LAWRENCE — The former director of the city’s Information Technology Department has admitted to cheating the city out of hundreds of thousands of dollars in federal money for improving municipal computer and communications systems.
Bryan J. Cahoon, 53, of Dover, N.H., faces a maximum sentence of 10 years in federal prison and a fine of up to $800,000 after pleading guilty to a felony count of theft and fraud concerning programs receiving federal funds.
But Cahoon would only get up to 18 months in prison if the judge accepts the sentence recommended by U.S. Attorney Carmen M. Ortiz’s office. The fine could be reduced substantially if the court determines Cahoon is incapable of paying it. The U.S. Attorney is also recommending three years of supervised release after prison and a mandatory special assessment of $100, according to the agreement.
Cahoon, who worked more than four years for the city’s IT department as an employee and later a consultant, engaged in “a scheme to steal” federal money during a period from early 2008 until late 2009, according to court documents filed last month.
During that period, Cahoon “subverted” state bidding laws and caused at least eight contracts with the city totaling $193,460 “to be awarded to his friends and associates,” Assistant U.S. Attorney William Bloomer said in a 17-page “information” document that cited eight unnamed associates as “cooperating” witnesses. An “information’’ takes the place of an indictment and is a formal accusation that a person committed a crime.
The court records said Cahoon, while doing business as Networks@Home LLC, subcontracted work on city projects from Company A and used several individuals awarded city IT department contracts as well as paid interns hired by Cahoon, to perform the subcontracted work. At the same time, they were being paid by the city to perform different work for the IT department, the documents said.
The result was that “Cahoon profited and caused the city to be double billed for the same work,’’ the documents said.
Cahoon waived an indictment and struck a plea agreement with the federal prosecutor. He is due back in U.S. District Court in Boston on Aug. 13 for a sentencing hearing before Judge Rya W. Zobel. Recent court documents list the amount of federal money he stole at more than $400,000, but less than $1 million.
“I understand the crimes to which I have agreed to plead guilty, the maximum penalties for those offenses and Sentencing Guideline penalties potentially applicable to them,” Cahoon said in signed letter acknowledging the plea agreement that was filed with court documents.
Cahoon wrote that he was satisfied with legal representation he’s received from Andover attorney James B. Krasnoo.
“We have discussed the charges against me, possible defenses I might have, the terms of this Plea Agreement and whether I should go to trial,” he wrote in his letter.
“I am entering into this Agreement freely, voluntarily and knowingly because I am guilty of the offenses to which I am pleading guilty and I believe this agreement is in my best interest,” he said.
The FBI’s fraud investigation of Cahoon is based on his activities while in charge of the IT department during the administration of former Mayor Michael Sullivan.
Several cooperating witnesses cited in the court documents said they submitted bogus quotations on contracts at Cahoon’s request. They said they performed work on the city library and other properties for Cahoon’s private company while also being paid under contracts awarded by the city, the documents said.
One cooperating witness was quoted in the documents as telling an FBI agent that Cahoon asked him to sign a proposal after never reviewing the contract or participating in the bidding process.
Cahoon has been unavailable for comment and has not returned telephone calls left at his home telephone number.
Suspicions about corruption in the IT department first surfaced publicly during the early days of Mayor William Lantigua’s administration.
Cahoon resigned abruptly from his $165,000-a-year consulting job with the city within weeks of Mayor William Lantigua’s inauguration on Jan. 4, 2010. Cahoon had made $81,900 a year as director of information services for the city before resigning and returning as a consultant, a move that allowed him to more than double his pay.
Shortly after Lantigua was sworn in as mayor, his administration suspected billing irregularities and questionable practices involving city computers and contractors. Several IT employees were fired as part of a major shakeup of the IT department.
Essex District Attorney Jonathan Blodgett later impaneled a grand jury to probe whether City Hall employees were involved in an alleged multimillion-dollar overbilling scheme related to city computer contracts. State police seized several computers, but no charges were ever filed.
The FBI got involved in its probe of Cahoon because of allegations about questionable use of federal grant money.
In 2008, the city received federal E-Rate discounts totaling $1.3 million. Of that, more than $376,000 was designated for improving the IT network at the Lawrence Public Library, according to the court documents.
The city received more than $1-million in federal E-Rate discounts in 2009. Of that amount, about $214,000 was designated for the IT network and electronic communications at the Lawrence Public Library. The so-called “E-Rate” grants and discounts from the U.S. Department of Education are intended to improve a municipal government’s technological systems within its schools and libraries.
Court documents mention that one of the government’s witnesses said he was in need of an advance to pay for his schooling. Cahoon agreed to submit an invoice for $11,982 with the understanding that he would work the hours needed to pay for the advance.
After receiving the check, the witness said he had worked enough hours to justify the advance. Cahoon then asked for the remainder of the money he was owed under the contract and told the witness to submit another invoice. The witness received a check for $12,917. But he said he cashed the check and gave it to Cahoon, according to the court documents.