Through two weeks of testimony, prosecutors in the Sal DiMasi corruption trial have elicited sensational testimony about bribes, kickbacks, and sleaze inside the State House. But as they’ve tried to pin a federal corruption rap on the former House speaker, they’ve also ended up pinning a wider indictment on Beacon Hill. The political system described by witnesses and lawyers on both sides of the DiMasi case is one that’s wired for moneyed insiders, controlled by a few powerful politicians, and abetted by a servile Legislature.
Federal prosecutors allege that, in exchange for steering $17.5 million in state contracts to the Canadian software firm Cognos, DiMasi netted at least $65,000 in kickbacks. DiMasi’s codefendants and longtime associates, lobbyist Richard McDonough and accountant Richard Vitale, are alleged to have received $300,000 and $600,000 in kickbacks, respectively. Significant portions of those larger kickbacks were also ticketed for DiMasi, a government witness alleged Wednesday.
The state software contracts were the vehicles for generating the kickbacks, prosecutors say. Joseph Lally, a former Cognos salesman who was originally indicted alongside DiMasi, McDonough, and Vitale, testified that he set up a sham consulting contract as a means of funneling at least $4,000 per month to DiMasi. However, the bulk of the illicit cash was skimmed from the 20 percent commission Lally received when he closed deals with the state.
Lally didn’t do anything special to get his deals through Beacon Hill. He just played the same game everyone else was playing: He hired a lobbyist and tried to extract revenue from personal relationships.
Lally has known McDonough and DiMasi for two decades. McDonough, a longtime friend of DiMasi’s, has lobbied lawmakers on Lally’s software deals for roughly 15 years. McDonough “could get you into places normal people couldn’t get to,” Lally said. For instance, McDonough and DiMasi arranged an audience with then-speaker Thomas Finneran, at which Lally pitched Cognos software. DiMasi later introduced Lally to key players in the Tennessee and Georgia legislatures.
“You wouldn’t want to hire someone who didn’t know anyone,” added Christopher Quinter, a former colleague of Lally’s at Cognos. “You needed the audience with the key decision-maker. It was the norm in the industry. They hired people to schedule meetings and open doors, and you had people to schedule meetings and open doors.”
Lally closed two software deals with the state: A $4.5 million deal with the Department of Education in 2006, and a larger statewide deal signed in 2007. Department of Education officials initially backed the $4.5 million software purchase as a way to comply with federal performance regulations. Former Rep. Lida Harkins told the department’s commissioner, David Driscoll, that he should ask DiMasi for the money. DiMasi “would make sure Bobby DeLeo put it in the budget,” Harkins said. (DeLeo succeeded DiMasi as House Speaker.)
Driscoll later told DiMasi he didn’t want the software funding, but DiMasi did not back off. He had former Rep. Robert Coughlin insert an earmark in the state budget funding the purchase. The amendment’s language came from Cognos, and was worded to preclude competition from other software firms. Coughlin, who now heads the Massachusetts Biotechnology Council, took the stand earlier this week. He said he sponsored the earmark because “the speaker’s office asked. It was an honor to do it.” Asked whether he knew what the earmark was for, Coughlin answered, “Not really.”
Later, a DiMasi staffer phoned DeLeo chief of staff James Eisenberg and said the speaker insisted that the earmark stay in the budget. Eisenberg relayed the orders to House budget staff, and noted the speaker’s interest on a list of amendments DeLeo was tracking. With the speaker’s blessing, it sailed through the House.
Lally, McDonough, Vitale, and DiMasi used a similar earmark when pursuing the large statewide software contract. Again, the earmark language came from Cognos, and it received little scrutiny in DiMasi’s House. The state’s Information Technology Division (ITD) even had a draft contract from Cognos before the bill was passed.
Lally initially priced the larger deal at $15 million, but wound up discounting it to $13 million. Asked how Lally arrived at the price for the statewide deal, Quinter testified, “He said he made it up, and he said Sal would fund it. That’s what he said for a lot of things.” It was the largest deal Cognos had ever signed. Cognos had previously sold a similar statewide software license to Ohio. That license covered more public employees and more agencies than the Massachusetts license, and it was priced at $6 million.
The Senate wound up inserting language into the bill requiring a competitive bid. Software giants Oracle and SAS jumped into the fray. Oracle hired O’Neill and Associates, which is run by Thomas O’Neill, the son of the former speaker of the US house. Vitale’s attorney has repeatedly said that O’Neill arranged a sit-down between Gov. Deval Patrick and one of Oracle’s top executives; O’Neill’s firm represented Oracle, but says it never requested an audience with Patrick.
Cognos had some help on the inside, though. A deputy at ITD, Stuart Lecky, allegedly fed Cognos intelligence on competing bids. Quinter testified that Lecky told Cognos how the Oracle and SAS bids were structured, and how each bid was priced. Lecky’s boss, acting ITD head Bethann Pepoli, met repeatedly with DiMasi and pushed Patrick budget secretary Leslie Kirwan to sign a deal with Cognos. Lally said he repeatedly threw DiMasi’s name around ITD. Pepoli hoped DiMasi would recommend she keep her job atop ITD, Lally said. Lecky was allegedly hoping Lally’s connections with DiMasi would help him secure a job running information technology for the MBTA.
