Office of the Attorney General: Longshoreman Sentenced on Charges of Fraud and Conspiracy

FROM THE OFFICE OF THE ATTORNEY GENERAL

July 11, 2008

BOSTON – Today, a South Boston man was sentenced in connection with crimes related to wage and procurement fraud related to his employment with Massport. Suffolk Superior Court Judge Margaret Hinkle sentenced Richard Flaherty, age 44, to 18 months in the House of Correction, with the sentence suspended for 18 months, on each charge ofFraud in the Procurement of Government Services and Conspiracy to Submit False Entries in Corporate Books. These sentences will run concurrently. Judge Hinkle also ordered Flaherty to pay a $5,000 fine and to perform 125 hours of community service.

Flaherty was convicted by a jury yesterdayin connection with fraudulently putting his then 12 year-old daughter on a union timesheet while working as a longshoreman on the Massport docks while he served as the business agent for the union, Local 805.

The defendant was indicted in August 2006 along with 20 other defendants following an in-depth investigation into payroll fraud schemes involving longshoremen who load and unload container ships at Massachusetts Port Authority's (Massport) Conley Terminal in South Boston.

The Attorney General’s Office began an extensive criminal investigation in April 2005, after Massport contacted the Attorney General’s Office about concerns that longshoremen were placing young children on the payroll at the docks. State Police and financial investigators assigned to the Attorney General's Office uncovered widespread instances where longshoremen were participating in schemes to defraud Massport and other marine shipping businesses operating at the port.

Authorities allege that this was part of a larger scheme which included fraudulently putting the children, aged two to 15, of senior longshoremen on the payroll in order to get them a higher starting pay grade. There are cases pending against 13 other defendants. Six other defendants have already either pled guilty or been convicted at trial and sentenced. Flaherty admitted to investigators that he fraudulently documented that his daughter performed work on the docks, in order to help her gain seniority in case she worked there in the future. As a result of appearing on the gang time sheet, a check payable to Flaherty’s daughter was subsequently issued and endorsed by Flaherty.

A Suffolk Grand Jury returned the indictment against Richard Flaherty on August 8, 2006. Flaherty was arraigned on September 5, 2006, at which time he entered a plea of not guilty and was released on bail. Yesterday, Flaherty was found guilty after twenty minutes of jury deliberations and was released on his own personal recognizance. Today, Suffolk Superior Court Judge Margaret Hinkle sentenced Flaherty to 18 months in the House of Correction, with the sentence suspended for 18 months.

Massport officials cooperated and assisted with the Attorney General's investigation. Investigators from the U.S. Department of Labor Employee Benefits Security Administration and Office of Labor Racketeering and Fraud Investigations assisted in this investigation.

The case was prosecuted by Assistant Attorneys General James O'Brien, Marc Jones, and David Waterfall of Attorney General Coakley's Criminal Bureau, with assistance from Massachusetts State Police assigned to the Attorney General's Office. Assistance was also provided by Financial Investigators James McFadden and Michael Guarin.