Date: 06/24/1999 Page: A1
Section: Metro
Author: By Stephen Kurkjian, Globe Staff
EVERETT -- Elected 18 months ago on a promise that Everett citizens would have unimpeded access to City Hall, Mayor David Ragucci has flung open the doors of government -- to his friends, supporters, and family members.
Within months of taking office, Ragucci has, according to records obtained by the Globe:
- Personally engineered an apparently illegal tax giveaway of nearly $90,000 to Everett's biggest tax deadbeat, whose family contributed to the mayor's campaign.
- Directed his procurement chief to circumvent state bidding laws to steer city contracts to other supporters and fired her when she refused.
- Ran afoul of the state inspector general's office for contract bidding irregularities.
- Doled out city jobs to supporters and friends. Even Ragucci's brother and his former sister-in-law are drawing public paychecks.
Now the new mayor is in trouble on several fronts. In addition to the inspector general's report, the state Office of Campaign and Political Finance has fined Ragucci for violating state election laws. His former procurement chief, Maureen Mahoney, has filed a lawsuit that charges that she was discriminated against and subjected to abusive language by the mayor and a top aide because she was a woman.
The FBI is also asking questions about the Ragucci administration, according to sources. And John R. McCarthy, the 12-year incumbent Ragucci defeated in 1997, has declared his intent to try to win back the mayor's office in November.
Ragucci refused requests for an interview.
Since mid-April, the Globe Spotlight Team has reported on numerous instances in which municipal officials in eight other Massachusetts cities and towns have taken steps to benefit themselves or their friends, in most cases using the control they have over lucrative development proposals in high-growth suburban communities.
In densely populated Everett, the Globe found, the questionable actions involved political supporters looking to the government for public contracts or, in the case of caterer George Varoudakis, forgiveness of a portion of his tax debt.
For Ragucci, who was elected on a slogan that he was ``worthy of the public's trust,'' the tax deadbeat case appears to be the most egregious example of his willingness to involve himself personally to help his political friends.
Saddled with eight years of back taxes on several properties amounting to $1.6 million, Varoudakis and his attorney -- Albert P. Farese Jr., also a Ragucci contributor -- entered into negotiations with the city after Ragucci took office.
Although state law prohibits such an arrangement, Ragucci agreed to forgo some of the interest payments that would have accrued for Varoudakis after he agreed to pay the overdue $1.6 million.
Ragucci's generosity extended even to the payment schedule.
The first deal required Varoudakis to pay off the debt between June and September last year. But when Varoudakis did not meet the deadline, Ragucci authorized a new schedule to run from October to May, with no interest acrruing on the unpaid debt during that time.
Even so, the deal collapsed, and the $88,296 in waived interest was reinstated last month, but only because Varoudakis was in prison and unable to complete his payments. He was convicted of arson in an unrelated case in US District Court and was sentenced to 57 months in federal prison last month.
Ann S. Murphy, spokeswoman for the state Department of Revenue, said that agreeing to forgo the interest owed on Varoudakis' property during the repayment period violates a state law that no more than $10 in interest on overdue property taxes can be waived.
Everett City Solicitor Ronald J. Salvato, who confirmed the details of the aborted settlement, was unable to provide any evidence that city officials had asked the Department of Revenue, which oversees the collection of local taxes, whether forgoing the interest payments was legal.
The statutory annual interest rate on unpaid property taxes is 16 percent.
Salvato, speaking for Ragucci, also declined to comment on the propriety of Ragucci's personal involvement in negotiations over the property-tax agreement. Nonetheless, Salvato insisted that the initiative was worthwhile because Varoudakis paid more than $600,000 before the deal collapsed.
``Mr. Varoudakis has not received one penny reduction of his tax debt to the city,'' Salvato said in a written response to a reporter's questions.
Varoudakis' daughter, Denise Varoudakis, and his lawyer, Farese, contributed $500 and $250 respectively to Ragucci's 1997 campaign. By law, the annual limit for donations to a state campaign is $500.
For a mayor who pledged to bring new life to City Hall, Ragucci has appeared to focus instead on rewarding friends, according to information in the lawsuit filed by Mahoney, former procurement chief.
The lawsuit alleges that almost from the day the 40-year-old Ragucci took office in January 1998, he and a few of his top aides directed Mahoney to skirt state bidding requirements so city contracts could at times be steered to firms whose owners were friendly with Ragucci.
When she declined, Ragucci criticized her for not being a ``team player'' and then fired her, according to the lawsuit.
``On numerous occasions during her employment with the city, Mahoney became aware that city officials, including the mayor and fellow department heads, were failing to abide by the procurement procedures required by the procurement laws,'' the lawsuit charges.
Mahoney filed the suit last February, contending that Ragucci wrongfully fired her in April 1998, three months after she took the position. She accused Ragucci and the administration of sex discrimination, denial of her civil rights, and violation of the state whistleblower's law.
In a written response, Salvato denied Mahoney's allegations, calling them ``false and misleading.'' Salvato said Ragucci's lawyers have advised the mayor to defer any comment on the allegations until the case is heard in court.
According to her lawsuit, Mahoney clashed with Ragucci on six different occasions during her three months as procurement chief, seeking to prevent him or other members of his administration from awarding no-bid contracts for such items as landscaping services and the purchase of firefighters' boots.
Following Mahoney's ouster, the city moved to seek bids on five of the six disputed contracts.
In late January 1998, Mahoney learned that Ragucci wanted the contract for servicing of police cruisers to be given to a company owned by a friend and political supporter. Mahoney told Ragucci that awarding the contract without bids would violate proper procedure. At the same time, according to Mahoney's lawsuit, the mayor criticized her for failing to make other no-bid purchases.
Mahoney's working relationship with Ragucci continued to deteriorate in ensuing weeks. Around March 27, Ragucci berated Mahoney for seeking bids for the city's towing contract, ``threatened her with termination if she did not withdraw the solicitation [for bids], used expletives and referred to her as `girl,' '' she asserted in the lawsuit. Ragucci fired her on April 13.
Neither Mahoney nor her attorney, James S. Weliky of Boston, would comment on the suit.
One of the contracts Mahoney challenged -- construction of a $40,000 baseball field at Glendale Park -- was later investigated by the state inspector general's office, which oversees local compliance with state public bidding statutes.
Last August, the inspector general's office concluded that Alfred Borgonzi, Everett's park director and a Ragucci appointee, had gone to great lengths so the Park Department would not have to seek competitive bids for the job. The inspector general found that the city had financed about half the project with private donations and split the city's portion into three contracts of less than $10,000 each, the level at which bids must be sought.
``To avoid the appearance of improperly steering a city contract to a vendor, the city should have advertised for competitive bids for the entire project, and then sought donations to fund a portion of the contract,'' Robert A. Finkel, assistant general counsel for the inspector general's office, said in a letter to the city that was provided to the Globe.
While he acknowledged that he may not have abided by the technicalities of the bidding law, Borgonzi argued that he saved the city at least $10,000 while providing a top-quality baseball field. ``I tried to do something good, and I went from feeling like a hero to a criminal,'' Borgonzi said. ``It's all politics.''
The inspector general's office was not the only state agency sending stinging letters to Everett City Hall last year. In April, the state Office of Campaign and Political Finance concluded its investigation into Ragucci's campaign and found several violations of campaign finance laws. It ordered the mayor to pay $5,425 in fines to charity.
While state law prohibits campaigns from taking corporate contributions, Ragucci accepted $1,175 in donations and another $2,035 in in-kind contributions from several firms. In addition, the oversight office found that several individuals were allowed to contribute more than the $500 yearly maximum.
The campaign finance office also fined Ragucci an additional $500 for making more than 600 personal and political telephone calls to Everett in 1996 and 1997 from the state welfare office in Lowell where Ragucci formerly worked as an investigator.
As a candidate, Ragucci promised Everett residents access to City Hall, but he has fulfilled that promise for some of his family members.
On Jan. 6, 1998, during his first week in office, he hired Carole Ragucci, the former wife of his brother Michael, as his secretary. Earlier this year, another Ragucci brother, Samuel, was hired as a laborer by the Everett Housing Authority.
The state conflict-of-interest law prohibits mayors from hiring immediate family members. But as his former sister-in-law, Carole Ragucci is not covered by that prohibition. And since the hiring in the Everett Housing Authority is done by a quasi-independent board, Samuel Ragucci's hiring may also not be prohibited by the anti-nepotism statute.
Instead, their hirings may be covered by a statute that advises all public employees that to avoid the appearance of a conflict of interest they should declare publicly whenever they hire a person who is related to them in any way. Ragucci made no such declarations when his former sister-in-law and brother were added to the payroll, according to city officials.
Scrutiny of Ragucci is not limited to the inspector general and the campaign finance office.
Varoudakis, in a phone interview from a New York federal prison where he began serving his sentence last week, said he had been visited earlier in the spring by two men, whom he presumed to be FBI agents, who asked if he would be willing to talk to them about city officials.
``I've no idea what they wanted to talk about,'' Varoudakis said. ``I had nothing to say to them, so I sent them away.''
Gail Marcinkiewicz, spokeswoman for the FBI's Boston office, said the bureau could neither confirm nor deny that it was investigating Everett City Hall.