Dirty Money in Boston

CHARLES L. WHIPPLE

EN ROUTE to pick up the pay-off money one day in 1950, Frank Norton’s car passed Faneuil Hall, where the Boston Tea Party had begun, and swung into Merchants’ Row. it stopped just short of State Street, the city’s financial nerve center, and Norton waited. A man opened the door and climbed into the back seat with Norton, taking with him a brown-paper package. It measured eight by eleven inches, was three or four inches thick, and contained $5000 in cash, in denominations of $20 and under: and the man was later able to swear under oath that he had never seen the money and that, indeed, it might have been Confederate currency.

In a minute or so, the man got out of the car without the package, and Frank Norton was driven around the corner and up State Street past the Old State House. Norton’s pickup of the pay-off money was one of many such cash deliveries. Others may have been made to his suite at a hotel next to the State House. The bribes took various forms. In all, they totaled $275,000, or exactly 10 per cent of the $2,750,000 in highway contracts that Norton obtained over three years for the engineering firm of Thomas Worcester, Inc., from the state Department of Public Works and other public bodies.

To whom did the bagman’s money go? Little of the cash, apparently, remained with Norton or his family. Rather, there is evidence, in a recent revealing case before Federal District Court Judge Charles E. Wyzanski, Jr., of a state-wide ‘’network of corruption" involving high public officials of the Commonwealth of Massachusetts and members of the Great and General Court (as the state legislature is called), and for which the banks, insurance firms, the press, the bar, and members of the judiciary itself must bear a share of the blame.

For the first time, and after years of rumor, this pattern of corruption has been disclosed under sworn testimony in the case of United States v. Thomas Worcester. It shows not only bribery but politicians loafing on the payroll, not only crooked accounting but a deliberate sabotage of the twoparty system: a bipartisan pay-off of legislators with jobs and money, the latter coming, at least in part, from shared commissions on contractors’ performance bonds. And it even shows that the judiciary itself is not immune to temptation. Some elements of the pattern may be age-old, but its extent is new.

The hearings turned the spotlight of publicity and judicial inquiry on the state’s most powerful official, who is not charged with any crime and who has denied, under oath, any wrongdoing. The official is William F. Callahan, former state Public Works Commissioner and now chairman of the Massachusetts Turnpike Authority. For the Department of Public Works, a decade ago, he supervised the construction of Route 128, the circumferential highway around Greater Boston which has attracted a billion-dollar electronics industry. For the Authority he built the $239 million toll road from New York state to Newton, a suburb of the capital, and he now seeks $175 million more to extend the toll road into Boston.

THOMAS WORCESTER was the engineering contractor who designed all of the first stage of Route 128 — an 18-mile stretch of superhighway between Route 9 and Lynnfield. His work on it included designs for 44 bridges, one of which took first prize in a national competition for the most beautiful bridge in its class. During World War II, he had done more than $100 million worth of work for the army and navy. Now 64, Worcester, a graduate of Harvard, is well placed socially and the owner of a lovely home in Waltham. His firm, successor of one founded by his father, enjoyed a national reputation for quality.

How, then, did he become entangled in bribery? Frank Norton dangled before him the prospect of juicy state contracts. Norton was a smooth talker, with mysterious business in Canada and Mexico. Worcester swore that Norton, in 1948, said he was “certain he could get the jobs for me because he knew Callahan.” Competitive bidding is not required on contracts with consulting engineers.

Once Norton moved into Worcester’s firm, with cards printed that described him as Assistant to the President, Worcester was hopelessly trapped. He was soon aware that besides paying Norton’s salary and signing an agreement to pay him 10 per cent of the amount of all public contracts that Norton obtained, he had to get cash in large amounts and small denominations to Norton. Worcester bothered little with financial matters, but he and his comptroller accomplished the transfer of money by cashing checks based on fraudulent vouchers, invoices, payroll entries, and even salary payments to themselves.

All these items were charged off to business expenses in Worcester’s income tax returns, and this is what ultimately brought him into court, although in the case of two subsidiary firms set up to siphon off the cash, Worcester and his comptroller paid themselves extra “salary” in order to pay taxes on the part of their “salary” that had gone to Norton.

The close-mouthed Norton apparently never divulged to anyone in the firm where the cash went, saying only that it was for necessary expenses and “went in and out.” He always promised an accounting. It never came, and according to one witness the entrapped contractor declared, “It’s got to be [stopped] if we’re going to keep business going. . . , It’s almost impossible to do business today without somebody looking for something,” and buried his face in his hands.

Primarily an engineer, Worcester was not required to file a performance bond on each state contract. General contractors, engaged in actual construction, must do so. Such bonds are purchased from insurance companies, which charge a normal fee of one per cent of the contract amount. The agent or broker selling the bond to the contractor is paid a commission, determined by bargaining with the insurance company, which ranges between 20 and 35 per cent of the premium. Not until late in the Worcester case did it become apparent to what use these commissions could be put.

Worcester was a small fish in a big aquarium. As part of a highway program that has remade the nation’s road maps, the Massachusetts legislature alone has authorized $1036 million since 1948 for highway construction, with $683 million of it financed by borrowing. In the last five years alone, the state has received more than $243.5 million in federal highway aid. Other states have done similarly, until the weary taxpayer, while grateful for being able to go places faster, has begun to wonder what he can do about the mounting costs and whether, in fact, they are entirely legitimate.

Worcester was indicted March 13, 1957, for income tax evasion. Not until three years and five months later did his trial begin. His defense was that the payments to Norton were business expenses. He was convicted by a jury after a thirteen-day trial. Then Judge Wyzanski, on September 9, 1960, offered to place him on probation, suspending an eighteen-month prison sentence, if he testified with candor before various bodies on request, including the grand jury. Worcester appeared there September 28, and also permitted U.S. Attorney Elliot L. Richardson to examine him under oath on October 4.

Richardson then filed a motion that Worcester’s probation be revoked because he had not been sufficiently candid. Worcester’s counsel opposed the motion, and in an effort to ascertain the truth, Judge Wyzanski made Worcester’s grand jury testimony public on October 27. The testimony named Callahan, and the fat was in the fire. The subsequent hearings, known as revocation proceedings, are unusual in jurisprudence but by no means without precedent.

Central to the Worcester hearings was whether this relatively small contractor, convicted of evading $180,000 in taxes, told the truth when he later testified that when Norton was hospitalized for a heart attack in the fall of 1949, Worcester delivered a package of cash to Norton’s wife and she put it in the overcoat pocket of a man who was sitting in the next room, but whom she would not allow him to see. This man, Worcester swore she told him, was Callahan.

Both Callahan and Mrs. Norton made out-ofcourt denials to the press. It became necessary, then, to request their testimony. Judge Wyzanski telegraphed them invitations to appear, but both balked. Mrs. Norton telegraphed the judge: “Thank you for your kind consideration, but I feel I can add nothing to what I have already said.” A message from Callahan’s secretary stated: “Your telegram of November 14th read. Mr. Callahan does not care to accept the invitation.”

Subpoenas were then issued for both. Callahan was persuaded by his advisers to engage a lawyer best known locally for his unsuccessful defense of the Brink’s bandits, who had perpetrated the nation’s largest cash holdup. Through him, Callahan fought a monumental battle both in and out of court, including two trips in vain to the U.S. Court of Appeals, to hamstring the proceedings. Then, after Mrs. Norton had sworn emphatically she could not remember any such episode involving Callahan’s pocket, Callahan himself denied the charge with the emphatic word, “Never!”

Judge Wyzanski, in an opinion that has rocked Boston, found Worcester’s testimony “candid, credible, complete.” He accused Mrs. Norton of “direct falsehoods and inexplicable failures to remember.” Worcester was, he said, “a most reluctant source of infamous information about others,” and he has “completely persuaded me of his decency.” Callahan’s denial “is unconvincing.

. . . No one who reads in full Callahan’s testimony, first before the petit jury and then in these revocation proceedings, would care to stake much on Callahan’s oath. ... I unhesitatingly stamp Callahan as an untrustworthy witness. And I accept Worcester’s story of the episode at Mrs. Norton’s home.”

Wyzanski agreed with another category of Worcester’s accusations. Worcester had identified, the judge said, “former members of the state legislature, a former candidate for the Republican nomination for governor, and a present member of Congress as recipients of what may, with some euphemism, be called the Worcester Bounty.”

The testimony in the case, however, had gone far beyond payrolls padded with the names of politicians, although the summonsing of Congressman James A. Burke, who was called just before election day to testify about receiving $450 from Worcester’s payroll, has been given as the reason why a prominent leader in Congress hopes to have Judge Wyzanski impeached. If the congressman reads the record, he will see that Congressman Burke was called by Worcester’s astute counsel, Attorney Cab in P. Bartlett.

Such matters — and they were but a small part of a mammoth out-of-court campaign in Callahan’s behalf— bothered the judge not at all. He referred in his opinion to another element of the pattern of corruption: no man now alive was apparently allowed, nor, indeed, did he at all desire, to see any more than one small link in the long and hidden chain. And certainly this applied to Worcester.

“The tendency of an otherwise decent man, like Worcester, when he gets into a sordid racket of extortion, bribery, and corruption is, as much as possible, to look the other way as his hand stretches forth to disburse a bounty,” said Judge Wyzanski. “Except for the episode in Mrs. Norton’s home. Worcester did not know in that kind of detail, with that kind of accuracy of observation required of a witness before he can effectively testify. He did not want that kind of knowledge. He never had it. He cannot legitimately invent it. And even if, with a battery of detectives and investigators, he had tried to discover the facts, he would have had as much difficulty as the District Attorney has had in this case.”

ONE man alone, in the case of the Worcester Bounty, saw more than one link in the chain of corruption. He was Frank Norton, the bagman, who brought in the state contracts to Worcester and delivered the cash. On December 30, 1951. worried about a federal tax probe of Worcester, he had called on Judge Charles E. Flynn, the lawyer whom he had had the Worcester firm hire for the case. He asked Flynn for “a very goodsized drink.”

“Before he quaffed it,” Judge Flynn testified, “he asked me if I thought I could spare it and 1 thought it was a very good-sized one. And I said ‘Yes,’ and he said. ‘Will you get me another and make me a decent-sized one.’ ” Flynn poured a stiff one in an old-fashioned glass; Norton downed it and said, “I feel better.” Flynn had a party for his children in progress, and Norton, taking his leave after a few minutes, asked how the tax case was going. “I said, ‘It’s going very badly,’ ” Judge Flynn recalled. “He says, ‘For who?' I says, ‘You know for who. It’s going badly for the Worcester Company and for you.’ He says, ‘For me?' I said, ‘Yes.’ I said, ‘They’re breathing right down your neck.’ . . . He said, ‘Is that so?’ . . . And he said, as he went out the door, ‘Well, I’ll take care of that.’ ”

Two days later, on New Year’s Day, 1952, as he sat hunched over the dining room table, where he was working on his income tax return, Francis C. Norton died of a heart attack. As one witness put it to Norton’s widow months later, when the tax sleuths were even hotter on the trail of the missing money, “Dead men can’t testify.”

Frank Norton had had a stroke in October, 1949. There is evidence to suggest that it may have been brought on by worry over the possibility of the federal tax probe. Worcester’s first general counsel, unable to stomach the bribery plan, had resigned. The daughter of a police chief had been fired by Worcester’s comptroller, Philip W. Murphy, on suspicion of “blabbing to an auditor about the cash going to Norton. The girl told her father, and he has testified that he told Callahan’s brother-in-law, John Murphy, that he would go to the Internal Revenue Service unless he got satisfaction. The police chief never did so, though he says he let Murphy see him talking to tax agents. He said that instead, from the chief’s own home, John Murphy phoned Callahan in Greenfield and the matter was settled by giving the girl a letter of recommendation, plus full pay till her coming marriage. Callahan could not remember the call, though he said he was in Greenfield. John Murphy remembered it, but insisted that the chief’s daughter and her job were never mentioned, and said that he merely inquired what kind of firm the Worcester Company was.

In July of 1951, however, things got hot. A tax agent was investigating the tax evasions ol Internal Revenue Collector Denis Delaney, who was later convicted, and Worcester had done some contracting work for the owner of a building which the Internal Revenue Service was to occupy. When the agent went to the Worcester plant and asked to see the books, Philip Murphy turned white and almost fainted. In almost no time, Philip Murphy testified, he and Norton were burning Murphy’s little black book recording the cash payments to the bagman.

Yet it seems possible, and despite Judge Flynn’s testimony about the agents’ breathing down Norton’s neck, that the tax probe did not become really serious until late fall of 1952. The near-fatal collapse of a heavy overpass section in Sullivan Square, Charlestown, had led to discovery by the First National Bank of Boston that Philip Murphy and Worcester had endorsed to contractor M. DeMatteo two checks totaling $60,000 from the state which had been previously assigned to pay off indebtedness to the bank. Worcester testified that DeMatteo, to get the money, had threatened to “cause trouble for the [Dever] campaign.” From here on, the tax agents really moved in. But Norton was no longer alive to tell his story.

From the forty-odd volumes of the Worcester case transcript, there is much that can be gleaned, though the task is complicated by Philip Murphy’s recent admission of perjury and the fact that perjury charges against other witnesses are being weighed as this is written.

THE pattern in the evidence on which Judge Wyzanski based his finding shows the familiar payment of political campaign contributions, of the sort Worcester meant in his testimony about his gifts to the late Governor Paul A. Dever when he ran for re-election unsuccessfully against the then Representative Christian A. Herter in 1952: “Of course, the thing always has been to try to play both ends against the middle, if you could — contribute to both sides — but Mr. Dever, of course, had the strong argument that we had received all this work and there was more in the offing. He was dangling something quite attractive.”

The pattern also shows both political parties loading up the payroll with politicians, some of whom did not even bother to pick up their paychecks but had them mailed. Ex-Mayor C. Gerald Lucey of Brockton, then a state representative, told how the then Republican chairman of the House Ways and Means Committee sent him to the Worcester firm, because “he knew I was not representing any company there and he thought I should become associated. ... He was a fine, honorable gentleman, even though he was a Republican.” One lawyer, Henry M. Santosuosso, was paid $11,000 in ten months for nonexistent “legal consultations,” and when the tax agents caught up with him, he hurriedly phoned the firm’s counsel, whom he had never seen, and asked what jobs the company had worked on so he could have “something to hang my hat on.” Another, ex-State Senator Edward M. Rowe, at Norton’s suggestion was paid $20,000, most of it in a year for which he filed no federal tax return, because, as one witness said Norton put it, “The Democrats wanted Rowe to run [for Governor] in the [Republican] primary in order to create a division in the Republican Party.”

According to his testimony, Vincent J. Shanley, then a Boston city councilor, seemed a most deserving case to Governor Dever, for he had eight children and needed money. Worcester paid him $50 a week for 77 weeks, for doing nothing. On the payroll of both Worcester and the Federal Bureau of Public Roads was Constantine J. D’Amato, now an engineering contractor in his own right. He was recently charged, during a probe of the Metropolitan District Commission (one of the few sincere legislative probes of corruption in Massachusetts), with having been paid for swimming pool designs which he had traced from someone else’s work.

Yet the phony jobs were but a small part of the story. They paid only a score or so of legislators and political hangers-on. But if — and there is now no legal evidence to prove it was done — the same practice was followed by enough other contractors and subcontractors, it would not have required too many of them to “employ” in this fashion a majority of the 280 members of the state Senate and House of Representatives.

Only the naïve would consider this the sole approach to influencing legislation on, say, a state highway bond issue, and, sure enough, the testimony in the Worcester case dredged up what could be other ways and means. There was, for example, the matter of contractors’ performance bonds. The commissions paid to insurance brokers handling them are lucrative. It has been estimated that in two years these brokers’ commissions on bonds for contractors dealing with the Massachusetts Turnpike Authority totaled almost $300,000 in what indirectly was taxpayers’ money.

Hence, ears pricked up when the subject entered the Worcester case testimony. A name running through much of it was that of Percy G. Cliff, a Boston insurance man and close friend of both Callahan’s and Frank Norton’s. Cliff has been ill with a heart condition, but with authorization from his doctor and lawyer, the court held an unusual, 45-minute session in his Winchester home. There the insurance broker testified that he had handled performance bonds for contractors doing business with the Massachusetts Turnpike Authority. Cliff admitted he had been “associated” since 1953 with John M. (“Mom”) Shea, Callahan’s personnel manager and job dispenser. But on the advice of Cliff’s physician, Judge Wyzanski ended the session abruptly, without getting an answer to his question whether Shea had been Cliff’s “partner, or , . . your co-venturer, or . . . was a friend who shared in certain of your financial transactions. . . .”

With Callahan on the stand a week later, the matter came up again. Callahan testified that his nephew, Francis R. Murphy, Jr., had been associated with Cliff in business. The witness replied, over his counsel’s roaring objection, that Shea handled job requests from legislators, “both Democrats and Republicans.” Next, Callahan testified he had “heard” that Shea, after losing the state DPW job in a change of regime in 1953, “worked together” as an insurance broker with Cliff. Soon Callahan was admitting that Shea received a share of the commissions on turnpike performance bonds, but he didn’t know what size share, nor did he know whether Shea transferred “half or more” of his commissions to cash.

“Has it come to your attention, Mr. Callahan,” asked U.S. Attorney Richardson, “that members of the legislature did receive shares of the commissions on the turnpike performance bonds?”

“Well,” said Callahan, “if a legislator has an insurance broker’s license, he absolutely has the right to share in performance bonds.” In a moment he was admitting, “Yes, it has come to my attention,” and he also testified that legislators had received a share of the commissions paid to Cliff. The judge barred, because “it may have an interest but not relevance,” a request for the names of the legislators. Richardson implied, in asking a question, that Cliff’s share in all of the turnpike performance bond commissions had been 60 per cent. If it was, Cliff would have received $175,000.

At any rate, another part of the pattern now seemed clear enough. There are 54 insurance brokers in the legislature, and I do not mean to imply that any of these shared commissions with Cliff, Shea, or Callahan’s nephew. But the conclusion seems inescapable that some legislators who voted for the Turnpike Authority and its huge bond issue were involved with at least one of these men, and it was naturally to their advantage to support the legislative proposals of a person or persons who would see to it that they received their share of the commission.

Then there were other disclosures. Callahan denied it, but documentary and other evidence indicated that he discussed state contracts with Norton even in Florida. Callahan admitted that his son-in-law, John J. Kelly, Jr., is an officer of Highway Traffic Engineers, Inc. Other testimony showed that half the stock of this firm, headed by Callahan’s long-time associate, former Metropolitan District Commissioner Edgar F. Copell, is owned by the same Kelly; that 90 per cent of the firm’s work is done for the Turnpike Authority; and that the company had not only hired Worcester’s former comptroller, confessed perjurer Philip W. Murphy, but had given him a $50-a-week pay raise last October.

Callahan admitted more: that he purchased for one dollar an option to buy the stock of the Bay State Dredging Company (a firm which hired Norton’s son Larry after the latter left Thomas Worcester, Inc.) and sold the option for $70,000 to contractor Lou Perini, owner of the Milwaukee Braves baseball team. Though Callahan had denied at Worcester’s trial that he was ever interviewed by an Internal Revenue agent in connection with the case, he now testified that he has in fact been investigated by the tax men for three years or more, and complained, “If ever a man has been harassed in the last eighteen months, I have been.” Callahan was asked how much his net worth had increased since 1949. He said the increase was “normal” and “not much.” But no figure of any kind was ever forthcoming.

ALSO, throughout the hearings there ran a thread that involved lawyers and judges and officials dealing in land damage and other cases; a firm called Public Relations, Inc., which, recommended by Governor Dever, received $29,000 from Worcester for doing nothing except “standing by” and whose president, William A. Beale, was “under hypertensive drugs that affect my memory very much”; a section of the press ever ready to print the worst about Wyzanski and the best about Callahan; and a network of gossip and espionage that defies description.

There was, for example, Judge James M. Langan, special justice of the Middleboro District Court, who showed up as counsel for Mary P. Norton, widow of the alleged bagman. Langan was barred as her counsel under a law preventing a judge from representing a witness in a criminal proceeding, and was later put on the stand himself. Langan had been counsel only last fall for a state Senate committee probe of the DPW that resulted in a whitewash. Now, in short order, he was testifying that Cliff had recommended him to Mrs. Norton, that he handled two land-taking cases for the Turnpike Authority, and that he was paid $5000 for two cases that Highway Traffic Engineers gave him.

There has always been some mystery as to why it took more than three years after Worcester was indicted, on March 13, 1957, for his case to be brought to trial. It had been assigned to Federal District Judge William T. McCarthy, but had not been tried when he retired last June. He had said that if there were bribery involved, it should be called to the attention of the slate attorney general “right off the bat.”

Langan was asked, at the post-trial hearings, about his having been a trustee in the 1955 reorganization of the Gil Wyner Company, once the state’s leading contracting firm. It then developed that as trustee he filed a $50,000 bond from Aetna, Cliff’s insurance company, as did the other two trustees, and all three of them had been named by Judge McCarthy. The broker’s commission for all three bonds was paid not to Cliff but to “one Harry Toner, whose offices are at 10 Post Office Square.” Toner, though not identified as such in court, is Judge McCarthy’s son-in-law. The other two trustees were Joseph Gottlieb, Assistant U.S. Attorney when Judge McCarthy was U.S. Attorney, and Timothy J. Driscoll, who is a close associate of Callahan and who attended most of the Worcester hearings. Judge Langan could not remember who had suggested Toner for the bonds.

Whatever conclusions may be drawn from all this, a pattern of corruption and pay-offs does emerge. Has it been copied in other contracting firms and in other states? Federal grand juries which have been holding hearings on highway scandals may come up with findings that show additional graft and bribery. As for Massachusetts, the case of the Worcester Bounty shows there has been dirty money in circulation. And there is reason to believe that President Kennedy, when he addressed the Bay State legislature four days after Judge Wyzanski’s bombshell, may have had this in mind. Quoting in part from the Massachusetts Bay Colony’s founder, Governor John Winthrop, he said: “Today the eyes of all people are truly upon us — and our governments, in every branch, at every level, national, state, and local, must be as a ‘city upon a hill’ constructed and inhabited by men aware of their grave trust and their great responsibilities.”

Governor Winthrop’s memorial, with its reference to a “city upon a hill.” stands on Boston Common, its back toward the State House.

Save for Worcester himself, now free on probation, no individual involved in his bounty has been indicted as this is written. But as Judge Wyzanski’s opinion tells so eloquently, Massachusetts has been indicted — and there she stands!