LAWRENCE — The former director of the city’s Information Technology Department will spend a year in federal prison and was ordered to pay $465,000 in restitution after he pleaded guilty to cheating Lawrence out of hundreds of thousands of dollars in federal money aimed at improving municipal computer and communications systems.
Bryan J. Cahoon, 53, of Dover, N.H., pleaded guilty this summer to felony theft and fraud but was not formally sentenced until Tuesday in U.S. District Court in Boston.
In addition to $465,000 restitution, Cahoon was sentenced to a year in federal prison which he will start serving on Jan. 27, according to court records.
Following his release, Cahoon will be on supervised probation for a year.
Under federal law, Cahoon faced 10 years in federal prison and a fine of up to $800,000.
Cahoon worked for more than four years for the IT department as an employee and later a consultant. He engaged in “a scheme to steal” federal money from early 2008 until late 2009 while working for the city. The FBI’s fraud investigation of Cahoon was based on his activities while he was in charge of the IT department under former Mayor Michael Sullivan.
In a sentencing memorandum filed on Monday, federal prosecutor William Bloomer said Cahoon defrauded the city of between $400,000 to $1 million.
“He stole this money from funds earmarked for technological improvements to the city’s deteriorating libraries and schools. He accomplished this scheme by exploiting a position of trust as the city’s IT director — awarding city contracts to his friends and using those contractual hired to perform work for his own private companies,” Bloomer wrote.
Cahoon, he said, employed a “complex financial ‘shell game’” steering city contracts to a specific company and then subcontracting work back to his own companies.
“Ultimately, Cahoon profited nicely from this thievery, the City of Lawrence paid twice for work done by Cahoon’s companies. To add insult to injury, much of the work on city projects that Cahoon had subcontracted was abandoned and left in a state of partial completion — leaving residents of one of the state’s poorest communities in the lurch,” Bloomer wrote.
Bloomer wrote that Cahoon’s crimes were “brazen.” He secured work on city projects for his private companies while he was employed by the city. Then, he steered contracts to his friends and used contractual hires to perform work for his private companies on city IT projects, Bloomer wrote.
In a victim impact statement, City Attorney Charles Boddy noted Lawrence is the poorest community in the state and one of the 20 poorest cities, per capita, in the country. It’s residents are primarily new immigrants who struggle daily with poverty, low employment rates and trying to meet their financial needs, he said.
“In this climate of both hardship and sacrifice, Mr. Cahoon provided himself and his friends with spectacular incomes, relaxed employment with no accountability for either hours worked or projects completed, subverted public works projects from lawful, non-collusive and legitimate vendors and thereby thrust unnecessary financial burdens and sacrifice on the public and city employees,” Bloomer wrote, quoting Boddy.
“Far from being a victimless crime, Mr. Cahoon’s victims comprise the 72,000 plus residents of Lawrence. The ramifications of his scheme continue today,” Boddy added.
Bloomer wrote that Cahoon has both bachelor’s and master’s degrees, worked in city government since 2005, had ownership interests in three companies and “he has committed fraud through a fairly complex game of three-card monte.”
“In short, Cahoon is a savvy, sophisticated and cunning businessman,” Bloomer said.
Of the restitution Cahoon was ordered to pay, $131,693.51 will be repaid to the city of Lawrence while the remaining $333,306.49 is owed to the federal government, according to court papers.
Federal Judge Rya Zobel presided over Cahoon’s case.
In a letter signed this summer, Cahoon agreed to plead guilty and acknowledged the potential sentence he faced. He also said he was satisfied with legal representation he received from Andover attorney James Krasnoo.
Suspicion about corruption in the IT department first surfaced publicly after Mayor William Lantigua took office in January 2010.
Essex County District Attorney Jonathan Blodgett later impaneled a grand jury to probe the overbilling scheme. The FBI got involved, however, because of questionable use of federal grant money.
Follow staff reporter Jill Harmacinski on Twitter @EagleTribJill.