationwide. The queue barriers in which customers stand in a snaking line to order
, food are too narrow to accommodate wheelchairs, forcing disabled customers to wait nearby
until they are noticed by restaurant employees. In addition, Wendy's agreed to modify its archi-

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tectural plans to eliminate the problem in future restaurants. The company also agreed to pay the
joint federal/state Task Force $50,000 and will pay a total of $12,000 in damages to five indi-
viduals or groups who filed complaints with the DOJ or state attorneys general regarding accessi-
bility at the fast-food chain.

PROTECTING FAIR HOUSING RIGHTS OF INDIVIDUALS WITH DISABILITIES

The Project continues to safeguard the right of individuals with disabilities to live in the
communities of their choice. For example, the Disability Rights Project of the Division assisted
a nursing home (Pelham House) in Newton which was encountering neighborhood opposition to
its renewal of a special permit. The facility claimed that the city's unwillingness to renew the
permit was violative of the residents' fair housing rights, while the city questioned whether the
facility had been operating properly. Project staff did a presentation on the Fair Housing Act and
Title II of the ADA to Newton's Land Use Committee. A three-part working group, composed
of representatives of the city, the neighbors and the Project was established. After a very long
evening of discussions/negotiations between the groups, people reached an agreement which
would provide Pelham House with the special permit it needed to continue flinctioning, and
establish safeguards and a process for redressing fiiture concerns of the neighbors. The Land Use
Committee (which had previously voted unanimously to reject the special permit application)
and the Board of Alderman approved the settlement package and granted the special permit.

The Project also obtained a settlement in a fair housing dispute in Lawrence. It grew out of
Lawrence's refusal to remove a piece of property from its demolition list, despite there being a
developer willing and able to develop the building into a residence for individuals with mental
disabilities. The Project explained to the City the fair housing implications of its actions and
commenced negotiations with the city to resolve the matter. According to the terms of the settle-
ment, the City of Lawrence agreed to provide $67,000 in community development funds to help
the developer purchase an alternative property, to be used for a community residence, and a
special employment training project.

COMMUNITY EDUCATION

Consistent with the strong emphasis upon community education, the Project has emphasized
programs to increase people's understanding of and compliance with disability rights laws.

PUBLIC PROTECTION BUREAU

Advisory To Dentists and Dental Hygienists

The Disability Rights Project issued an Advisory in August, 1998 to apprise all dentists and
dental hygienists in the Commonwealth of their obligations under state and federal law not to
discriminate against individuals infected with the human immunodeficiency virus (HIV). The
Advisory stated that any practice or policy of denying treatment, providing disparate treatment,
and/or assessing a surcharge to any patient who is HIV-positive, regardless of whether that
person is symptomatic for HIV/ AIDS violates both state and federal law.

The Advisory also explained the 1998 United States Supreme Court ruling of Bragdon v.
Abbott which held that a person's HIV infection constitutes a "disability" within the meaning of
the ADA. Therefore, the affected person would be entitled to complete protection under the
ADA in areas of employment, public services and places of public accommodation (including a
dental or medical office). The Bragdon decision specifically involved a provider of dental care;
however, the same principle of non-discrimination also applies to other providers of medical care
and related health care services.

CONSUMER PROTECTION AND ANTITRUST DIVISION

THE WORK OF THE DIVISION

CPAD carries out the Attomey General's authority under the state Consumer Protection Act
and the state and federal antitrust laws. The division also acts pursuant to a broad grant of
authority and responsibility found in General Laws chapter 12, section 10, which directs that the
Attomey General "shall take cognizance of all violations of law... affecting the general welfare of
the people... and shall institute... such criminal or civil proceedings before the appropriate state
and federal courts.. .as he may deem to be for the public interest...." At any given time, the
division is likely to be handling 250 separate matters, roughly a dozen of which relate to antitrust
law.

CPAD is also active in the legislative arena, working with all sectors of the public to draft
bills that will protect consumers without placing undue burdens on businesses. The division
engages in other forms of advocacy as well, filing formal comments in administrative proceed-
ings, at both the state and federal levels. The division provides information to the public through
written publications on a variety of consumer topics, and makes speakers available to both

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consumer and business groups for educational purposes.

Three specialized units also fall under the responsibility of the division's Chief These are ,
the Consumer Complaint and Information Section (CClS), the Local Consumer Programs
(LCPs), and the Mediation Services Department (MSD).

RELIEF OBTAINED THROUGH CPAD CASES

Consumer Restitution:

Civil Penalties, Attorney Fees, Costs:

Local Consumer Aid Fund:

Other:

$ 1,668,725
$2,565,500
$127,500

$8 billion over next 25 years
plus $323 million every year
thereafter paid by Tobacco
industry to Commonwealth

$250 million to establish
anti-smoking foundation

$1 .45 billion for anti-smok-
ing public education

$158,333 to DPH Health
Protection Fund

$30,000 grant to publish
consumer brochures in
several languages

Return of unfairly collected
debt monies from hundreds
of Massachusetts residents

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SIGNIFICANT CASES AND PROJECTS

Brief descriptions of several significant matters handled by the Consumer Protection and
Antitrust Division between July 1, 1998 and June 30, 1999 are set out below.

ANTITRUST

Microsoft: The Division contributed to the preparation of the government's case in a
significant way, by conducting essential legal research and assisting in the preparation of
expert witnesses. The suit involves claims by the federal government and several states
that software manufacturer Microsoft engaged in illegal efforts to preclude competition in
computer related products and services.

Toys R Us: This case, filed jointly by several states to halt a major retailer's efforts to
keep warehouse and club chains from competing in the sale of toys, has produced settle-
ments with each of the defendants, retailer Toys R Us, and toy manufacturers Mattel,
Little Tykes, and Hasbro. The proposed joint settlement, which has been submitted to a
federal court for approval, would require the donation of tens of thousands of toys to the
Toys for Tots program.

Disposable Contact Lens Litigation: Massachusetts has been very active in litigating
with other states this federal antitrust action, based on allegations that eye care providers
have made concerted efforts to restrict competition in the retail sale of contact lenses.

Joint health care venture by Harvard-Pilgrim Health Care, Baystate Health System,
and Health New England: An examination of potential anticompetitive effects of a
proposed health care joint venture in western Massachusetts led to an agreement on July
13, 1998 requiring prior notice to the Attorney General of any ftiture acquisitions or
exclusive contracting arrangements.

CONSUMER CREDIT

First Alliance Mortgage Company: Suit was brought on October 30, 1998 against this
California mortgage lender for charging up to 23 points for loans made to Massachusetts
citizens.

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United Companies Lending Corporation: The Division obtained a Consent Judgment
on October 21, 1998 in this case against a Lousiana mortgage lender, based upon its
practice of charging Massachusetts borrowers excessive fees and points for mortgage
loans. The judgment orders the company to pay over $500,000 in restitution to Massa-
chusetts consumers and a $146,500 civil penalty to the Commonwealth. In a related
matter, in which UCLC challenged the Attorney General mortgage lending regulations
that prohibit the charging of unconscionable fees, a federal judge upheld the regulations
as valid law.

Commonwealth Capital Funding Corporation: The Division obtained a Judgment on
August 1 7, 1998 against this company, which operated a phony first time home buyer
program, and took thousands of dollars from would be homeowners in Massachusetts.
The judgment orders the principals of the company to pay $828,000 in restitution to
consumers, and a $1,435,000 civil penalty and $22,000 in attorney fees to the Common-
wealth.

National Affordable Housing Coalition, Inc: This consumer protection action against a
Nevada company that charged consumers $500 to attend a sales presentation it called a
"seminar" and falsely promised that consumers could obtain mortgage loans and purchase
their dream homes within 7 to 10 days regardless of their credit history has nearly con-
cluded, with a ruling July 9, 1998 that the company was acting as an unlicensed mortgage
broker in Massachusetts.

First North American Bank: The Division led a national effort to prosecute retailers
who violated the rules of bankruptcy and tried to collect from consumers debts that were
discharged by the federal bankruptcy court. This subsidiary of Circuit City, which issued
the retailer's store credit card, settled the claims of Massachusetts and 29 other states by
agreeing on November 19, 1998 to repay to consumers any debts unfairly collected (100
in Massachusetts), and paying a $40,000 civil penalty to the Commonwealth.

May Department Stores Company: another in the series of national investigations of
retailers unfairly collecting debts that were discharged through personal bankruptcy
proceedings, this case resulted on November 2, 1998 in reimbursement of 1200 Massa-
chusetts consumers for moneys unlawfully collected, and payment of a $280,000 civil
penalty to the Commonwealth.

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General Electric Capital Corporation and Montgomery Ward: another in the series
of national investigations of retailers unfairly collecting debts that were discharged
through personal bankruptcy proceedings, this case resulted on August 7, 1998 in reim-
bursement of about 430 Massachusetts consumers for moneys unlawfully collected, and
payment of a $153,000 civil penalty to the Commonwealth.

Filene's: The Division obtained a Consent Judgment on January 25, 1999 against Filenes
for unfair debt collection practices, including phoning at unreasonable times and using
profane language. The judgment that requires the retailer to pay a $245,000 civil penalty.

National Credit Systems: Suit was filed July 24, 1998 against this New York debt
collection agency for attempting to collect debts from Massachusetts residents without a
Massachusetts license.

University Student Services: The Division joined a multistate effort to halt the decep-
tive marketing by a New Jersey company of a charge card to college bound students,
wliich the company falsely represented was a means of payment required or endorsed by
numerous schools. In a July 8, 1 998 agreement, the Commonwealth obtained $5225 in
refunds for over 200 Massachusetts consumers.

Credit Repair Firms: In a sweep of local companies taking in advance fees and making
false claims to consumers of their ability to wipe clean their credit histories, the Division
sued Second Federal Credit, Credit Repair Network, New England Financial, and Allied
Credit Services, along with their principals on July 27, 1998, and obtained immediate
court orders halting their practices.

HANDGUN REGULATION

American Shooting Sports Council v. Attorney General: In a June 30, 1999 decision,
the Supreme Judicial Court upheld the legal authority of the Attorney General to issue a
set of consumer protection regulations, which declare the sale of unsafe handguns to be
an unfair or deceptive trade practice. The regulations require that handguns sold in
Massachusetts meet certain manufacuring standards, and have adequate childproof
features to protect children from accidental harm.

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HEALTHCARE

Horizon Healthcare: Litigation was filed October 6, 1998 against the operators of the
Greenery Rehabilitation Center in Brighton, alleging that the nursing home provided
substandard care to brain injured patients, which has led to serious harm or death in more
than one resident of the home.

SmithKline Beecham Consumer Healthcare: The Division participated in a multistate
investigation of this drug manufacturer, for the misleading advertisement of its smoking
cessation products Nicoderm and Nicorette. Under the resulting December 10, 1998
agreement, the company vdll no longer suggest that using its products will guarantee
success in quitting the smoking habit. The manufacturer also paid the Commonwealth
$50,000 for the cost of its investigation, and contributed $158,333 to the Health Protec-
tion Fund of the Department of Public Health.

OTHER CONSUMER PROTECTION MATTERS

United Parcel Service; Airborne Freight Corp.: An investigation of delivery services
that took inadequate precautions against delivering alcohol without a Massachusetts
license, and delivering it to minors in Massachusetts, has produced agreements dated
June 23, 1999 under which two such companies will alter their practices and contribute
$2500 to the Local Consumer Aid Fund.

Travel Opportunities: This multistate investigation of a Florida travel company's
deceptive marketing practices resulted on December 7, 1998 in a settlement whereby the
company is to follow strict rules about its advertising, pay back injured consumers, and
pay a $25,000 civil penalty to Massachusetts.

JCK Group d/b/a Tower Cleaning Systems: A suit was filed on September 3, 1998
against this company for claiming to sell lucrative franchises for commercial cleaning
services, taking in thousands of dollars fi-om small entrepreneurs, and then failing to
provide the income producing cleaning accounts promised. A Consent Judgment entered
the same day by the court ordered the company out of Massachusetts for 2 years, and
ordered it to pay $100,000 in restitution to affected Massachusetts purchasers, as well as
a $5000 civil penalty to the Commonwealth.

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Medical Weight Loss Center: The Division obtained a Consent Judgment on November
6, 1998 in this case against the operator of a weight loss clinic. Among other things, the
suit alleged that the clinic was prescribing a dangerous medication without adequate
medical supervision. Under the judgment, the operator must pay $15,000 in restitution to
affected consumers.

Walter Long: Suit was filed by the Division on December 7, 1 998 against a man posing
as a licensed real estate and mortgage broker, taking deposits and fees for unavailable
apartments and mortgages, and failing to make refimds to consumers of any moneys paid.

Home Shopping Channel: A Consent Judgment entered March 19, 1999 in this case
prohibits the Home Shopping Channel from selling mace illegally in Massachusetts, and
orders payment of a $10,000 civil penalty to the Commonwealth.

Super Bowl: Massachusetts consumers who purchased travel packages from one of
several ticket brokers or travel companies that were to include tickets to the 1 997
SuperBowl were disappointed to find that no tickets were in fact provided. This suit
resulted in a March 23, 1999 judgment that returned $70,500 to consumers who had made
such purchases from National Travel Vacations, Sports World Tours, Harvey Zuckerberg,
Carlyle Industries, Ticket to Travel, National Travel, Inc., and Saugus Center Travel.
The court also ordered payment of a $2000 civil penalty.

Bottle Bill Litigation: This case was filed December 9, 1998 against six container
redemption centers that were refionding 4 cents per container rather than 5 cents, as
prescribed by statute.

United Buyers Service of Massachusetts, Inc.: This suit against a buying club, based
upon allegations of high pressure sales practices and misrepresentations to consumers,
concluded on December 15, 1998 with a court order voiding all contracts with Massachu-
setts consumers; cancelling any debts owed by those consumers to the buying club; and
ordering payment of $150,000 in restitufion to consumers and a $100,000 civil penalty.

Nestle: The Division participated in a multistate investigation of "Nestle Magic," which
consisted of a chocolate shell encasing a small plastic Disney toy. In response, Nestle
recalled the product, and contributed $125,000 to the Local Consumer Aid Fund, pursu-
ant to a March 11,1 999 agreement.

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Union Travel and Tours: On March 3, 1999, the Division sued the owner of a travel
agency who claimed falsely that she could arrange for consumers to obtain divorces from
the Dominican Republic. The suit seeks return of the consumers' money, having been
charged $500 apiece for this phony service.

Guillermo Recinos; Rebecca Jereidini: This suit, brought under the Massachusetts
Consumer Protection Act and the federal Americans with Disabilities Act, alleged that a
dentist refused to treat HIV positive patients. An April 20, 1999 Consent Judgment
prohibited the dentist from discriminating against HIV positive patients and required
payment of a $20,000 civil penalty by the dentist and the co-owner of his practice.

J.J. O'Brien Movers: A judgment obtained April 13, 1999 against this moving and
storage company bars it from operating a warehouse without a license, and orders it to
make frill restitution to consumers whose belongings have been lost or stolen while in the
company's care. The mover must also pay a $4000 civil penalty to the Commonwealth.

Cynthia and Christopher DesBrisay: This couple was sued on May 4, 1999 for taking
deposits for works for art from numerous consumers, and failing either to deliver the
purchased items or refimd the money paid for them.

Matthew Gaeta: On March 18, 1999 this operator of several gas stations settled the
Commonwealth's allegations that he claimed to sell Citgo brand gas, when in fact he was
selling unbranded gasoline to consumers, with payment of a $50,000 civil penalty.

Consumer Publications Translation Project: This office received a $30,000 grant on
October 7, 1998 to fund the translation, printing, and publication of five consumer protec-
tion brochures written by the attorneys of this division into eight different languages
spoken in various Massachusetts communities.

RECOVERING PUBLIC FUNDS

U.S. V. Baker & Taylor: On July 14, 1998, the Commonwealth intervened in federal
litigation filed by the U.S. Department of Justice to recover overcharges of public schools
and libraries by this national book wholesaler. While discounts of 40% off list price were
promised, actual discounts of only 10% to 25% were reflected in the bills paid by various
public entities.

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TOBACCO CONTROL

Suit Against Tobacco Manufacturers: The massive, complex litigation against the
tobacco industry, in which the Attorney General sought to recover the costs incurred by
the Commonwealth in caring for residents suffering from smoking related illnesses, came
to a close on December 3, 1998 with a ground-breaking settlement. Massachusetts will
receive over $8 billion dollars from the tobacco companies over the next 25 years, and an
additional $323 million every year thereafter as a result of this litigation. The Consent
Judgment entered by the court also prohibits cigarette advertising aimed at children,
outdoor advertising, and tobacco company sponsorship of events where a significant
number of children are likely to be in attendance. The judgment restricts the distribution
of free cigarette samples to adult-only venues. It also provides for the creation of a
national charitable foundation, the purpose of which is to reduce teen smoking; the
tobacco industry will fund this foundation with $250 million over the next 10 years. The
tobacco industry will also pay $1.45 billion over the next 5 years to ftmd a national public
education fund aimed at educating consumers about the harmful effects of tobacco use.

Philip Morris v. AG: the Attorney General continues to defend against this federal suit
brought by the tobacco companies challenging the Massachusetts statute requiring disclo-
sure of the ingredients in tobacco products.

Regulations to prohibit the advertising of tobacco products near schools, parks, and
playgrounds, to require certain health warnings on packaging, and to prohibit certain
practices that promote smoking in children, were issued by the Attorney General's Office
after holding public hearings and accepting written comments.

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CONSUMER COMPLAINT AND INFORMATION SECTION

!
The Attorney General's Consumer Complaint and Information Section ("CCIS") provides \
services to individual consumers by responding to thousands of consumer complaints and re-
quests for information on consumer issues and referrals on the Attorney General's consumer |
"hotline"; through a voluntary mediation program aimed at resolving consumer complaints !
against businesses which obtains refunds and other savings for individual consumers; by educat-
ing the public through developing and distributing educational materials and participating in
consumer education initiatives; by responding to public records requests; and by identifying
potential trends of unfair or deceptive trade practices for further investigation or possible pros-
ecution by the Consumer Protection and Antitrust Division.

For the period July 1, 1998, through June 30, 1998, CCIS received and responded to 18,005
written complaints and other correspondence; responded to 122,717 telephone calls to the Attor-
ney General's consumer hotline; provided mediation services immediately upon receiving tele-
phone calls to 72 consumers experiencing highly time sensitive or particularly egregious con-
sumer disputes; mailed consumer educational brochures or pamphlets to 5,728 consumers;
recorded 5,138 consumer complaints in our computerized complaint tracking system; mediated
2,040 consumer complaints, recovering $733,685 in refunds or other savings for individual
consumers, representing an increase of $155,418 from Fiscal Year 1998; responded to 672 public
records requests; and identified 1 0 companies for further investigation or prosecution by the
Consumer Protection and Antitrust Division.

Some of the highlights of CCIS's mediation efforts during Fiscal Year 1999 include com-
plaints involving a computer training school which closed leaving its students with thousands of
dollars in student loans and no education. Working with the federal government and student loan
guaranty agencies, CCIS was successful in obtaining complete loan discharges for the 55 stu-
dents who filed complaints. CCIS also mediated complaints involving a travel agency where one
of the employees allegedly received thousands of dollars from consumers for trips and then never
booked the trips. Through mediation, CCIS was successful in obtaining full refunds for all of the
consumers who could provide proof of purchase. Lastly, CCIS mediated complaints involving a
furniture store which changed ownership. Allegedly, the previous owner accepted thousands of
dollars in deposits for furniture before selling his business and disappearing. As a result of
CCIS's mediation efforts, the new owner agreed to offer merchandise credits to all 47 consumers
who filed complaints.

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In addition to resolving complaints through its mediation service, CCIS continued a strong
focus on preventative consumer education initiatives. CCIS staff organized activities and com-
munity outreach for the National Consumer Protection Weeks in October 1 998 and February
1999. As part of these outreaches, the Section developed a brochure with a compendium of
consumer credit information called the Attorney General's Guide to Credit and an interactive
computerized quiz on consumer credit. CCIS staff also participated in consumer outreach events
at the "Big E" Eastern States Exposition and at the annual Massachusetts Council on Aging
conference.

In addition to these outreach events, CCIS partnered with the Quincy police department on an
educational initiative aimed at decreasing victims of telemarketing fraud. As part of the initia-
tive, the CCIS Director spoke to various groups of seniors on the topic, giving tips on how to
avoid victimization. CCIS staff also partnered with the Massachusetts Consumers Coalition in
their effort to examine and address the growing problem of seniors and credit debt. CCIS helped
develop and test a survey that will allow the Coalition to further study this issue. Lastly, CCIS
staff provided trainings on consumer topics to the freshman legislators elected in the fall of 1998,
as well as to area high schools, colleges, and senior citizen groups.

LOCAL CONSUMER PROGRAMS

Nineteen Local Consumer Programs, located in communities around the state, are associated
with CPAD. These programs receive grant monies and direction from this office, pursuant to
G.L. c. 12, section 11 G. In addition to fielding consumer complaints received directly from the
public and from CCIS, offering mediation services, and distributing Attorney General publica-
tions to citizens, these programs feed complaint data to this office, for use in evaluating potential
division cases. The office liaison to the LCPs is on call to provide advice as needed, and con-
ducts monthly fraining sessions for program directors. Settlements of CPAD cases often include
designation of a specified dollar amount of the recovery for the Local Consumer Aid Fund.

MEDL\TION SERVICES DEPARTMENT

MSD oversees three programs: the Student Conflict Resolution Experts (SCORE) Program,
'the Conflict Intervention Team (CIT), and the Face-to-Face Mediation Program (FTFMP).

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FACE-TO FACE MEDIATION PROGRAM (FTFMP)

The Face-to-Face Mediation Program began in 1983 in an effort to broaden the continuum of
services provided by the OAG for the resolution of consumer disputes. The FTFMPs offer
consumers and tenants a quick, convenient, non-adversarial, and effective option to resolve their
disputes. FTFMP users can schedule a mediation session at their convenience and, with the help
of trained volunteer mediators, air their differences and negotiate a mutually acceptable resolu-
tion. Cases are referred to FTFMPs by the courts, police, community agencies and local con-
sumer programs. Today there are nine FTFMPs in Worcester, Somerville, Haverhill, Lowell,
Hyannis, Fitchburg, Brockton, Springfield and Greenfield.

In FY 99, the Face-to-Face programs responded to 4,856 referrals to mediation, resolved 136
complaints by phone and conducted 2,190 mediation sessions with 82% resulting in a voluntary
mediated agreement. A total of $1 ,03 1 ,25 in dollars and $ 1 96,827 in services was returned to
consumers, businesses, landlords and tenants served by the FTFMPs.

In FY 99, programs in Hyannis, Lowell and Brockton received ongoing consultation and
technical assistance to enhance mediation and case-flow procedures. Annual site-visit evalua-
tions were conducted with programs in Fitchburg, Brockton, Worcester, Springfield, Haverhill,
Lowell, Greenfield and Hyannis. Site-visits enable MSD to evaluate individual program perfor-
mance, assess field operations and identify areas for improvement. During the site visit, volun-
teer mediators are observed while mediating, and questionnaires are administered to program and
referral sources.

STUDENT CONFLICT RESOLUTION EXPERTS (SCORE)

SCORE is a comprehensive school-based student mediation program that prevents youth
violence by teaching young people more constructive responses to conflicts. Since its inception
in 1989, SCORE has: trained 3,960 student mediators; mediated 13,803 student conflicts;
resolved 13,425 conflicts; and achieved a 97% success rate.

The SCORE program model is unique because it links schools, government and community
mediation centers. In the SCORE program model, a full-time adult SCORE coordinator is hired
and supervised by a local community mediation program with SCORE grant funds. The school
provides mediation program space and refers student disputes to be mediated.

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In FY 99, 26 SCORE programs operated in 16 Massachusetts communities: Worcester
(Bumcoat Sr HS), Somerville (Somerville HS), Boston (Cleveland MS, Curley MS, English HS,
Boston HS, Brighton HS, East Boston HS), Lynn (Lynn Classical HS, Lynn English HS, Lynn
Technical HS), Springfield (Chestnut MS), Dartmouth (Dartmouth HS), Taunton (Taunton HS),
Fall River (Durfee HS), Maiden (Maiden HS), Medford (Medford HS), Wakefield (NE Metro
Tech HS), Lowell (Lowell HS), Pittsfield (Reid MS, Herberg MS), Holyoke (Holyoke HS, Dean
Tech HS), Quincy (Quincy HS), and Greenfield (Greenfield MS, Greenfield HS).

In FY 99, SCORE programs conducted 2,693 peer mediations and successfially resolved 98%
of the student disputes referred to mediation.

Annual site-visit evaluations were held at 23 of the 26 SCORE programs during the last
quarter of the school year (April- June) to assess program operations, identify areas needing
improvement, troubleshoot problems, and interact with local school officials. During these
annual visits, questionnaires are administered to SCORE coordinators, school principals, student
mediators, and SCORE grant recipients. Informal site visits are also conducted during the year.

I TRAINING GRANTS

In FY 99, $212,000 of the funds allocated to SCORE from settlement monies were used to
help schools to start-up or enhance existing peer mediation programs and to promote quality peer
mediation training. Twenty -nine SCORE Training Grants were awarded for the 1998-99 school
year to schools in: Arlington (Arlington HS), Boston (Boston Latin Academy, Boston Latin
School, Timilty MS, Snowden HS), Lexington (Lexington HS), Medfield (Medfield HS),
Mattapoisett (Old Rochester JHS), Swansea (Case JHS), Foxborough (Foxborough HS),
Gloucester (Gloucester HS), Lowell (Robinson MS, Rogers MS, Sullivan MS), Peabody,
(Higgins MS), Winthrop (Winthrop HS), Newton (Newton South HS), West Springfield (West
Springfield JHS), Stoughton (Stoughton HS), Braintree (East MS), Framingham (combined grant
to Framingham HS, Fuller MS and Walsh MS) South Deerfield (Frontier Regional HS), Hadley
(Hopkins Academy), Rochester (Old Colony Regional Technical HS), North Reading (North
Reading HS), Beveriy (Beverly HS), Fitchburg (Montachusett Technical HS), Westford
(Nashoba Valley Technical HS), and Provincetown (Provincetown HS).

CONFLICT INTERVENTION TEAM (CIT)

The Conflict Intervention Team was initiated in academic year 1992-1993 in response to
large-scale outbreaks of violence at several schools in Greater Boston. The OAG sponsors CIT

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in collaboration with the Massachusetts Department of Education and the Massachusetts Asso-
ciation of Mediation Programs/Practitioners. The CIT is comprised of a team of specially trained
community mediators that can mobilize quickly to provide emergency mediation services to
schools in crisis or on the verge of a crisis. CIT is able to respond to schools anywhere in the
state with a team that reflects the diversity of the students involved in the conflict. In most
instances, MSD staff oversees CIT mediators during an intervention.

CIT conducted two interventions during the 98-99 school year, one in Quincy and one in
Chelsea. In each instance, GAG staff and a team of community mediators conducted interviews
with students to identify the sources of the conflict. Mediations were set up among the students
involved in the conflict. All but one mediation resuhed in an agreement.

FY 99 was the first year of a three-year $150,000 grant from the Hewlett Foundation to
support CIT enhancement and replication. The Hewlett funds are administered by the CIT's
partner, the Massachusetts Association of Mediation Programs/Practitioners. A part-time CIT
program administrator, Xavier Velasco Suarez, was hired with Hewlett funds and works at the
GAG under the supervision of the Mediation Services Department.

TRAININGS

MSD staff led nine SCORE trainings and trained 133 of the 445 student mediators trained in
FY 99. MSD staff also helped conduct two CIT mediator trainings, in Hyannis, MA and Las
Vegas, NV. Other trainings conducted by MSD included: a three-day "Introduction to Media-
tion Skills" training for 20 OAG staff; a two-day Train-the-Trainers Institute for new peer media-
tion trainers; a three-day Advanced Mediation Skills training for discrimination complaint
mediators in the Federal Aviation Administration; and a 3'/2 day Basic Mediation Skills training
for discrimination complaint mediators in the Federal Law Enforcement Training Center.

PUBLIC EVENTS, CONFERENCES, WORKSHOPS

During the year, MSD staff participated in public events in Springfield at the city wide peer
mediators' swearing-in ceremony, in Worcester to celebrate SCORE'S tenth anniversary, and in
Quincy at a SCORE grant award ceremony.

MSD Staff delivered eleven SCORE and CIT workshops at OAG, state and national confer-
ences in: Boston, Cambridge, Lowell, Hyannis, Springfield, Brockton, Dighton, Amherst, and

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Holyoke, MA; and Phoenix, Arizona. There were six SCORE and CIT presentations delivered in
Boston, Marlboro, and Wakefield, MA; and Loudonville and Rochester, New York.

COMMUNITY OUTREACH

Outreach projects in FY 99 included the Permanency Mediation Coalition, the Supreme
Judicial Court Standing Committee on Dispute Resolution, the 1 999 MAMPP Conference
Committee, the Massachusetts Violence Prevention Task Force, the Mediation Week 1999
Committee, the Host Committee for the CREnet (Conflict Resolution Education Network) 1999
conference, and as a Board member of the Massachusetts Association of Mediation Programs/
Practitioners.

Additional outreach activities in FY99 included: a comprehensive statewide mailing of the
Ten-year SCORE Report to school superintendents, principals, coordinators, grant recipients,
mayors, school committees, state senators and representatives and local newspapers; a statewide
and nationwide mailing on CIT; and publication of two articles on SCORE in News in School
Health (September 1998), published by the MA Dept. of Public Health, and The Fourth R (July
1998), published by the Conflict Research Education Network. Newspaper articles on SCORE
programs and press releases announcing SCORE Training Grant awards appeared in the Salem
Evening News, Berkshire Eagle, Dartmouth Chronicle, Greenfield Recorder, Springfield Union-
News, Worcester Telegram and Gazette, Patriot Ledger, Lynn Daily Item and Nation's Cities
Weekly.

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DIVISION OF PUBLIC CHARITIES

The Attorney General represents the pubHc interest in the proper soHcitation and use of
charitable funds and is authorized to "enforce the due application of fiinds given or appropriated
to public charities within the commonwealth and prevent breaches of trust in the administration
thereof." G.L. c.l2, sec. 8. The Division of Public Charities was established to carry out the
Attorney General's responsibilities in this area.

More than 38,579 charities are registered with the Division, as well as 285 fiindraisers pres-
ently soliciting donations on behalf of charities in Massachusetts. A public charity is an entity
which is non-profit, whose purpose is charitable, and which benefits a portion of the public; in
addition to philanthropic organizations, examples of public charities include nonprofit hospitals,
schools, social service providers, and cultural organizations. As well as registering and obtaining]
financial reporting by charities and fundraisers, the Attorney General is the defendant in all
proceedings brought to wind up the affairs of a public charity or to change the terms of a chari-
table trust.

Beyond enforcement of laws requiring annual reporting by public charities operating in the
Commonwealth, the Division focused its activities during the last fiscal year in three primary
areas: enforcement litigation to address deception and fraud in charitable fundraising; estate and I
trust actions to ensure that charitable trust fimds are appropriately administered and applied; and
corporate governance and oversight initiatives to ensure that charitable governing boards are
carrying out their fiduciary duties of due care and loyalty.

Recognizing that charities provide vital services in our communities, enjoy certain benefits
due to their tax-exempt status, and assume certain obligations as a result of these benefits, the
Division has been involved in a number of initiatives over the past year intended to strengthen
the charitable sector at large. These efforts have included the Division's annual report on chari-
table fundraising, published during the Fall giving season, the Kellogg Healthcare Conversion
Information Project, and proposed legislation in two key areas~(I) charitable fundraising and (ii)
acquisitions of nonprofit health care providers by for-profit companies.

SOLICITATION OF CHARITABLE FUNDS

The Attorney General takes affirmative legal action against charities and professional
fundraisers for unfair or deceptive solicitation practices and to enforce their fiduciary duties with

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respect to funds raised. In addition to injunctive relief, the Attorney General may seek restitution
of funds intended by the public to benefit a specific charity, or particular charitable purpose,
along with penalties and fees.

Following are examples of deceptive charitable solicitation cases in which the Division was
involved in the last fiscal year:

Commonwealth v. Baystate Assistance Programs; Veterans for the Homeless; Com-
monwealth Alliance d/b/a Veterans Aid Program; Steven M. Materas; Paul A.
Kouri; Joseph J. Petillo. In December, 1 998 the Attorney General filed a fundraising
fi-aud action against these defendants, which include professional fundraisers, charities
and their officers, for allegedly misleading donors to believe that their contributions
would benefit homeless shelters and veteran outreach centers when such was not the case.
The Division also obtained initial orders under which the Division attached defendants'
real property and $340,000 of their liquid assets while the case is pending.

Commonwealth v. William Twohig d/b/a United States Charitable Publications,
American Veteran^s Relief Fund, Inc., Disabled Peace Officers Association. Inc.

I This deceptive solicitation action, which the Division had filed in 1997, was part of a
federal and multi state sweep of telemarketing fraud. The defendants in the Massachu-
setts case included a Las Vegas fundraising company and two client charities, one in
California and the other based in Texas. That same year the Commonwealth had ob-
tained a consent judgment against one charity, the California-based Disabled Peace
Officers Association, Inc. and a $500,000 default judgment against the fimdraiser,
William Twohig.

In August, 1998 a final judgment was obtained against the remaining defendant, Texas-
based American Veterans Relief Fimd, banning it from further fundraising in the Com-
monwealth until a $48,000 penalty is paid.

Commonwealth v. Allan C. Hill Productions, Inc. et al. The Division had brought this
case in 1997 against fourteen telemarketing companies for failure to account for chari-
table funds raised in Massachusetts as required under c. 68, Section 24(c). Consent
judgments had been entered against four of the defendants.

In August, 1998, the Division successfully opposed one defendant's motion to dismiss.

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Defaults have entered against four other defendants. Litigation is proceeding against the
remaining six defendants.

Commonwealth v. Ranick Enterprises, Inc; Bellcamp Enterprises; Everready
Enterprises; US Charitable Publications; NE Charitable Services; Eastern Mass.
Veterans Programs; George Campbell; Help Hospitalized Children's fund; Regular
American Veterans; Foundation for Disable Firefighters; American Veterans Wish
Foundation. In 1 997 the Division had brought suit against a muUi state fundraising
operation for allegedly defrauding Massachusetts donors of millions of dollars in chari-
table contributions. In August, 1998, the Division obtained a final judgment against one
of the charities, Texas-based Help Hospitalized Children's Fund, enjoining it from solicit-
ing Massachusetts residents until it has paid $30,000 in restitution to Children's Hospital
in Boston. In September and October, 1998, the Division obtained default judgments
against five of the fundraising defendants and recovered $40,000 from the insurance bond
company that had issued them solicitor bonds.

Commonwealth v. International Union of Police Associations, Vietnam Veterans of
America, Massachusetts State Council, Inc., American Trade and Convention
Publications, Inc., Robert James Drake Marketing; George Campbell. This enforce-
ment action was originally filed in 1996 against several professional fundraisers and their
charity clients for deceptive solicitation of charitable funds in the Commonwealth. In
December, 1998, the Division obtained a consent judgment banning professional solicitor
Robert James Drake, Inc. from charitable fiindraising in the Commonwealth. In June,
1999, the Division obtained a default judgment granting $500,000 in penalties and
permanently banning solicitor George Campbell, the remaining defendant, from further
charitable fundraising in the Commonwealth.

Commonwealth v. M&M Advertising Associates, Inc., John E, MacNeil, Hugh M.
Mayher, et. al. In January 1998, the Division had filed a contempt action against one of
the fundraiser defendants, which resulted in payments to the Attorney General's Local
Consumer Aid Fund in the amount of $4,500. The penalties were part of a judgment
previously, obtained by the Division in a suit alleging that the defendants conducted
deceptive charity campaigns for high school sports associations and a publication for
senior citizens. After notice of the Attorney General's intent to file a second contempt
complaint against the defendant for non-payment of a money judgment, the fundraiser
paid another $8,000 in February, 1999.

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Commonwealth v. Robert Aaron In June, 1998 the Attorney General had filed a
contempt complaint against a Hyde Park telemarketer for allegedly continuing to raise
charitable funds in Massachusetts in violation of a 1994 consent judgment entered in a
deceptive solicitation suit. The defendant was found in contempt and ordered to pay a
fine.

Commonwealth v. Twentieth Century Promotions, Inc., Lloyd Morse, Mission of the
Heart In March, 1999, the Division brought an enforcement action against a fundraiser
and his charity client for falsely claiming to be fundraising on behalf of Ronald
McDonald House and several local libraries. The Division obtained consent judgments
ordering the fundraiser and charity to pay restitution to Ronald McDonald House in
Boston and ordering the charity to dissolve.

Commonwealth v. Cancer Fund of America and Medical Assistance. The Division
brought this deceptive solicitation case against Cancer Fund of America, a Tennessee
charity, and Medical Assistance, its Massachusetts fundraiser, in March, 1 999. The case
alleges that Massachusetts donors were misled to believe that 100% of their contributions
would benefit cancer patients in central Massachusetts who were in need of special foods,
medicines, and hospice care, that the charity provided little or no care to cancer patients
in central Massachusetts, and that it provided no funding to hospices. The complaint also
alleges that the charity failed to monitor statements made by the professional fundraiser
in accordance with commitments the charity had made in documents filed with the
Attorney General.

Commonwealth v. East West Concert Productions; Southeastern Productions, Inc.;
Statewide Promotions; Joseph Moses; Police Alliance of Boston. This multi-defen-
dant deceptive fundraising litigation concluded in October, 1 998 with court approval of
consent judgments in which professional fundraiser Statewide Promotions and its client,
the Police Alliance of Boston, agreed to a ban on all future charitable fundraising activity
and also paid $7,500 in restitution to the Attorney General's Consumer Aid Fund.

Commonwealth v. Production Marketing Services, Inc. The Division filed suit
against Production Marketing Services, a telemarketer whose fundraising campaign
misled donors to believe that their contributions would benefit athletic and drug preven-
tion programs for Pembroke youth, when the funds were in fact going to a baseball
league on Cape Cod, another part of the state. The Division obtained a consent judgment

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ordering Production Marketing to pay $14,000 and obtained an Assurance of Discontinu-
ance in which the Cape Cod baseball league agreed to pay $5,000 in restitution.

ESTATES AND TRUSTS

In furtherance of his authority to "enforce the due application" of charitable trust funds and to
"prevent breaches of trust in the administration thereof," the Attorney General is an interested
party in the probate of all estates in which there is a charitable interest and in all other judicial
proceedings affecting charitable trusts.

Accordingly, the Division continued to handle a large volume of cases in this area involving
such matters as proposed allowance of accounts, will compromises, sale of real estate, change of
purposes or beneficiaries of charitable trusts and bequests, amendment of charitable trusts to
meet IRS requirements, and termination of charitable trusts under G.L. c.203, §25. For example:

Board of Trustees of the Maiden Public Library v. Attorney General The Trustees
of the Maiden Public Library filed a complaint for the application of the doctrine of
deviation to permit the library, which is a public charity, to sell a valuable painting given
to it in trust in 1 885, the proceeds to be used to re-pay bonds taken out by the library to
make the facility handicapped accessible, to expand its facilities, and to provide proper
housing for its vast art collection. After investigation, the Division assented to the relief
requested in the complaint. The Middlesex Probate Court approved the library's request
on April 8, 1999.

Trustees under the will of Caroline Weld Fuller v. The Attorney General In 1998

the Fuller Trustees submitted a complaint for cy pres for the probate court's approval.
The complaint is the last chapter of a lengthy case involving the removal for misconduct
of the prior trustees of a charity which provided housing for elderly in Milton, the man-
agement of the trust by a receiver, the return to the trust of $1 million by the former
trustees, and an appeal to the SJC on issues raised by the probate court judge, and finally
the appointment of new trustees in November 1996.

With the intervention and guidance of the Division, the relief ultimately sought by the
trustees in the cy pres complaint requested modification of the trust so that the Fuller
trustees can sell the trust property to a non-profit developer and then use income from the
proceeds to subsidize the housing units in the development to make the housing afford-

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able for moderate and low income tenants. The court approved the relief requested in
October 1998. The Attorney General continues to monitor the progress of the develop-
ment and the implementation of the court's order at the request of the court.

Museum of Fine Arts v. The White Fund Trustees, et. al. The White Fund Trustees,
v^ho hold a collection of paintings in trust for the purpose of creating and gratifying a
public taste for fine arts, particularly among the people of Lawrence, are seeking court
approval to sell the paintings, which include a valuable Monet, and to use the income
from the proceeds to fiind art projects in Lawrence. In 1912, the Reverend William
Wolcott left the paintings in trust to the White Fund Trustees and stated in his will that
until a suitable gallery existed in Laurence to hang the paintings, the trustees should offer
the paintings to the Museum of Fine Arts for exhibition. The paintings have been at the
Museum since that time. The trustees challenge the museum's contention that the status
quo furthers the intent of the testator. The case is scheduled for surmnary judgment
arguments in August, 1999, and for trial in September, 1999.

Town of Amesburv The Division has been involved in this longstanding dispute be-
tween Amesbury and the now defunct Anna Jacques Hospital over control of trust flinds
held by the hospital. Following the Attorney General's assent in 1997 to court transfer of
the trust funds to the Town of Amesbury, Anna Jacques Hospital filed a motion to inter-
vene. Subsequently, and at the Division's urging, the Town of Amesbury established a
health care commission to administer the funds in order to provide grants to individuals
who incur necessary health services but who are uninsured or underinsured, and who lack
the means to pay for such services. In addifion, Amesbury agreed to reserve one seat on
the five person health commission for a member of Anna Jacques Hospital management.
After this arrangement was finalized, Anna Jacques withdrew its motion to intervene, and
the court approved transfer of the trusts' assets to the health care commission.

In Re: Petition for the Allowance of the First and Final Account of James K.
Glidden as Executor of the Estate of Walter Barrett The Division filed objections to
the court allowance of the first and final account of James Glidden as executor and
attorney for the estate of Walter Barrett, on the grounds that his fees were excessive, both
as to the amount of time spent on various tasks, and the rate at which many executor
services were billed. The Division further contends that estate taxes were overpaid;
Glidden allegedly failed to file for a rebate when informed of his mistake; and he improp-
erly billed the estate for unnecessary services, including meetings with representatives of

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the charitable beneficiaries regarding the inadequacy of his accounting. The matter is
scheduled for trial in fiscal year 2000.

Trustees of the Arthur G.B. Metcalf Foundation v. Air University, Falcon Founda-
tion, United States Strategic Institute, Boston University, and Thomas Reilly

The Arthur G.B. Metcalf Foundation is a private foundation created by the former presi-
dent of the Board of Trustees of Boston University to principally benefit Boston Univer-
sity. The trustees of the Foundation notified the Division that they wished to modify the
terms of the trust to accelerate the funding of two professorships at the University which
otherwise would be fimded over time. After review of the Complaint for Modification of
the trust, the Division assented to the proposed relief

Glendale Park, Everett The Division continued to review the decisions by cities and
towns in the Commonwealth to use parkland for other municipal purposes, most com-
monly for the siting of new schools. The crux of the Division's review is whether or not
a park is held by the city or town in charitable trust. If so, the mimicipality must prove in
a court proceeding that the park is no longer useful as a park.

In 1998, the Division reviewed the City of Everett's decision to site a new high school on
the Glendale Park. The Division concluded that the park was not held in trust and,
therefore, there were no impediments raised by charities law to the park's being used for
a school once the city complied with regulations imposed on such changes by the federal
government, the state Office of Environmental Affairs, the Department of Education, and
the state legislature.

WILLS, TRUSTS, AND OTHER PROBATE STATISTICS

During the past fiscal year, the Division received and reviewed 1,083 new wills, and received
and reviewed 624 interim accounts for executors and trustees, as well as 682 final accounts. In
addition, the Division received 673 miscellaneous probate matters or pieces of correspondence in
new or existing probate cases, in addition to 92 petitions for license to sell real estate and peti-
tions under G.L. c.203, sec. 25 to terminate trusts too small to be administered economically and
distribute the trust property to the beneficiary, resulting in the availability of more income to the
charitable beneficiaries of such trusts by reason of elimination of administrative costs.

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CHARITY GOVERNANCE

The Attorney General's oversight of charitable corporations focuses on stewardship by
charity boards of directors. The Division can become involved when directors breach their
individual fiduciary duties of due care and loyalty or to prevent the misuse of charitable funds.
rhe Division has brought a number of enforcement actions and obtained several governance
agreements, after investigation, in which charity boards have agreed to reform the manner in
which they operate. This year such matters included:

Commonwealth v. Valley Oasis in Childhood Education. In September, 1 998, the
Division obtained a consent judgment banning the directors of a Bellingham day care
center, Valley Oasis in Childhood Education (V.O.I. C.E.) fi-om operating any charitable
organizations in Massachusetts in the fiiture. The ban was the resolution of a lawsuit
previously filed by the Division against the directors, who were husband and wife, for
allegedly mismanaging the center's finances. As part of the settlement, the couple re-
signed their positions fi^om V.O.I.C.E., and turned its operations over to the Guild of St.
Agnes of Worcester, an experienced day care provider in Worcester county. The transi-
tion was accomplished without any interruption in services.

Attorney General v. Hillcrest Remedial Reading School, Inc. The Division had
obtained an order appointing a receiver for a charity for students with dyslexia and other
reading disabilities following the death of the charity's president, because the charity had
no remaining members of its board of directors or corporate officers. After liquidating
the charity's assets and paying creditors' claims, the receiver initiated dissolution pro-
ceedings. The Supreme Judicial Court entered an interlocutory order distributing ap-
proximately $295,000 to support programs at each of two other charities for students with
learning disabilities: the Carroll School and the Landmark School.

FOR-PROFIT ACQUISITIONS

The Public Charities Division continued this year to devote considerable time and resources
to investigating proposed for-profit acquisitions of health care providers. Massachusetts chari-
table organizations may not, on their own, "convert" to for-profit status. If charitable assets are
to be transferred to a for-profit, it must be for fair value, the transaction must be necessary and in
the best interest of the charity, and the charity board must have acted careftilly and in a manner
uninfluenced by conflict of interest.

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During the year, the Division handled the following matters relating to conversions or pro-
posed conversions of nonprofit health care providers.

Boston Regional Medical Center Boston Regional Medical Center ("BRMC") is an
acute care hospital in Stoneham. Beginning in fiscal year 1 997, the Division had investi-
gated the proposed sale of BRMC to a for-profit hospital chain. Doctors Community
Health Care, Inc. In February, 1999 the hospital declared bankruptcy without complet-
ing the proposed for-profit conversion. The Division continues to be involved in the
bankruptcy proceeding in order to ensure the hospital's restricted funds are appropriately
administered.

Health Foundation of Central Massachusetts In 1995, after investigation by the Divi-
sion, Central Massachusetts Health Care (CMHC), a non-profit HMO in Worcester, had
obtained court approval and sold substantially all of its assets to a for-profit HMO. The
sale generated $45 to 50 million in proceeds to be used by a foundation to make health-
related grants for the benefit of the vulnerable population in Central Massachusetts.

In October, 1998, after an intensive, community-based planning process, the board of
CMHC and the Division jointly presented a foundation plan to the Worcester Probate
Court for approval. The plan provided for a community based board to oversee health-
related grant making within the greater Worcester community and was approved by the
Court on October 29, 1998. The court also approved a process for the search for an
executive director. After a nationwide search, the Health Foundation hired its first
executive director in July, 1999.

MetroWest Community Health Care Foundation, Inc. In February, 1999 the Supreme
Judicial Court approved a plan filed by the Attorney General and MetroWest Health, Inc.
for creation of the MetroWest Conmiunity Healthcare Foundation, Inc. The plan pro-
vides for creation of a community based foundation intended to maintain and improve the
health status of people living or working in the 25 towns served by the MetroWest Medi-
cal Center prior to its conversion to for profit status in 1996. The Foundation will be
funded with approximately $40 million in hospital related assets generated by the 1996
sale of the Medical Center to Columbia/HCA, a for-profit hospital chain.

Nellie Mae Corporation In the second and final phase of this for-profit conversion, the
Division investigated and approved sale of the Nellie Mae Corporation, a wholly owned

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for-profit subsidiary of the Nellie Mae Foundation, to Sallie Mae. The net proceeds of
the sale, approximately $210 million, will be used by the Nellie Mae Foundation for
education-related grant making in New England, bringing the total funding for the Foun-
dation to approximately $280 million. In September, 1997, the Supreme Judicial Court
of Massachusetts had approved the initial transfer of Nellie Mae's student loan portfolio
and secondary market operations to Nellie Mae Corporation, a wholly owned for-profit
subsidiary, in return for 100% of the subsidiary's senior stock.

Review of Asset Dispositions Under amendments to the non-profit corporations act,
which took effect in April, 1990 a charitable corporation must give 30 days advance
written notice to the Attorney General before making a sale or other disposition of all or
substantially all of the charity's assets if the disposition involves or wall result in a mate-
rial change in the nature of the activities conducted by the corporation. G.L. c.180,
§8A(c).

In addition to for-profit dispositions such as those discussed above, the Division reviewed a
number of significant transactions involving proposed disposition of substantial charitable assets,
including the following:

Sale of Interest in MetroWest Medical Center The Division reviewed the due dili-
gence by the charity limited parmer of the MetroWest Medical Center Limited Partner-
ship in evaluating its options in connection with the transfer fi-om Columbia/HCA of the
majority for-profit paitnership interest in the MetroWest Medical Center to Tenet, another
for-profit hospital chain. After investigation, the Division concluded that charities law
requirements had been met and the sale occurred in March, 1999.

In Re Worcester Surgical Center The Worcester Surgical Center was a non-profit
wholly-owned subsidiary of Central Massachusetts Health Care Inc., the nonprofit HMO
which sold its assets to a for-profit HMO in 1995. The court order permitting the sale of
the HMO business ordered that the interim Board of Trustees of the former HMO take all
necessary steps to sell the Worcester Surgical Center. Net proceeds of the sale were then
to be added to the fiinding of the health care foundation formed after the sale of the
HMO.

In 1999, sale of the Surgical Center to a for-profit partnership which included the
Center's doctors in a limited partnership was approved by the Probate Court after the

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Division completed an investigation and concluded that (1) the valuation of the Center
was properly conducted and the asking price reflected fair market value; (2) the monetary
interests of the physician investors did not adversely affect the price of the transaction;
(3) the Center was widely marketed; and (4) the selection process of the buyer was fair.

CHARITABLE CORPORATION DISSOLUTION STATISTICS

In order to cease corporate existence, charitable corporations must dissolve through a pro-
ceeding in the Supreme Judicial Court. To enforce the public's interest in the disposition of
charitable assets, the Attorney General is a party to all voluntary dissolutions of charitable
corporations under G.L. c.180, §1 lA. After review, negotiation of necessary modifications, and
assent by the Division, the pleadings are filed by the dissolving charity in the Supreme Judicial
Court.

During the reporting year, the Division assented to 68 final judgments dissolving charitable
corporations pursuant to section §1 1 A.

SIGNIFICANT DIVISION INITIATIVES

PUBLIC EDUCATION CAMPAIGN

In consultation with the Attorney General's Advisory Committee on Public Charities, the
Division continued its ongoing public education campaign regarding charitable giving and
charity stewardship.

The Division continued to distribute its wide variety of public education materials, including
"The Attorney General's Guide For Board Members of Charitable Organizations". "How To
Give But Give Wisely", "Tips On Charitable Giving", and "Questions Commonly Asked To The
Division Of Public Charities".

In November, the Division conducted the seventh annual "Giving Season" public education
campaign. Carried out in conjunction with the Better Business Bureau and the American Asso-
ciation of Retired Persons Of Massachusetts, this education campaign is part of long-term effort
to inform individuals and businesses about the donating process and how to make sure that their
contributions are put to the best possible use. Materials distributed, in addition to those men-

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tioned above, included the "Attorney General's Guide For Charities Who Fundraise From The
Public" and "Question And Answer Guide For Professional Fundraisers".

The "Giving Season" public education campaign featured the annual "Attorney General's
Report On Telemarketing For Charity". The report provides general information about profes-
sional fundraisers and their statutory reporting obligations and specific information about the
campaigns conducted in calendar year 1997. Annual financial reports from 449 charitable
telemarketing campaigns conducted by 85 separate telemarketing companies were analyzed.
Total revenue from all campaigns amounted to $84,351,651 out of which slightly more than
$30,884,409 million dollars went to charity. The average percentage received by the charity was
37 percent, after all ftmdraising expenses were deducted. This represents 2 percent more than the
amount received by charities the previous year. On a per campaign basis, the average percentage
received by the charitable organizations was 28.5 %.

NATIONAL TRAINING FOR REGULATORS ON FOR-PROFIT ACQUISITIONS

In 1997, the Attorney General had received a $295,000 grant from the W.K. Kellogg Founda-
tion to develop and conduct a national training program for regulators dealing with for-profit
acquisitions and conversions of nonprofit hospitals and other health care entities. In July 1 998,
the Division conducted a conference for 100 regulators from 46 states. The Division also
developed a Guide to assist board members, regulators and advocates facing for-profit healthcare
acquisitions and conversions in their communities. The Guide, which will be published in 1999,
will be supplemented by a collection of conversion-related materials. A website is being created
to maximize access to these materials.

THE ATTORNEY GENERAL'S COMMUNITY BENEFITS INITL\Tr/E

The Division was involved in the initial public meetings and final drafting of the Attorney
General's Community Benefits guidelines for Nonprofit Acute Care Hospitals. Since the issu-
ance of the Guidelines in June, 1994, the Division has been closely involved in monitoring and
furthering hospital compliance. In 1998, the Division prepared a new financial template and
summary guidance sheet and conducted informal training for hospital community benefit coordi-
nators.

In January, 1999, 65 separate hospital Community Benefit Reports were reviewed and evalu-

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ated and the aggregate findings made public in a status report. In addition, the Division prepared
an inventory and classification of all the reported community benefit and community service
programs and made that listing available to participating hospitals.

The Division participates actively in the Attorney General's Community Benefits Advisory
Task Force and chairs the working group on Needs Assessment and Outcomes Evaluation. One
of the goals of this working group is to create a community benefits website to further interstate
and intrastate exchange.

PROBATE PROCEDURES OF THE DIVISION OF PUBLIC CHARITIES

In October, 1998, the Division developed a new guide, "Probate Procedures of the Division
of Public Charities". The guide presents a practical description of the information needed by the
Division in order to facilitate its review of probate or trust matters and of the steps followed by
the Division in such reviews.

CONFERENCE AND PROFESSIONAL EDUCATION
PRESENTATIONS AND PUBLICATIONS

As part of the Division's ongoing public education effort throughout the year, the Director of I
the Division and other Assistant Attorneys General in the Division spoke to numerous charitable
groups, served on several continuing professional education panels and national educational
conference panels, and contributed to educational publications.

DIVISION ADMINISTRATION AND STATISTICS

Enforcement of laws requiring accountability by public charities is central to Division re-
sponsibilities with respect to charitable funds. With the exception of religious organizations and
certain federally chartered organizations, all public charities must register with the Division and
all registered charities must submit annual financial reports. The registrations and financial
reports are public records and public viewing files are maintained. The Division responded to
over 2,654 requests to view files in the past fiscal year and, in response, approximately 5,974
files were pulled.

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CHARITABLE ORGANIZATIONS: REGISTRATION AND ENFORCEMENT

I From July 1, 1998 through June 30, 1999, the Division processed approximately 13, 460
annual financial reports and annual filing fees totaling $1 ,242,610.00. These funds are revenues
received by the General Fund. During this period, 1,088 new organizations were reviewed,
determined to be charitable, and registered. Each was sent the Division's packet of information
about the Division's registration and filing requirements.

As part of an ongoing compliance program. Division staff contacted charities whose annual
filings were deficient or delinquent to rectify filing deficiencies.

ISSUANCE OF CERTIFICATES TO CHARITIES WHO FUNDRAISE

Under G.L. c. 68, sec. 19, every charitable organization which intends to solicit funds from
the public, except religious organizations, must apply to the Division for a solicitation certificate
before engaging in fundraising. Upon receipt, the Division reviews certificate applications for
compliance v^th statutory requirements. Unless there is a deficiency in the application, all
certificates are issued within a 10-day statutory period.

REGISTRATION OF PROFESSIONAL SOLICITORS AND FUND RAISING COUNSEL

Under §§22 and 24 of G.L. c.68, all persons acting as professional solicitors, professional
i fundraising counsel, or commercial co-venturers in conjunction with soliciting charitable organi-
zations must register annually with the Division. Solicitors and commercial co-venturers must
also file a surety bond in the amount of $10,000.00. All fundraisers must also file with the
Division a copy of each fundraising contract which they sign with any charitable organization,
and solicitors must later file a financial return regarding each fundraising campaign.

|j During the fiscal year ending June 30, 1999, a total of 285 registrations were received and
'approved, resulting in $58,950 in fees to the Commonwealth. Registrations were received from
93 solicitors, 143 fund-raising coimsel, and 49 commercial co-venturers.

CHARITIES DIVISION COMPUTERIZATION

With Information Technology funding from the Legislature, the Attorney General's Office

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began implementation of a test database and imaging system for the Division's charity and
fundraiser registrations and financial filings during this fiscal year. The system is designed to
enhance compliance with the registration and financial reporting requirements, facilitate the
Division's administration of the registrations and filings, and improve public access to the filed
information.

TABLE I: MONEY RECOVERED FOR THE COMMONWEALTH TREASURY

Charitable and Fundraiser Registration Fees $ 1 ,401 ,660.00

Other fees, requests for copies, requests for $ 2,041 .32

computer information

TOTAL $1,403,701.32

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CHIEF PROSECUTOR

The Chief Prosecutor of the Public Protection Bureau is responsible for the investigation and
criminal prosecution of crimes related to the priority areas of the Bureau and Attorney General.
The Chief Prosecutor, with the assistance of one full time Assistant Attorney General in addition
to access to the Bureau attorneys, insures that the Bureau is able to protect the public interest
through both civil and criminal means.

The Chief Prosecutor focuses on solving complaints by considering creative approaches to a
myriad of crimes that traditionally have gone unprosecuted. Criminal cases are begun when
linvestigations are completed and a determination that criminal, as opposed to civil, remedies are
|appropriate. On some occasions, investigations lead to a determination that civil or administra-
tive remedies are more appropriate and will result in a better outcome for the Commonwealth.
When patterns demonstrate the need for improved legislation, the Chief Prosecutor, in conjunc-
Ition with the Bureau Chief, drafts the legislation and builds consensus with legislators and
administrative agencies. Statewide training for prosecutors and police is performed when novel
areas of enforcement, such as home improvement contractor fraud, demonstrate a need for
improved methods of investigation and prosecution.

Primary areas for criminal investigation include consumer related crimes, including identity
fraud, home improvement contractor fi-aud, elder fraud and abuse, health care fraud within the
area of private insurers, the unauthorized or unlicensed practice by certain professionals such as
dentists, doctors or public accountants, crimes relating to charities and telemarketing fraud. An
emphasis has been placed upon the application of criminal remedies to areas of criminal activity
that have been especially challenging to traditional law enforcement. PPB Prosecutors also
devote substantial effort to prevention of crimes such as Identity Fraud and Home Improvement
Fraud and helping victims, even if criminal prosecution is not feasible.

HIGHLIGHTS OF CASES PROSECUTED TO COMPLETION

Am-TechAVilbur Brown (Telemarketing/Business Opportunity Fraud)

The Chief Prosecutor was appointed to be a Special Assistant United States Attomey
in order to work with an assistant United States attomey in prosecuting an egregious
scheme selling private pay telephones. Based upon complaints received by the Attomey
General's Consumer Hotline, sixty indictments were obtained and prosecuted in Federal
Court. In October of 1998, Wilbur Brown was sentenced to serve five years in federal

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prison. The defendant was ordered to pay $821,000 in restitution.

The initial investigation by investigators assigned to the Public Protection Bureau and
State Police also led to a civil injunction which froze Amtech's bank accounts and a civil
judgment pursuant to G.L. c.93 A.

Sean Wagner (Home Contractor Fraud/Larceny from Elders)

After defaulting on his probation and pending criminal charges for two years, Wagner
was prosecuted in three District Courts for driveway paving scams involving the elderly.
At the time that the complaints were initiated, Wagner was in violation of conditions of
probation for prior convictions of larceny from an elder. The probation violations were
used as a means to promptly dispose of the new complaints which included eighteen
months incarceration in the House of Correction and a two year suspended sentence
which ran concurrently with the period of incarceration with intensive drug treatment.
This case served as the basis for state wide training of prosecutors and probation officers
on the effective use of probation surrenders in matters of home contractor fraud. The
case also formed the basis for proposed legislation regarding pavers in the Home Im-
provement Contract Fraud statute.

Robert Hernandez (Unauthorized Practice of Nursing Prosecutions/Forgery and Uttering)

District Court complaints were issued in response to the discovery that Robert
Hernandez was working in a nursing home as a nurse without a license after faking his
own death and submitting a phony death certificate.

Hernandez pleaded guilty to unlicensed nursing, forgery and uttering in the Lawrence
and Framingham District Courts, and was sentenced to two years in the House of Correc-
tion suspended for two years. He was placed on probation for four years, banned from
the health care field and ordered to perform 400 hours of community service. The pros-
ecution garnered widespread media attention and has led to increased vigilance in the
nursing home industry to the verification of nursing credentials. Recent legislation was
also passed to require criminal checks on nursing home employees.

Paul Palaza (Larceny/Home Improvement Fraud)

Palaza was an unregistered roofer who took the roof off a disabled single mother's
house and then abandoned work. Palaza was on default on his probation and was thought
to have left the state. He was arrested and was arraigned on larceny and home improve-

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ment fraud charges. Palaza pleaded guilty and received two years in the House of Correc-
tion with six months to serve. The balance of the sentence was suspended for three years.
Restitution of $7,500 was ordered and the defendant was banned from the home contract-
ing field, except that the defendant may work for a licensed contractor, but must not
accept money directly from homeowners.

Jeffrey Gordon (Unlicensed CPA/Larceny)

Gordon was charged with falsely holding himself out as a Certified Public Accoun-
tant and with larceny after claiming to be a CPA and doing a shoddy job doing tax prepa-
ration for two victims. Gordon pleaded guilty and was placed on one year probation,
ordered to perform 1 00 hours of community service and pay restitution.

Dirk Kiefer (Home Improvement Fraud)

Kiefer was charged with larceny and home improvement contractor fraud after taking
money from numerous consumers and doing little or no work. After several cases were
joined into one District Court, Kiefer pleaded guilty in Salem District Court and was
sentenced to two years in the House of Correction suspended for two years with restitu-
tion to be paid to the seven victims. After a restitution hearing Kiefer was ordered to pay
$43,538, the ftill amount of restitution.

Lori Lebeouf (Larceny By a Personal Care Assistant)

Lebeouf, a Personal Care Assistant, was charged with having bilked an elderly victim
with Cerebral Palsy, through the unauthorized use of the victim's credit cards. Lebeouf
who had moved to Florida, returned to Massachusetts and pleaded guilty to three counts
of felony larceny. The Judge continued her matter without a finding. She was placed on
probation for two years and ordered to pay $4962 in restitution and was banned from
being a personal care assistant or a fiduciary.

REFERRALS EVALUATED

The Chief Prosecutor evaluated hundreds of complaints during this year. The complaints
came from a variety of sources including other divisions within the Office of the Attorney Gen-
eral, police departments, outside agencies, attorneys and private citizens. A large volume of
complaints were generated by the Attorney General's Elder Hotline, Consumer Hotline and
Insurance Hotline. Complaints to these hotlines that involved criminal behavior, and are not
being handled by local District Attorney's offices, are assessed and investigated by the Chief

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Prosecutor or investigators assigned to the Public Protection Bureau.
INITIATIVES AND PUBLICATIONS

Identity Fraud Legislation

The criminal arm of the Public Protection Bureau drafted and promoted legislation
criminalizing identity fraud. The legislation, Massachusetts General Laws, c. 266 §37E was
sponsored by the former and present Attorneys General and State Senator Jacques. The bill was
enacted and became law in March of 1999. In the course of researching and drafting the bill we
have now become involved in several of these investigations. A model for investigation and
prosecution is being developed. The Chief Prosecutor also helped to develop and distribute the
Credit Identity Fraud consumer handbook that can be found in Attorney General Reilly's Guide
to Credit. The Chief Prosecutor also sits on the Check Clearinghouse Task Force and works with
the Financial Organized Crime Task Force.

Home Improvement Contractor Fraud Initiative

The Chief Prosecutor continues to get cases for referral and consultation from all over the
state on this difficult topic, leading to several new prosecutions. The Chief Prosecutor was
named to the Advisory Board of the American Prosecutor's Research Institute (APRI) Home
Improvement Project and is a co-author of APRI's newest publication, Home Improvement
Fraud Against Seniors. When that publication is completed, the manual will be distributed to all
members of the National District Attorneys Association.

Last Jime, the Chief Prosecutor and assistant attorneys general and investigators working
under his direction embarked upon a project to increase and improve statewide prosecution of
home improvement contractor fraud. The Chief Prosecutor and bureau personnel developed a
prototype prosecution manual for use by local police and prosecutors. All legal and investigative
documents were placed on computer disks and distributed at a state-wide conference attended by
over 1 20 local police, prosecutors, probation officers and representatives of the Board of Build-
ing Regulations and Standards and the Department of Consumer Affairs. As an offshoot of the
training, the Attorney General's office handles home improvement fraud complaints from around
the state and acts in an advisory capacity to local assistant district attorney's handling theses
cases. Suggestions for improvements in the Home Improvement Statute are being collected and

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are expected to be the basis for amending the Statute in a future legislative session.

MCLE Training-Superior Court Practice

On November 1 8, 1 998 The Chief Prosecutor was one of three prosecutors on the faculty
of the MCLE Superior Court Practice training. The MCLE Superior Court Criminal Practice
Manual, including a chapter co-authored by the Chief Prosecutor, was published in June of
1999.

Telemarketing Fraud

The Chief Prosecutor has continued to work with Federal Authorities as a Special Assistant
United States Attorney on a large telemarketing fraud case involving fraudulent charities. An
initiative on coordinating with other state Attorneys General and Federal authorities on interstate
telemarketing initiatives is underway. As part of this initiative, an assistant attorney general has
coordinated with the National Association of Attorney's General in order to implement multi-
state enforcement in this area.

District Court Rotation

The Public Protection Bureau continued to send assistant attorneys general to the District
Court criminal prosecution rotation program which enabled them to gain valuable courtroom
experience which they brought back to the criminal cases in the bureau.

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REGULATED INDUSTRIES DIVISION

INSURANCE

The Regulated Industries Division's representation of consumer interests in insurance
matters is divided into several distinct categories. The Division intervenes in both automobile
and health insurance rate setting proceedings. The Division also performs a consumer protec-
tion/insurance laws enforcement function. Through the Division's insurance hotline for consum-
ers, direct mail and telephone communications, the Division receives many consumer questions
and complaints. Through mediation, negotiation and, if necessary, litigation, the Division
obtains both restitution and injunctive relief for insurance consumers. Finally, the Division
engages in non-case related work to advance insurance consumer interests, including legislative,
regulatory, educational, and other outreach activities.

RATE CASES

Automobile

1999 Private Passenger Automobile Insurance:

On July 7, 1998, the Auto Insurers' Bureau (AIB) filed with the Division of Insurance its
recommendation concerning the profit component of 1 999 private passenger automobile insur-
ance rates. On August 14, 1998, AIB filed with the Division of Insurance its recommendation
concerning the main rate for 1999 private passenger automobile insurance rates. AIB requested
an increase of 15.5 % increase over the 1998 rates. If approved, these requests would have been
equivalent to an average increase in auto insurance premiums for Massachusetts drivers of $129
per car or 462 million dollars overall. On behalf of Massachusetts consumers, the Division
challenged the increase requested by the industry. In addition, the Division asked the Commis-
sioner to recuse herself fi-om playing any role in the decision for the 1 999 rate year because of
allegations that the Commissioner had engaged in private discussions concerning the rate with a
member of the AIB. The Commissioner refused to recuse herself. On December 29, 1998, the
Commissioner issued a memorandum and order fixing and establishing an average rate of $841
which is approximately 0.7% higher than the equivalent 1998 rate or 14.8% lower than the
industry's requested increase. This reduction included 20% of the 176 million dollars collected
in error during the years 1991 through 1996. The savings to Massachusetts consumers was 443
million dollars or an average of $1 14 per car.

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2000 Automobile Insurance:

Proceedings concerning the 2000 automobile insurance rate began on April 13, 1999 with
notice of the annual hearing called by the Commissioner to determine whether it was necessary
jthat the rates for 2000 be fixed and established in accordance with G.L.M. c. 175, §1 13B. The
Division participated in the hearings and took the position that market conditions continued to
require that rates be set pursuant to G.L.M. c. 175. The Division noted, however, that for the
third consecutive year some level of competition already existed in Massachusetts as a result of
the large number of group rates and deviations approved by the Commissioner during 1996, 1997
and 1998. No decision had been issued by the Commissioner by the end of the fiscal year.

Homeowners
FAIR Plan Rate Increase:

In September, 1998, the Massachusetts Property Insurance Underwriting Association
("FAIR") submitted filings to the Division of Insurance for increases in their Homeowners
product and their Dwelling and Fire product. The Division participated in the hearings and the
case was settled by stipulation. The stipulations resulted in savings to Massachusetts consumers
of $11 5,983.

Medicare Supplement
United Health Care:

In April 1998, United Health Care filed for increases in its Medicare supplement policy rates
to be effective in 1999. These policies are provided to members of the AARP. Following
lengthy hearings before the Commissioner in which the Division actively participated and argued
against the increase, the case was settled by stipulation of the parties. The Commissioner ap-
proved the sfipulation in April 1999. The stipulation resulted in an aggregate rate that was
$578,998 less than United Health Care requested.

Bankers Life & Casualty:

In November 1 997, Bankers Life and Casualty filed for an increase in its Medicare supple-
ment rates to be effective in 1998. All of the policy forms for which Bankers Life seeks a rate
increase are closed to new enrollment. For forms A043 (the Core Plan) and A044 (the MediSup

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2 Plan), Bankers requested 100% and 1 17% respectively. For forms 73X, 98X, and A042, (guar-
anteed renewable age-rated plans with prescription drug coverage), Bankers Life requested
respective rale increases of 83%, 77%, and 64%. For form A040 (age-rated, guaranteed renew-
able Core plan). Bankers requested a 46% increase. The Division intervened in the case and
participated in the hearings. On June 1 1 , the Commissioner disapproved the rate request and
asked Bankers to submit additional evidence to demonstrate the reasonableness of its administra-
tive expenses and other expense components. Following the Commissioner's disapproval, the
parties entered into settlement discussions and settled the case by stipulation. The Commissioner
approved the stipulation in July, 1998 with an effective date of August, 1998. The stipulation
resulted in an aggregate rate that was $24,645,060 less than Bankers requested.

Bankers Life & Casualty:

In November 1998, Bankers Life and Casualty filed for an increase in its Medicare supple-
ment rates to be effective in 1999. All of the policy forms for which Bankers Life seeks a rate
increase are closed to new enrollment. For forms A043 (the Core Plan) and A044 (the MediSup
2 Plan), Bankers requested 157% and 188% respectively. For forms 73X, 98X, and A042, (guar-
anteed renewable age-rated plans with prescription drug coverage). Bankers Life requested
respective rate increases of 51%), 74%, and 52%. For form A040 (age-rated, guaranteed renew-
able Core plan). Bankers requested a 11% increase. The Division intervened in the case and
participated in the hearings. The parties entered into settlement discussions and settled the case
by stipulation. The Commissioner approved the stipulation in March, 1999 with an effective
date of August, 1999 . The stipulation resulted in an aggregate rate that was $16,960,393 less
than Bankers requested

World Insurance Company:

In March 1998, World Insurance Company filed for a rate increase in its Medicare supple-
ment policies. All of the policy forms for which World seeks a rate increase are closed to new
enrollment. For forms D-A041(old Medisup2 policy) and D-A044 (new Medisup 1 policy),
World requested an increase of 52%). For D-A042 (old Medisup3 policy) and D-A045 (new
Medisup2 policy), World requested a 103% increase. The Division intervened in the case and
participated in the hearings. In August, 1998, the Commissioner approved a rate that was
$4,142,244 less than World requested.

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World Insurance Company:

In April, 1 999, World Insurance Company filed for a rate increase in its Medicare supple-
ment policies. All of the policy forms for which World seeks a rate increase are closed to new
enrollment. For forms D-A041(old Medisup2 policy) and D-A044 (new Medisup 1 policy).
World requested increases of 74.5% and 78.1% respectively. For D-A042 (old Medisup3 policy)
and D-A045 (new Medisup2 policy). World requested increases of 48.1% and 50.4% respec-
tively. The Division intervened in the case and participated in the hearings. The case was
ongoing at the end of the fiscal year.

Community Health Plan/ Kaiser Foundation Health Plan of MA:

In April, 1998, Community Health Plan/ Kaiser Foundation Health Plan of MA filed for a
rate increase for its Medicare cost contract. Kaiser asked for a rate of $97.65 per member per
month for the base medical product and $69. 1 0 per member per month for the drug rider. Com-
bining the 2 rates, this represents approximately a 60% increase from last year's rates. The
Division intervened in the case and participated in the hearings. By decision entered September
1998, the Commissioner approved a rate that was $1,489,896 less than Kaiser requested.

CONSUMER PROTECTION/ENFORCEMENT

The Division also engaged in non-rate case related insurance work during fiscal year 1999
that involved consumer protection issues and/or enforcement of the Commonwealth's insurance
I laws. Representative matters include:

EMPLOYERS FAILURE TO REMIT HEALTH INSURANCE PREMIUMS

During the 1 999 fiscal year, the Division continued to investigate complaints against employ-
ers who allow their group health plans to lapse because of their failure to remit health insurance
premiums or their failure to provide sufficient funds to cover their employees' health costs.

Investigations

The Division investigated 53 employers in response to these types of complaints during this

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fiscal year. The Division has seen a marked decrease in the volume of "failure to remit" com-
plaints since 1996, when the Division was instrumental in promulgating an Attorney General
regulation, 940 CMR 9.00, that requires insurers to pay claims until they have notified employ-
ees directly of any termination of coverage. With the exception of disputes between a single
employee and the employer, most complaints now relate to self-insured plans.

Bankruptcy Intervention
Summit Plastics

During the fiscal year, the Division's motion to intervene in the bankruptcy filing of Summit
Plastics was allowed by the bankruptcy court. Summit filed for chapter 1 1 protection leaving its
former employees with medical bills in excess of $22,000 outstanding. The matter was still
pending at the end of the fiscal year.

Boston Regional Medical Center (BRMC)

BRMC filed for reorganization under chapter 1 1 of the bankruptcy code on February 2, 1999.
Prior to the bankruptcy, BRMC had deducted a portion of the health insurance premiums from
the employees' pay checks for approximately two months. BRMC failed, however, to remit
those payments to the appropriate carriers. This resulted in unpaid medical bills for Fallon
Health Care participants (approximately 240 employees) in the amount of $200,000. The Divi-
sion filed a Motion to Intervene on February 24, 1999 on behalf of the employees which was
allowed by the court. The Division is working on a settlement and stipulation that would allow
BRMC to remit payment to Fallon which would, in turn, pay the outstanding medical bills.

NewCare Health Corporation (NewCare)

NewCare employees began contacting the Division' Insurance Hotline in June with com-
plaints about employee benefits not being funded. Through an investigation, prompted by the
complaints received, the Division learned that NewCare had failed to remit premiums deducted
from employee paychecks, as far back as January 1999, to the appropriate carriers, including
Blue Cross Blue Shield and Health New England. On June 22, 1999, NewCare filed for protec-
tion under chapter 1 1 of the bankruptcy code. After the close of the fiscal year, the Division filed
a Motion to Intervene on behalf of the employee consumers for payment of their medical claims.

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Agreements

East Coast Medical (Massachusetts Rehab)

Jeff Greenfield, M.D. failed to remit employee paycheck deductions to New England Health
Care (NEHC) between February 28, 1997 and April 21, 1997. After negotiations with
Greenfield's attorney, we received payment to satisfy the outstanding medical bills for the five
employees affected.

Everett Plating

An employee of Everett Plating complained that it was delinquent in its payments to the
insurance company even though the premiums were deducted from the employees' paychecks.
Through our intervention, the company remitted the premiums due and the benefits were rein-
stated.

Oasis Health Care

Employees of Oasis informed this Office that the self-funded health insurance plan was
tenninated retroactively and that there were outstanding medical bills in excess of $100,000.
Because it involved the self fimded plan of a large national corporation, the Division referred the
case to the US Department of Labor.

FMK Manufacturing

An employee of FMK Manufacturing was promised health insurance as a benefit of employ-
ment. Nonetheless, FMK failed to honor that promise. As a result, the employee and his family
incurred medical bills in the amoimt of $2564. Through our intervention, FMK reimbursed the
employee for the outstanding medical bills.

Valley Gage

The Division entered into an agreement with self-insured employer Valley Gage, Inc. In
which Valley Gage promised to pay off numerous outstanding claims against its health plan.
Valley gage paid off approximately $25,000 of the $37,000 of outstanding claims before going
out of business this year.

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Violations of 940 CMR 9.00

Following an investigation of some companies' failure to pay their health insurance premi-
ums, the Division discovered that three local HMOs were in violation of 940 CMR 9.00. (940
CMR 9.00 is the Attorney General regulation that requires insurance carriers, including HMOs,
to pay medical claims imless they have notified employees that the coverage has been canceled
for non payment of premium by their employer). The HMOs had refused to pay health insurance
claims of employees of a number of companies without first notifying the employees that their
coverage had been canceled because of nonpayment. That investigation was ongoing at the end
of the fiscal year.

HEALTH COVERAGE

During the 1999 fiscal year, the Division undertook a variety of initiatives in the areas of
health insurance coverage and managed care.

Hospital and HMO Community Benefits

A member of the Division oversees the implementation of the Attorney General's HMO
Commimity Benefits Guidelines. During the 1998-99 fiscal year, the Division member provided
guidance to the HMOs in their completion of their annual community benefits reports and ana-
lyzed those reports.

Communirv Benefits Task Force

i
A member of the Division also oversees the Attorney General's Advisory Task Force on 1

Hospital and HMO Community Benefits, which was convened in June 1 998 for the purpose of ,
advancing the goals of the Community Benefits Guidelines. This Task Force includes represen- !
tatives of hospitals, HMOs, insurance carriers, health maintenance organizations, community j
health advocacy groups and relevant state agencies, and is organized into several working groups;!
that focus on the key elements of community benefits including needs assessment, program
evaluation and community participation. There were initially five working groups: (1) Confer- j
ence Planning (now concluded); (2) Statewide Public Health Initiative; (3) Community Participa-
tion; (4) Needs Assessment and Outcomes Evaluation; and (5) Guideline Implementation Issues.

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Community Benefits Conference: Good, Better. Best:
Making the Most of Community Benefits

A member of the Division, working with the Task Force, played a lead role in planning a
major conference focusing on community benefits best practices that took place in October 1998
The Conference was attended by a diverse group of more than 300 hospital, HMO and commu-
nity organizations from across the state. Panelists included representatives from Harvard School
of Public Health, the Heller School at Brandeis University, Stonehill College, Yale University
School of Medicine, the MHA, MAHMO, Health Care for All, the Massachusetts Department of
Public Health and representatives from hospitals, HMOs, Blue Cross Blue Shield of Massachu-
setts and community organizations.

Non-Group Health Insurance Advisory Board

Following the appointment by the Attorney General of the two consumer members to the
Nongroup Health Instu-ance Advisory Board, the Division continued to review the work of the
Board.

Balanced Budget Act, Medicare Plus Choice and Prescription Drug Coverage

Following the issuance of regulations by HCFA that implied that the Balanced Budget Act (
the "BBA") preempted all state mandated benefits insurance laws, the Division worked with
health advocacy organizations. Members of the Division met regularly with the advocates and
with members of the Administrative Law Division in challenging the preemption by the BBA of
the Massachusetts statute and regulations. The Office litigated the issue in the U.S. District and,
following an adverse decision, appealed that decision to the First Circuit.

The Division worked with the Attorney General in the preparation of his testimony presented
to the Joint Committee on Health Care of the Massachusetts legislature. The Attorney General
supported the expansion of the Senior Pharmacy Program from its current $750 per year benefit
to $1,500 per year. In addition, the Attorney General supported the expansion of the eligibility
requirements so that more seniors would be eligible to participate in the Senior Pharmacy Pro-
gram.

In addition, a member of the Division works with a coalition of health care advocates seeking
to find aUemate mechanisms to provide prescription drug coverage for seniors. The Coalition

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has drafted and filed proposed legislation which would expand the current Senior Pharmacy Plan
to include more elders and to increase the drug benefit.

Infertility Treatment Coverage

Members of the Division investigated the use of age limits by HMOs on the coverage of
infertility treatments in violation of the Infertility Benefits Mandate, G. L. M. c. 175, § 47H, i.e.,
the HMOs would not cover treatments such as artificial insemination for women over 42-45
years of age. Members of the Division met separately with representatives from three HMOs.
The HMOs agreed to cease using age limits.

Continuation Coverage after Divorce

A member of the Division participated in a working group made up of various health care
advocates to provide education to pro se divorce litigants on their rights to continuing coverage
in the event of divorce. The group prepared a brochure to be distributed to all divorce litigants
through the probate court. In addition, the group drafted amendments to the current statute to
clarify the rights of divorcees to continuing coverage.

LEGAL ACTIONS

Commonwealth v. Fraternal: Following complaints from consumers who had pur-
chased health insurance from the Fraternal Insurance Group, the Division determined that
Fraternal was operating an unlicensed insurance company and had over one million
dollars in outstanding medical claims with no assets to pay those claims. The Division
filed a complaint against Fraternal Insurance Group, its owner, Paul J. Pereira, and
obtained a preliminary injunction against them, prohibiting them from engaging in the
business of insurance, accepting premiums of fees from consumers in connection with
insurance and freezing their bank accoimts. The Commonwealth's Motion for Summary
Judgment was allowed and judgment has entered for the Commonwealth.

Commonwealth v. Fraternal: Subsequent to the entry of a preliminary injunction
prohibiting them from accepting insurance premiums, the defendants. Fraternal Insur-
ance Group, its owner, Paul J. Pereira. accepted insurance premiums from several con-

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sumers. The Division filed a contempt of court action and obtained judgment against
Mr. Pereira.

Paul J. Pereira (Fraternal) Following suit by the Commonwealth, Mr. Pereira filed for
protection under c. 13 of the Federal Bankruptcy code. The Division intervened in the
bankruptcy on February 11, 1999. On May 5, 1999, the Division filed a Motion to
Dismiss Mr. Pereira's bankruptcy. The bankruptcy was dismissed on June 10, 1999. As
a result, Mr. Pereira's assets are no longer under the protection of the Federal Bank-
ruptcy court. This will aid in the recovery of a civil judgment in the amount of approxi-
mately $1.9 million the Division has obtained against Mr. Pereira.

LONG TERM CARE INSURANCE

During the 1998-1999 fiscal year, the Division continued its work in the examination of
problems faced by elders in financing nursing home and other long-term care.

Consumer Complaints and Education

The Division responded to numerous consumer inquiries regarding long-term care insurance.
A member of the Division made presentations to elder and other organizations conceming long-
term care insurance.

Long-term Care Task Force

Members of the Division, together with Bureau attorneys, continued to participate in a
statewide Task Force on Long-Term Care Financing (the "Task Force"). The Task Force is a
bipartisan effort led by the Attorney General and the Governor to develop strategies to increase
the private financing options for long-term care, and to provide financial security to elders who
risk impoverishment from the costs of long-term care services. Participants include representa-
tives of the relevant state agencies (Office of the Attorney General, Division of Medical Assis-
tance, Division of Insurance, Executive Office of Elder Affairs, and the Group Insurance Com-
mission), consumer and elder advocacy groups, the insurance industry and long-term care pro-
vider organizations. The Task Force is an outgrowth of the Interagency Workgroup on Long-
Term Care Financing, in which members of the Division and Bureau attorneys worked with the
Division of Insurance, the Division of Medical Assistance and the Executive Office of Elder

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PUBLIC PROTECTION BUREAU

Affairs during the first part of the 1997 fiscal year to produce a preliminary report that called for
further study of certain issues.

Members of the Division serve on the Task Force Steering Committee, and have worked
on and participated in several working groups that studied and made recommendations on a
number of issues. These included the redrafting of Division of Insurance regulations on long-
term care insurance and the acceleration of death benefits in life insurance policies, public educa-
tion concerning long-term care financing, and development of alternative insurance products to
cover some of the costs of long-term care, such as the offering of long term care insurance to
state employees through the Group Insurance Commission. Members of the Division have taken
lead roles in drafting major revisions to the Division of Insurance's long-term care insurance and
life insurance regulations for the purpose of expanding the private options available for covering
the costs of long-term care, while enhancing consumer protection. The revised regulations are
set to be promulgated early in the next fiscal year. The work of the Task Force will continue into
the next fiscal year with a focus on designing consumer education and disclosure materials.

LIFE INSURANCE LITIGATION

Consumer Complaints

During the year, the Division continued to devote a considerable amount of time and re-
sources to sales practices in the life insurance industry. These practices included the alleged
misrepresentations made by various life insurance companies in the sale of their life insurance
products. These misrepresentations generally involved "churning" (the practice of turning in old
policies for new policies on the representation that the old policies would fully or partly support
the new); "vanishing premiums" ( the promise that premiums would no longer be necessary after
a finite number of years). The Division mediated cases on behalf of individual consumers and
also engaged in discussions with several companies that would resolve the cases on a global
basis.

Companies with whom members of the Division mediated individual complaints included:
Midland Life, Mutual of New York (MONY), Zurich Kemper, Beneficial Standard Life,
Conseco, Mass Mutual, Boston Mutual, Delaware American life. Presidential and Equitable Life.
The Division estimates that benefits to policyholders as a result of its intervention were in excess
of $500,000.

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Prudential Life Insurance Company of America Claims Settlement: The Division
continued to monitor the Alternative Dispute Resolution ("ADR") process detailed in our
consent judgement against The Prudential and in the global class action settlement. In
addition, the Division provided advice to policyholders who were dissatisfied with their
settlement proposal and wished to appeal the decision. The Division continued to partici-
pate in the Regulatory Oversight Group that is conducted by the various states to ensure
the fairness of the remediation process. Members of the Division also spend time with
policyholders who do not understand the offers made to them. The processing of claims
and appeals, and accordingly the Division's work, will continue into the next fiscal year.

Hancock Mutual Insurance Company: On March 25, 1998, the Division filed a con-
sent judgement in which John Hancock agreed to provide global relief for the alleged
deceptive sales practices of its agents from 1979 through 1996. The judgment provided
relief to approximately 250,000 Massachusetts policyholders. In the litigation, the
Division, as in the case against The Prudential, alleged that John Hancock engaged in
three primary deceptive sales practices in the sale of whole life, universal life and vari-
able life insurance policies, as well as certain mutual fiinds and aimuities sold during that
time frame. The Division alleged that John Hancock engaged in: "churning" or replace-
ment and financing; "vanishing premiums" or "abbreviated premium payment" plans;
and selling life insurance as an investment, retirement plan, savings plan or college
savings plan, the practice of selling life insurance by either disguising the product as life
insurance or minimizing the life insurance of the product.

On May 1, 1998, the Division set up a consumer hotline to assist policyholders in making
appropriate elections of either ADR or General Policy Relief ("GPR") and to assist them
in filing their claim forms in a manner designed to afford them the best possible relief
Between fiscal year 1998 and fiscal year 1999, the Division received and responded to
over 22,000 calls. The hotline was still in operation at the end of the fiscal year.

Between fiscal year 1998 and fiscal year 1999, the Division also conducted twenty-one
(21) claim form assistance seminars, fraveling across the state to reach as many policy-
holders as possible. The Division also met in small group sessions twice per week with
John Hancock policyholders in order to assist those individuals who need special atten-
tion due to disability or age and for those who cannot attend a large group seminar. The
Division has met with and assisted almost 3,000 policyholders through personal assis-
tance and seminars.

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PUBLIC PROTECTION BUREAU

In addition to consumer outreach, the Division has continued to allocate substantial
resources and manpower to monitoring and participating in the training of claims ana-
lysts. The Division conducted four audits of the ADR claims and brought its concems to
the company's attention which resulted in the retraining of analysts. The Division
continues to meet with defendants and plaintiffs' counsel in order to ensure compliance
with the letter and spirit of the settlement.

In addition, members of the Division mediated individual complaints for out-of -class

policies which has resulted in refunds of $520,000 to over 50 John Hancock policyhold-

I
ers. I

MetLife. Members of the Division began initial discussions with MetLife on the possi-
bility of settling the national class action suit pending against MetLife.. Members of the
Division mediated individual complaints against MetLife resulting in refunds of over
$100,000 in cash and $287,000 in additional death benefits to twenty five MetLife policy-
holders.

CONSUMER ASSISTANCE

In addition to the many consumer complaints which the Division was able to resolve on
behalf of consumers, members of the Division explained and worked with many consumers to
guide them in such matters as: understanding the intricacies of various entitlement programs and:
the interplay between them; the billing practices of their health insurers; continuation of health
insurance coverage following termination of employment or following divorce and the like.
While no monetary consumer benefit can be placed on these activities, they provide a valuable
service to Massachusetts consumers, many of whom are elderly or who have no other sources to
turn to for help.

Consumer Mediation

Members of the Division mediated several matters on behalf of consumers throughout the
year.

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PUBLIC PROTECTION BUREAU

Consumer Hot-Line and Paralegal Resolution of Inquiries and Complaints

During the fiscal year, the Division received and responded to over 9,250 telephone inquiries,
an increase of almost three percent from the prior fiscal year. In addition, the Division opened
and mediated on behalf of consumers 1371 written complaints. The Division closed 1435 com-
plaints. Over $1,847,500.00 were received by consumers through the intervention of the parale-
gal and volunteer interns, an increase of 4.5% over the prior fiscal year.

AGELDER:

The Attorney General's Elder Hotline is a fairly recent initiative that began operation on June
16, 1997. The hotline was established in response to the high volume of calls from, or relating to,
the elderly that come into the Attorney General's office. In the past fiscal year, the number of
calls and the number of elders helped has continued to increase. The hotline has fielded approxi-
mately 5,241 phone calls in the past fiscal year. The hotline staff provides information, referrals,
and mediation services to resolve the concerns of callers. The hotline is staffed by 10 elder
volunteers and 3 part-time staff members who receive monthly trainings on elder issues. The
majority of callers are elders, with an increasing number of calls coming from the children of
elders as well as with professionals who deal with elders in the course of their duties. Since its
inception, AGELDER has increased its mediation activities and these activities benefitted elders
in the amount of $93,046.23 during the past fiscal year.

The calls are remarkable for their variety, although some trends are discemable. Consumer
issues and complaints have been the number one concern. Within this group complaints and
queries about businesses and private contractors and reports of telemarketing and other scams
directed at the elderly have been primary. Health insurance, especially Medicare, Medigap and
Medicare HMOs and long-term care insurance constitute another broad area of concern. The
hotline also receives calls about tenant/landlord issues, financial exploitation, home care, benefit
programs, health concems and questions, fransportation problems, charities and non-profits and

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OTHER ACTIVITIES

Legislative Activities

A member of the Division testified, on behalf of the Attorney General, before the Massachu-
setts Joint Committee of Insurance in support of two bills, S. 733 and S.734, both bills sponsored
by Senator Dianne Wilkerson. Both bills would prohibit discrimination by insurance companies
on the basis of gender.

Guest Speakers

Members of the Division made presentations to several organizations regarding insurance
and financial exploitation of seniors.

ESTIMATED SAVINGS TO CONSUMERS

Auto Rate Case 443,000,000

Medigap Insurance Rate Cases 43,674,347

FAIR Rate Case 115,983

Life Insurance Individual Case Mediation 1 ,297,000

Consumer Hotline 1 ,847,500

AGELDER Mediation 93,046

Total 490,027,876

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PUBLIC PROTECTION BUREAU

UTILITIES

The bulk of the utiHty workload of the Regulated Industries Division in fiscal year 1999
Involved advocacy of consumer interests in connection with the implementation of the dramatic
changes underway in the telephone, electric and gas utility industries. There was only one
traditional rate case, but a number of proceedings related to mergers between utility companies
— two mergers between gas utilities were approved and another was proposed as were two
involving electric utilities. Implementation of the 1997 Electric Restructuring Act (St. 1997, c.
164) continued with the final proceedings on individual electric utility company restructuring
plans as well as proceedings concerning sales of electric generating facilities, annual transition
cost reconciliation filings, and the design of the "default" power service that must be made
available to all customers. Work continued among interested parties to make competitive gas
supplies available to more customers and the further progress was made at expanding the range
of activities in which competition could occur in the telecommunications industry. The Division
was an active participant in all of these developments. It advocated new structures and rules to
maximize the consumer benefits from the change in regulatory approach as well as to protect the
interests of small residential and business customers during the transition to new regulatory
frameworks. Most of this work occurred in adjudications of specific cases. Examples of the
Division's public utility work relative to each industry in fiscal year 1999 include the following:

UTILITY MERGERS

Eastern Enterprises - Essex Gas Company, D.T.E. 98-27

On February 27, 1998, Eastern Enterprises (the corporate parent of Boston Gas Com-
pany) and Essex County Gas Company filed a joint petition in connection with a pro-
posed merger in which they sought DTE approval of a "rate plan" under G.L. c. 164, §
94. Among other things, the rate plan called for the current rates of Essex to be"frozen"
at current levels for 10 years and for Essex to be allowed to amortize the acquisition
premia and other costs of the merger during that 10 year period. The Division opposed
DTE approval of this rate plan on the grounds that a rate freeze would harm, not benefit
Essex's customers and, thus, that the Companies had not made the required demonstra-
tion that allowing the recovery of acquisition premia costs would not harm consumers,
that in addifion, the Division urged the DTE to require the Company to implement a plan
to ensure the quality of the service provided to Essex's customers did not deteriorate as a
result of the merger. In a decision issued on September 17, 1998, the DTE concluded that
a rate freeze would benefit customers and approved the rate plan, but it did require the

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Companies to put into place a service quality plan.

Northern Indiana Public Service Company - Bay State Gas Company, D.T.E. 98-31

On March 209, 1998, Northern Indiana Public Service Company ("NIPSCo") and Bay
State Gas Company filed a joint petition in connection with the proposed acquisition of
Bay State by NIPSCo in which they sought DTE approval of the transaction under G.L. c.
164, § 96 and of a "rate plan" under G.L. c. 164, § 94. The rate plan called for the rates
of Bay State that would be in place November 1 999 (the end of an earlier rate plan) to be
frozen for five years, but with rate reductions required/rate increases allowed to the extent
the Company's earnings exceeded/fell below certain levels. The rate plan also provided
for Bay State being permitted to recover the costs of the transaction in the future to the
extent that it demonstrated that those costs had been offset by savings resulting from the
merger. The Division opposed DTE approval of this rate plan on the grounds that a rate
freeze would result in Bay State's customers paying higher rates than they otherwise
would and argued that the Companies had not demonstrated that allowing the recovery of
acquisition premia costs would not harm consumers. In addition, the Division urged the
DTE to require the Company to implement a plan to ensure the quality of the service
provided to Essex's customers did not deteriorate as a result of the merger. In a decision
issued on November 5, 1998, the DTE concluded that a rate freeze would benefit custom-
ers and approved the rate plan, but it did require the Companies to put into place a service
quality plan.

Eastern Enterprises - Colonial Gas Company, D.T.E. 98-128 On December 24, 1998,
1999, Eastern Enterprises (the corporate parent of Boston Gas Company and Essex
County Gas Company) and Colonial Gas Company filed a joint petition in connection
with a proposed merger in which they sought DTE approval of a "rate plan" under G.L. c.
164, § 94. Among other things, the rate plan called for the current rates of Colonial to
be"frozen" at current levels for 10 years, as well as for Colonial being permitted to
include in its rates over the subsequent 10 years an annual charge of approximately $12.3
million to offset "costs" from the merger to the extent its rates in 2009 are less than the
level that they would have attained had its 1998 rates been increased by $8.5 million (10
percent) and then been further increased each year between 1 999 and 2000 by the overall
rate of inflation less 1.5 percent. The Division opposed DTE approval of this rate plan on
the grounds that its approval would result in "harm" to consumers. The Division spon-
sored two expert witnesses and argued during the course of eight days of evidentiary
hearings and in briefs filed in May 1999. that Colonial's current rates were excessive and

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PUBLIC PROTECTION BUREAU

that approval of the Companies' proposal would resuh in Colonial's customers paying
higher rates than they would in the absence of the rate plan. A decision in this case had
not been issued at the close of the fiscal year.

BEC Energy - Commonwealth Energy System, D.T.E. 99-19

On February 1, 1999, BEC Energy (the corporate parent of Boston Edison Company)
and Commonwealth Energy System (the public utility holding company parent of Cam-
bridge Electric Light Company, Commonwealth Electric Company, Canal Electric
Company and Commonwealth Gas Company) filed a joint petition in connection with a
proposed merger in which they sought DTE approval of a "rate plan" under G.L. c. 164, §
94. The rate plan called for the current rates for all four utility subsidiaries to be "frozen"
at current levels for four years as well as DTE approval of the utilities recovering through
rates over the next 40 years approximately $1 billion in "costs" resulting from the merger.
The Division was an active participant in the DTE proceeding, opposing the rate plan on
the grounds that its approval would result in "harm" to consumers because the Compa-
nies had not shown that their current rates were reasonable or the rates that would result
under the plan (with the inclusion of the merger costs) would be reasonable. Following
several days of evidentiary hearings, including testimony by two expert witnesses spon-
sored by the Division, briefs were filed in May and June 1999. A decision in this case
had not been issued at the close of the fiscal year.

New England Electric System - Eastern Utilities Associates, D.T.E. 99-47

On April 30, 1999, Massachusetts Electric Company and its wholesale affiliate. New
England Power Company, togther with Eastern Edison Company and its wholesale
affiliate, Montaup Electric Company, filed a joint petition with the DTE seeking approval
of the merger of Eastern Utilities Associate's electric company operating subsidiaries into
the New England Electric System's ("NEES") electric company operating subsidiaries as
well as of rate plan for MassElectric after the merger with Eastern Edison. The proposed
rate plan included provisions concerning the recovery of the acquisition premium and
transaction costs associated with the acquisition of EUA by NEES as well as the acquisi-
tion of NEES by National Grid Company. The DTE held public hearings on the proposal
during June 1999, but evidentiary hearings had not yet begun at the close of the fiscal
year.

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ELECTRIC MATTERS

Electric Restructuring Plans

Western Massachusetts Electric Company, D.T.E. 97-120.

As required under the terms of the Electric Utility Restructuring Act, on December 31,
1997, Western Massachusetts Electric Company filed a proposed restructuring plan with
the DTE, which it supplemented in January 1998. Following a review of the Company's
proposal and two evening public hearings, the Division filed comments with the DTE,
arguing that the proposal did not satisfy the standards of the Act. In a February 1998
decision, the DTE granted interim approval to the Company's plan, but ordered minor
modifications as well as further review and investigation. The Company modified its
plan in May and later filed testimony in support of its proposal for the treatment costs
related to its Millstone nuclear facilities. During 27 days of evidentiary hearings held
between September 1998 and January 1999, the Division opposed the Company's plan
through cross-examination of the Company's witnesses as well as through the presenta-
tion of the testimony of four expert witnesses who, among other things, proposed another
approach to the Company's nuclear costs which reduced its recovery of nuclear costs to
reflect the impact that years of mismanagement had on the market value of those facili-
ties. The Division also opposed the Company's proposal to shift onto Massachusetts
customers responsibility for costs that had previously been borne by the customers of its
Connecticut affiliate as well as a number of erroneous approaches to accounting issues
proposed by the Company. Briefs were filed in March and April 1999 and a decision by
the DTE was pending at the close of the fiscal year.

Fitchburg Gas & Electric Light Company (DTE 97-115)

As required under the terms of the Electric Utility Restructuring Act, on December 31,
1997, Fitchburg Gas & Electric Light Company filed a proposed restructuring plan with
the DTE, to which the DTE granted interim approval in February 1998. Following four
days of evidentiary hearings, the Division filed briefs in May 1998 in which it urged the
DTE to modify the Company's proposal to, among other things, include lower distribu-
tion rates, require that the accounting for the Company's earlier Seabrook loss be brought
in compliance with a 1985 settlement, and reduce the amount of the balance claimed by
the Company for deferred income tax liabilities related to its electric generating invest-
ments. In a decision issued on January 15, 1999, the DTE rejected the proposal for lower
distribution rates but generally agreed with the Division's position on the interpretation of

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the 1985 agreement on the Company's Seabrook, loss as well as on the treatment to be
given to revenue shortfalls resulting from discount power contracts and the design of the
low income rates required under the Electric Restructuring Act. The DTE deferred final
resolution of the Seabrook and deferred income tax issues until the results of an indepen-
dent audit.

Generation Asset Divestiture

Boston Edison Company /Commonwealth Electric Company, D.T.E. 98-118/119/126

In December 1998, Boston Edison filed a petition with the DTE seeking approval of an
agreement to sell its Pilgrim nuclear power plant to a wholly owned subsidiary of Entergy
Corporation and, pursuant to G.L. c. 164, § IH, to "securitize" (refmance with bonds
supported by a pledge of transition charge revenues) approximately $730 million of its
remaining stranded costs. Commonwealth Electric Company, a contract purchaser of 1 1
percent of the output from Pilgrim, had entered into an agreement to terminate its life-of-
unit agreement with Boston Edison and a substitute agreement with the Entergy subsid-
iary. ComElectric also filed a petition with the DTE seeking approval of its agreements.
The DTE consolidated its consideration of the ComElectric petition with the two related
Boston Edison proceedings. The Division participated in six days of evidentiary hear-
ings and filed Initial and Reply Briefs in March 1 999 arguing that the limited financial
resources of the single purpose Entergy subsidiary impaired substantially the claimed
value to Edison's customers of the transfer to that subsidiary of the Pilgrim decommis-
sioning liability. In addition, the Division argued that the Company's earlier settlement
agreement precluded Edison's proposal to shift onto its retail customers Pilgrim related
stranded costs recovered previously under wholesale service contracts with municipal
customers. On March 22, 1 999, the Department approved the sale of Pilgrim and the
related ComElectric proposals without modification. On April 2, 1999, the DTE ap-
proved the Company's securitization proposal.

Eastern Edison Company/Montaup Electric Company, D.T.E. 99-9

On January 7, 1999, Eastern Edison and its wholesale affiliate, Montaup Electric Com-
pany, filed a petition with the Department requesting approval of the sale by Montaup of
its minority interest (2.89989 percent) in Seabrook to Little Bay Power Corporation, a yet
to be formed affiliated of Great Bay Power Corporation ("Great Bay"), a single purpose
corporation formed in the 1980s to take title to another minority interest in the Seabrook
plant divested as a part of the bankruptcy plan of EUA Power Corp., a former affiliate of

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Eastern and Montaup. Following evidentiary hearings, the Division filed briefs in April
and June urging the DTE to reject the sale. The Division argued that Montaup had not
maximized the benefits to consumers because the requirement that Little Bay assume
Montaup's liability for decommissioning Seabrook reduced the sales price while the
purported transfer of liability had little value in light of the fact that Little Bay lacked the
financial strength to withstand any adverse developments at the plant. The Division
argued that a premature shutdown of the plant would be likely to lead to a decommission-
ing default by Little Bay and such a development would result in harm to Massachusetts
consumers, potentially even the customers of Eastern, who could possibly be required to
make up any resulting shortfall. A decision was pending at the end of the fiscal year.

Eastern Edison Company/Montaup Electric Company, D.T.E. 99-105

On November 21, 1997, Eastern Edison Company ("Eastern") and its wholesale affiliate,
Montaup Electric Company ("Montaup"), (collectively the "Companies"), filed a petition
seeking DTE approval of the sale of the Montaup's Somerset station and Montaup's 1.96
percent minority interest in Wyman Station. Following two days of evidentiary hearings,
the Division entered into a stipulation with Montaup reserving all rate issues for a
Montaup proceeding before the Federal Energy Regulatory Commission and, subject to
the terms of that agreement, the DTE approved the sales in a decision issued on April 27,
1999.

Commonwealth Electric Company, Cambridge Electric Light Company, Canal
Electric Company/Eastern Edison Company, Montaup Electric Company, DTE 98-

78/83

On July 31, 1998, the electric subsidiaries of the Commonwealth Energy System —
Commonwealth Electric Company ("ComElectric"), Cambridge Electric Light
("CELCo"), and Canal Electric Company ("Canal") — filed a joint petition with the DTE
seeking approval of the sale of substantially all of their non-nuclear generating facilities
to Southern Energy New England, the allocation of the proceeds between the two retail
subsidiaries — CELCo and ComElectric — and the terms under which those proceeds
would be returned to those companies' retail customers. On August 7, Eastern Edison
Company and its wholesale affiliate, Montaup Electric Company, filed a petition with the
DTE seeking approval of the sale to Southern Energy of Montaup's minority interest in
one of the ComEnergy generating units. The two proceedings were consolidated. Fol-
lowing three days of evidentiary hearings, the Division filed Initial and Reply Briefs in
which it urged the Department to approve the sale as well as the proposed allocation of

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proceeds between ComElectric and CELCo, but to reject the Companies' proposal to pay
carrying costs on the balance of proceeds to be returned to customers at a significantly
lower rate than the carrying costs paid by customers on the unamortized balance of the
Companies' transition costs. Harvard University and Massachusetts Institute of Tech-
nology filed briefs arguing that the Companies should be required to allocate a greater
portion of the proceeds to CELCo. In an order issued on October 30, 1998, the DTE
approved the sale but deferred ruling on the allocation and carrying cost issues pending
the development of further information at supplemental hearings. Following a day of
supplemental evidentiary hearings, the Division filed a supplemental brief and on Decem-
ber 23, the DTE issued an order in which it adopted an allocation of the proceeds consis-
tent with the position taken by the Division but allowing the Companies' carrying cost
proposal, subject to a later review of the Companies' efforts to maximize the benefits to
their customers from the proceeds.

Eastern Edison Company, D.T.E. 99-21

On February 16, 1999, Eastern Edison filed a petition with the Department seeking
approval, pursuant to G.L. 164 § 17 A, to guaranty payment of the obligations of its
wholesale affiliate, Montaup Electric Company, under an agreement whereby Montaup
transferred to Constellation Power Source, Inc. ("Constellation") its rights to power under
various power purchase agreements and its entitlement to power from Hydro Quebec in
exchange for Constellation's agreement to supply power to serve Eastern's standard offer.
Following an evidentiary hearing, the Division notified the Department that it would not
oppose approval of the petition. A DTE decision had not been issued at the end of the
fiscal year.

Fitchburg Gas & Electric Light Company, D.T.E. 98-121

On November 20, 1998, Fitchburg Gas & Electric Light Company filed a petition seeking
DTE approval of a proposed sale of its minority interest in United lUuminafing
Company's New Haven Harbor generating station. Following discovery, the Division
nofified the DTE that it would not challenge the proposed sale but would participate in
the later proceeding in which the Department would consider the appropriate rate treat-
ment to be given the proceeds from the sale.

Western Massachusetts Electric Company, D.T.E. 99-29

On May 4, 1999, Western Massachusetts Electric Company filed a petition seeking DTE
approval of an agreement to sell its fossil generating facilities to Consolidated Edison

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PUBLIC PROTECTION BUREAU

Energy, Inc. and of a proposal to allow the Company to retain a portion of the proceeds.
Following a favorable ruling by the hearing officer limiting the scope of the proceeding
to the question of whether the terms of the sale satisfied the requirements of the Electric
Restructuring Act, the Division notified the DTE that it did not oppose the sale. A DTE
decision had not been issued by the close of the fiscal year.

Miscellaneous Electric Restructuring Proceedings

Boston Edison Company, D.T.E. 98-111.

On November 4, 1998, Boston Edison filed with the DTE proposed new rates and
charges designed to provide the first annual reconciliation of it transition charge and to
increase the price of its standard offer. In comments filed in December, the Division
argued that the filing represented a "general increase in rates" and that the Department
should hold a hearing on the propriety of the Company's proposal. In a decision issued
on December 31, 1998, the DTE allowed the Company's proposal to go into effect but
agreed that hearings were appropriate. Hearings were held in early March and in briefs
filed in April, the Division urged the Department to reject the Company's proposal
regarding the pension expenses related to its former generation employees, the treatment
of revenues from sales of power from its former fossil plants, and the computations
required under provisions of an earlier settlement agreement creating performance incen-
tives governing the Company's recovery of Pilgrim related costs. A DTE decision had
not been issued by the close of the fiscal year.

Boston Edison Company, D.T. E. 97-95

In October 1997, the DTE opened an investigation to determine whether Boston Edison
had complied with the terms of a 1993 DTE order which approved up to $45 million of
investments into an unregulated subsidiary for the express purpose of pursuing invest-
ments in three specified areas: demand side management, electric motor vehicles, and
power generation. The focus of the investigation was the Company's involvement in a
telecommunications/cable TV joint venture with RCN Corporation which involved cash
investments, transfers of assets, and guarantees of indebtedness. During 27 days of
hearings, ending in March 1999, Boston Edison and Cablevision of Boston presented 13
witnesses. Although it acknowledged the pro-competition impact on the market for cable
TV and telecommunications services that resulted from the Company's investment, in
briefs filed in May and June, the Division argued that Company had failed to comply
with the 1 993 order. In particular, the Division argued that the Company had made

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PUBLIC PROTECTION BUREAU

investments beyond the $45 million authorization and that the joint venture was outside
the scope of the activities in which the DTE approved investments in its 1993 decision.
The Division urged the DTE to require the Company to divest its interest in the joint
venture and to credit its electric customers with any gain. A DTE decision had not been
issued at the close of the fiscal year.

Fitchburg Gas & Electric Light Company, D.T.E. 98-120

On October 30, 1998, Fitchburg Gas & Electric Light Company filed a petition with the
DTE seeking approval of a contract with Constellation Power Sources, Inc. ("Constella-
tion") to supply the Company's entire standard offer service load between January 1,
1999 and February 28, 2005 and a motion seeking a protective order against disclosure of
the terms and pricing of the contract. The Division opposed the Company's motion for a
protective order. In its January 15, 1999, decision on the Company's restructuring plan,
the DTE approved the contract and denied that portion of the Company's motion that
sought protection against disclosure of the pricing terms of the contract but allowed that
portion concerning non-pricing terms.

Fuel Clause Balances, D.T.E. 98-13

On January 22, 1 998, the DTE issued a notice of inquiry soliciting comments regarding
the treatment of any outstanding fuel and purchased power costs balances owed by or to
utilities at the March 1 , 1 998 openings of the retail power market to competition and the
termination of fuel clause recovery of such costs. In comments, the Division urged the
DTE to consider limiting the scope of the inquiry to the identification of appropriate
mechanisms to address any balances found owed or owing in individual company spe-
cific filings and the of the number of outstanding performance issues for each company.
As of the close of the fiscal year, the DTE had not yet issued a decision delineating the
scope of the proceeding.

GAS MATTERS

Base Rate Cases

Fitchburg Gas & Electric Light Company (DTE 98-51) In May 1998, Fitchburg Gas
& Electric Light Company filed a request to increase its gas rates by $1.55 million (9%).
Following 13 days of evidentiary hearings, the Division filed briefs in October 1998, in
which it urged the DTE to reject the Company's proposals to: increase substantially the

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PUBLIC PROTECTION BUREAU

rate at which it depreciates its assets and implement rate redesigns that would result in
substantial increases for some customers. In addition, the Division argued that the DTE
should find that the Company's had violated the provisions of the DTE's cost of gas
adjustment (CGA) regulations concerning the collection of gas inventory financing costs
and require the Company to return the monies wrongfully collected to its customers. In a
decision issued on November 30, 1998, the DTE allowed the Company to increase its
deprecation rates, with the result that it approved a $91 1,883 increase in the Company's
rates. The DTE did accept the Division's position on the requirements of the DTE's
CGA regulations, but deferred ruling on any remedy pending ftirther review in a subse-
quent proceeding to be initiated. In a subsequent decision on a motion by the Company
for recalculation, the DTE increased the amount of the approved rate increase by $86,278.
On March 15, the Company filed a petition seeking an exception fi-om the provisions of
the Department's CGA regulations. Hearings in this matter, D.T.E. 99-32, were sched-
uled to begin after the end of the fiscal year.

Gas Unbundling/Restructuring

Unbundling of Natural Gas Distribution Services, D.T.E. 98-32-B. During the
fiscal year, important developments occurred in connection with ongoing effort to re-
structure the existing natural gas industry to allow all customers to choose among com-
peting suppliers of gas to be delivered by the local distribution company. This undertak-
ing began in 1997 when the Department of Public Utilities, the predecessor of the DTE,
directed the 10 local gas distribution companies to initiate an informal process to build a
consensus among various interested parties on principles upon which to restructure the
existing industry. The Division has participated in this process, representing the interests
of residential and small business customers in numerous meetings and technical confer-
ences, urging, among other things, the principle that any restructuring or unbundling
should not result in an unfair shift of costs from large to small customers. Most of this
effort has been taken as a member of the so-called "Customer Group" (an informal
coalition including the Division of Energy Resources as well as representatives of busi-
ness customers). As a result of the inability of the interested parties to reach an agree-
ment on the allocation of responsibility for the cost of the gas companies' existing gas
supply capacity commitments, in April 1 998, the DTE opened a notice of inquiry to
examine the question of how to dispose of that capacity' as well as the question of alloca-
tion of responsibility for those costs. In May and June 1998, the Customer Group had
filed two rounds of comments and given testimony in support of a requirement that

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PUBLIC PROTECTION BUREAU

existing customers of gas companies be assigned their pro-rata share of supply capacity if
they elect to purchase gas from a third party. On February 1, 1999, the DTE issued its
decision in which it adopted the "mandatory assignment" position advocated by the
Customer Group and set October 1, 1999 as the date upon which all of the gas companies
would be required to provided to all of their customers the option to purchase gas from
competitive suppliers.

To assure continuation of a market for gas supplies for those customers that already had
competitive alternatives, the Division entered into a settlement agreement with interested
parties that: (1) exempted customers who had migrated to transportation service before
February 1 , 1 999 from the mandatory assignment of capacity and (2) provided that those
customers who entered into supply contracts between February 1 and November 1 , 1 999
(including a significant niunber of residential customers) would pay $0.01/ therm or CCF
in lieu of a mandatory assignment of capacity through November 1, 2000, after which
they will be assigned their respective slices system capacity, with the funds collected
being applied to reduce the gas supply costs of residential customers. On April 2, 1999,
the DTE approved the settlement. At the close of the fiscal year, the gas utilities had not
completed all of the tasks necessary to implement restructuring.

TELEPHONE MATTERS

Area Codes

Area Code Conservation in Eastern Massachusetts DTE 98-38.

Shortly before the May 1, 1998, completion of the implementation of the two new area
codes created as a result of a January 23, 1997 DTE order (781 and 978), the national
administrator of North American Number Plan armoimced an imminent shortage of
number resources in the 508 and 617 area codes (March 4, 1998) and as well as in the
new 781 and 978 area codes (May 12, 1998). On April 24, 1998, the DTE opened an
investigation to evaluate means to delay the need for new area codes. The Division
intervened in this proceeding and on June 1, 1998, filed a motion seeking an emergency
order from the DTE requiring all telephone companies to conserve numbers through the
implementation of "virtual nimiber pooling," an approach to number resource conserva-
tion that increases the efficiency with which nimiber resources are used. Shortly after the
beginning of the fiscal year, the industry adopted a voluntary number pooling plan that

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provided much of the number resource conservation sought in the Division's earlier
motion. On March 19, 1999, the Division filed with the Department a report addressing
rate center consolidation, another number conservation mechanism that would reduce the
new number resources needed by new entrants in the market. Hearings on the rate center
consolidation proposal were scheduled to occur after the close of the fiscal year.

Area Code Relief in Eastern Massachusetts, DTE 98-1 1.

On January 11, 1999, the DTE opened an investigation to consider alternative means to
add new area codes in eastern Massachusetts: further division of the geographic areas
covered by the existing area codes, or the implementation of multiple area codes within
geographic areas covered presently by a single existing area code. Following public
hearings, the Division made a request, which was rejected by the DTE, for evidentiary
hearings on issues raised during the course of evening public hearings held throughout
the state. A DTE decision had not been issued at the close of the fiscal year.

DTE Petition For FCC Waivers, NSD File No. L-99-17, 19.

In April 1 999, the Division filed written comments with the Federal Communications
Commission supporting February 1 999 requests by the DTE for authority to implement a
technology-specific overlay (i.e., a separate area code for mobile phones) and/or other
various area code conservation measures in the 508, 617, 781, and 978 area codes. An
FCC decision had not been issued at the close of the fiscal year.

MISCELLANEOUS

Telesave, Inc. DTE 98-59.

On June 15, 1998, Telesave, Inc. filed a complaint with the DTE alleging that Bell Atlantic
engaged in unjust and unreasonable practices by refusing to accept e-mail from its customers
as a valid means to communicate their intention to change long distance service providers.
The Division intervened in this proceeding on behalf of Bell Atlantic's customers. Following
hearings in November 1 998, the Division filed briefs arguing that subject to appropriate
safeguards to ensure secure communications between the Company and its customers. Bell
Atlantic should be required to accept e-mail as a valid means for customers to communicate
their long distance carrier selection decisions. In a decision issued on May 21, the DTE
required Bell Atlantic to accept electronic communications from its customers, but through a
secure web site rather than e-mail. On June 1 1 , Bell Adantic filed a motion seeking reconsid-
eration of the DTE and that motion was pending at the close of the fiscal year.

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OPINIONS

No. 98/99-1

OPINIONS

SCOTT HARSHBARGER
ATTORNEY GENERAL

1& Commonweatth oj ^Massachusetts

office of the Slttomey Qemrai

One ^fiSurton (Pface

(Boston, M^ 02108-1698

No. 98/99-1
September 4, 1998

Honorable William F. Galvin
Secretary of the Commonwealth
One Ashburton Place
Boston, MA 02108

Dear Secretary Galvin:

You recently transmitted to me a series of proposed ballot questions and requested my
opinion whether those questions are ones of "public policy" within the meaning of G.L. c. 53,
§ 19, and, if so, what simple, unequivocal and adequate form is best suited for presentation of
I these questions on the November, 1998, ballot. I have reviewed the proposed questions and have
concluded that, wdth two exceptions, each is a public policy question that may appear, in the
form provided herein, on the November ballot.

The principles governing my review of proposed ballot questions are well settled, have
been reviewed in prior Opinions of the Attorney General, and accordingly need not be exten-
sively reviewed here. See, e^, 1990-91 Op. Att> Gen. No. 1, Rep. A.G.. Pub. Doc. No. 12 at
78 (1990); 1988-89 Op. Att'y Gen. No. l.Rep. A.G.. Pub. Doc. 12 at 102 (1988). It is sufficient
to say that each question must (1) involve a determination of what governmental action is desir-
able or necessary for the public interest, as opposed to individual concerns; (2) relate to an
important public matter in which every citizen of the Commonwealth would have an interest, even
if the direct impact of the question is confined in some way to a specific geographic area;
and (3) be consistent with the powers of the Legislature and involve a subject matter that is fit for
legislative action. With two exceptions, each of the questions proposed here meets these standards.

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OPINIONS

The first question I must disapprove asks:

Do you approve of the construction of a new high school at Legion Field, East
Weymouth?

Viewed generally, this question appears to concern the construction of public educational
facilities, a subject that may be viewed as of state-wide concern. The question is not necessarily
deficient, therefore, because it concerns only a single town. On its face, however, the question
does not contain an instruction to a State Senator or Representative on a matter that is appropri-
ate for legislative action; rather, it contemplates only action at the local level—a decision by the
town of Weymouth regarding the siting of a new high school. See 1968-69 Op. Att'y Gen. No.
5, Rep. A.G., Pub. Doc. No 12 at 38 (1968) (Attorney General may draw reasonable inferences
from the form of the statement of the question in the petition). This view is confirmed by infor-
mation, including news accounts, indicating that the decision regarding the siting of the new
school will be determined at a special town meeting in Weymouth. See id. (in reviewing public
policy questions, Attorney General may rely on such facts of common knowledge, actual or
presumed, in the voting district concerned as may be reasonable). The question, therefore,
clearly violates the requirement that public policy questions pursuant to G.L. c. 53, § 19, instruct
state legislators on matters fit for legislative action. See 1990-91 Op. Att'y Gen. No.l at 81
(rejecting proposed question asking whether town should institute a traffic safety operation on
ground that it sought action from town officials rather than the state legislature).

The second proposed ballot question I must disapprove states:

We call for the removal of the chain link fence fi-om the A. Piatt Andrew Bridge. We
believe this project should not have gone forward without public input and approval.
Though the motivation for the fence was well intentioned, the fence is ineffective and is
aesthetically unacceptable.

On its face, this proposal (which, I am informed, concerns a bridge in Gloucester) does
not take the form of an instruction to a State Senator or Representative. Voters considering this
question, therefore, would not be informed that they are instructing their legislator, as G.L. c. 53,
§ 19, contemplates.' Moreover, the proposal fails to include a sufficient description of a law for

' An informational booklet prepared by the Secretary of the Commonwealth on State Ballot
Question Petitions recommends that public policy questions take the following form: "Shall the (senator
or representative) from this district be instructed to vote in favor of legislation (describe the legislation
you wish to be enacted)?"

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OPINIONS

which a legislator should vote; rather, it comments on the perceived inadequacies of the fence
and on the circumstances regarding its origination.^ Public policy questions properly "involve
determinations of what governmental action is desirable or necessary for the public interest, as
. contrasted to statements of fact," 1988-89, Op. Att'y Gen. No. 1 at 103.

In addition, one other ballot question merits discussion. That question asks:

Shall the state representative from this district be instructed to vote in favor of legislation

requiring that the nuclear reactor presently operating in Cambridge on Albany Street near Mass.

Ave. and MIT, be removed forthwith out of Cambridge to a safer and less densely populated

area?

The question arises whether this legislation, if enacted, would be preempted by the
federal Atomic Energy Act of 1954. See, e^, English v. General Elec. Co.. 496 U.S. 72, 80-82
(1990) (issues regarding radiological safety of nuclear plants are preempted by federal govern-
ment), and, consequently, whether the subject matter of the question would be fit for state legis-
lative action.

Prior opinions of Attorneys General have established not only that traditionally a broad
view has been taken of what constitutes an appropriate question of public policy under G.L.
c. 53, §§ 19-21, see 1988-89 Op. Att'y Gen. No. 1 at 102, but also that "in ascertaining whether a
question is one of 'public policy,'" the Attorney General's review "does not and cannot extend to
a consideration of the constitutionality of any legislation that might eventually be enacted as a
result of the voters' instruction." 1986-87 Op. Att'y Gen. No. 2, Rep. A.G.. Pub. Doc. No. 12 at
55 (1986). For the same reasons, my review does not and cannot extend to a consideration of the
possibility that legislation enacted as a result of a public policy instruction might be preempted
by federal law: the exact form of the action that might be taken by the Legislature based on the
result of the voters' instruction cannot now be foreseen; and, like questions of constitutionality.

^ Thus, it is unclear, for example, whether the law should provide for the removal of the fence, for
the removal of the fence until the public has had its opportunity for review, for the removal of the fence
and its replacement by a fence that is more effective or aesthetically acceptable, or some other variation.
For the Attorney General and the Secretary of State to alter materially the substance of a question when
drafting it would be contrary to G.L. c. 53, § 19, and could interfere with proponents' right to put an
instruction before the Legislature. Moreover, revisions that materially change a proposed question would
raise serious doubt whether the signature requirements of § 19 have been satisfied, because the question
is no longer substantially the same as what was originally presented by petition to the voters. The
authority of the Attorney General and Secretary of State to draft an approved question in "such simple,
unequivocal and adequate form as shall be deemed best suited for presentation upon the ballot," G.L. c.
53, § 19, does not encompass the kind of substantive revisions that this proposed question would require.
See 1988-89 Op. Att'y Gen. No. 1 at 105, n.7.

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OPINIONS

questions of federal preemption that might result from one form of action might not be presented
if that action took another form. See 1994-95 Op. Att'y Gen.No. 2, Rep. A.G., Pub. Doc. No. 12
at 199-200 (1994).^

In conclusion, each of the proposed questions may appear on the ballot, in the district(s)
indicated, in the following form, which had been developed in consultation with your staff:

First Berkshire, Second Berkshire,
Third Berkshire and Fourth Berkshire Representative Districts

Shall the state representative from this district be instructed to vote in favor of legislation
that would change the Berkshire County Commission, enabling it to become a stronger, more
effective, and more locally controlled agency with a mission to develop and implement regional
policies regarding economic development, transportation, environmental protection, land use,
water, sewage, education and other county services?

Third Berkshire Representative District

Shall the state representative from this district be instructed to vote in favor of legislation
prohibiting state action in support of the Environmental Protection Agency's designation of the
General Electric plant, the Housatonic River, and off-site PCB landfill areas
as a Superfund site?

Berkshire, Franklin, Hampden & Hampshire Senatorial District

Shall the state senator from this district be instructed to vote against the elimination of
county government, which elimination would allow the state to take over the county courthouses,
the Berkshire County House of Correction, and the county's Registries of Deeds?

' A prior Opinion of the Attorney General did disapprove one public policy question, and sug-
gested the possibility of disapproval of another, on constitutional grounds. See 1984-85 Op. Att'y Gen.
No. 2, Rep. AG., Pub. Doc. No. 12 at 76 (1984). However, I believe that more recent opinions declining
to engage in such analysis are more persuasive for the reasons set forth in this opinion. Moreover, public
policy questions regarding the subject of nuclear power have been approved in prior Opinions of the
Attorney General. See, e,g^ 1980-81 Op. Att'y Gen. No. 6, Rep. A.G., Pub. Doc. No. 12 at 1 10-1 1
(1980).

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OPINIONS

Ninth Essex and Twenty-third Middlesex Representative Districts

Shall the state representative from this district be instructed to vote in favor of legislation
illowing capital punishment for persons convicted of first degree murder?

Second Norfolk and Tenth Suffolk Representative Districts

Shall the state representative from this district be instructed to vote in favor of legislation
lo create a health care system for all the residents of Massachusetts that provides universal
coverage for comprehensive health care services that includes the freedom to choose doctors and
other health care professionals, facilities and services; eliminates the role of insurance companies
in health care and creates an insurance trust fund that is publicly administered and fairly funded;
and, in order to safeguard the availability of quality health care, stops the buying, selling, manag-
ing and closing down of health care facilities by for-profit corporations?

Twenty Eighth Middlesex Representative District

1 . Shall the state representative from this district be instructed to vote in favor of legisla-
tion requiring that the nuclear reactor presently operating in Cambridge on Albany Street near
Massachusetts. Ave. and the Massachusetts Institute of Technology be removed immediately out
of Cambridge to a safer and less densely populated area?

2. Shall the state representative from this district be instructed to vote in favor of legisla-
tion stimulating increased production and availability of affordable housing for middle

class and low income residents of Massachusetts, including rental and home ownership?

3. Shall the state representative from this district be instructed to vote in favor of legisla-
tion providing for universal, affordable, comprehensive health insurance for all residents of
Massachusetts, and providing for a health care bill of rights for all residents of Massachusetts?

285

OPINIONS

In accordance with the practice of prior Attorneys General, I have not made any indepen-
dent inquiry whether the above questions meet the additional requirements for public policy
questions set forth in G.L. c. 53, §§ 19-21 (1996 ed.). These requirements involve factual deter-
minations which are more appropriately made by you as Secretary of the Commonwealth. I
conclude only that the questions are ones of public policy and may, if these other requirements
are met, appear on the ballot in the form set forth above.

Sincerely,

Scott Harshbarger

286

Office of Attorney General
Tom Reilly

One Ashburton Place

Boston, MA 02108

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