* US prosecutors to recommend prison for mayor, backer
* City saw 156 foreclosures in 2008
* Central Falls filed for bankruptcy in 2011
By Hilary Russ
Sept 19 Mayor Charles Moreau of impoverished
Central Falls, Rhode Island, resigned on Wednesday and agreed to
plead guilty to a federal fraud charge.
Moreau submitted his resignation to the Rhode Island
Secretary of State early on Wednesday. A few hours later,
federal prosecutors charged the mayor of the smallest city in
the smallest U.S. state with fraud and filed his plea deal with
the U.S. District Court in Rhode Island.
Beginning in 2007, as the number of foreclosed homes in the
city began to surge, Moreau channeled all the work of boarding
up the houses to his long-time friend and political contributor,
Michael Bouthillette, prosecutors said in a two-count charging
Bouthillette also agreed to plead guilty to a charge
stemming from the board-up scheme, prosecutors said. They also
said they would recommend prison time for both men.
According to prosecutors, Bouthillette boarded up at least
167 homes from September 2007 to July 2009. He made
"unreasonable profits amounting to hundreds of thousands of
dollars," the criminal charging document said.
Moreau allegedly circumvented competitive bidding
requirements by declaring homes to be emergencies needing
immediate board-ups. In some cases, tenants were still living in
the houses, and in other cases Bouthillette re-boarded houses
that had already been closed up by owners, prosecutors said.
In return, prosecutors said, the mayor took kickbacks --
partial payment of a furnace for his Central Falls house and
renovations and flood remediation to another home.
Central Falls fell into bankruptcy in August 2011 because of
steep cuts in state aid, revenue shortfalls and unfunded pension
and retiree healthcare liabilities of nearly $80 million.
By then, homes had been foreclosed across Central Falls. In
2008, there were 156 foreclosures in the city of about 19,400
residents, according to bankruptcy court documents.
The following year, foreclosures started to decline,
dropping to 83 in 2009 and 55 in both 2010 and 2011. The
document estimated the number of foreclosures in 2012 is 34.
"HE VIOLATED HIS OATH TO THE PEOPLE"
Moreau also dismissed concerns from city employees, telling
one to "mind his own business," the document said.
"He violated his oath to the people of Central Falls. That
has brought him down today, and deservedly so," said U.S.
Attorney Peter Neronha in a statement.
Moreau did not answer his phone, and his lawyer did not
reply to a request for comment. An attorney for Bouthillette did
not immediately respond to a phone message.
Bouthillette will pay $160,000 to be used for community
programs in Central Falls, and he agreed to forego collection of
an additional $270,000 from the city that he might have received
from boarding up homes, according to his plea deal.
Prosecutors will recommend that both men receive prison
terms, a spokesman said, but a judge will ultimately hand down
Moreau and other local elected leaders were stripped of
power by a state-appointed receiver, who later put the city into
Central Falls' case was widely watched because it proposed
balancing the city's budget by slashing pensions, raising taxes
and leaving bondholders unscathed.
The receiver won court approval for the plan on Sept. 6,
laying out an exit from bankruptcy just 13 months after filing.
The plan calls for the state-appointed receiver to retain
oversight while passing power back to elected officials no
sooner than January.
Gayle Corrigan, who runs the city day-to-day as the
receiver's chief of staff, said that attorneys were reviewing
the city's charter and Rhode Island's receivership law to
determine the next step to fill the now vacant position.
"It's a terrible thing for the city," said City Council
President William Benson Jr. in a phone interview.