City Councillor Walsh Indicated On Charges of Conspiracy, Fraud

City Councillor William H. Walsh was indicted yesterday morning on 59 charges of conspiracy, bank fraud and making false statements to a federally-insured bank.

Walsh was one of 19 people indicted for allegedly defrauding Dime Savings Bank of New York of about $8 million for condominium developments in Massachusetts.

If Walsh is convicted on all of the indictments he faces up to 208 years in prison and $14.75 million in fines.

Yesterday's indictment, the product of a two-year FBI investigation, prompted calls for the third-term councillor's resignation from political opponents who said Walsh was bringing "discredit" to the council.

Walsh, 47, was not available for comment yesterday. According to his law firm, Ferraro & Walsh, the councillor is on a "business trip."

A warrant for Walsh's arrest was issued at 12:30 p.m. yesterday. Walsh has yet to surrender to authorities, according to FBI spokesperson William J. McMullin.

Seven of the defendants were summoned to court yesterday and nine more were arrested. Three more, including Walsh, were still being sought.

The other defendants include several employees and business partners of Walsh including Dennis M. Cargill, a real estate broker, and Ann M. Jarosiewicz, a former paralegal for Walsh and a former alternate on the city's Board of Zoning Appeals.

Walsh and the other suspects allegedly told Dime they had made large down payments on the real estate projects so the bank would make loans to unqualified borrowers, according to the indictments.

The alleged down payments inflated the valued of the six developments and enabled the investors to secure larger mortgage loans to finance other dealings.

In recent years the number of cases of bank fraud prosecuted by the government has risen. For Walsh, the declining economy destroyed many of the projects that he had set-up in the 1980s, exposing the alleged fraud and mismanagement.

"The downturn in the economy has brought a lot of these cases to light," said McMullin. "People failed to make payments showing that fraud had occurred."

Walsh flatly denied any wrongdoing when the FBI investigation was first leaked to the media in December. "There was no inflating of prices," Walsh told The Crimson in December. "To my knowledge, everything was 100 percent legitimate."

The Cambridge Civic Association--the "good-government" party which opposes Walsh and other Independentcouncillors--called on Walsh yesterday to stepdown form his post.

"One way Councillor Walsh can serve the councilinstead of bringing more discredit to it whileunder investigation, would be to take the higherroad and resign," said CCA Executive DirectorDavid R. Leslie '69.

But Mayor Kenneth E. Reeves '72, a CCA-endorsedcouncillor, took a more conciliatory stanceyesterday.

"We must have compassion for a colleague whoselife is falling apart," Reeves said. "It is alegal matter and we must let the courts decide."

Reeves said, "the city council has no plans toaddress Walsh's indictment at its meeting nextMonday and that "the indictment of CouncillorWalsh does not touch on the public process ofCambridge."

Other long-time political opponents of Walshsaid, however, that the city council should notremain silent.

"I don't think the city can turn the other wayand pretend nothing's happened," said Michael H.Turk, cochair of the Cambridge Tenants' Union, apro-rent control organization that has beentracing Walsh's real estate dealings since 1989.

Turk, who says Walsh should resign, adds it isunlikely that Walsh kept his private dealsseparate from his interests as a city councillor.

The Independent camp, which holds the minorityin city council, has not only supported Walsh inthe political arena but has also been linkedclosely to Walsh's private real estate dealings.

Councillor Sheila T. Russell, an Independentwho has been both political ally and financialdealer with Walsh, would not comment on hercolleague's indictment. Former City Clerk JosephP. Connarton, who had financial investments withWalsh, also declined to comment, only saying thatthe indictment was "very unfortunate.

"One way Councillor Walsh can serve the councilinstead of bringing more discredit to it whileunder investigation, would be to take the higherroad and resign," said CCA Executive DirectorDavid R. Leslie '69.

But Mayor Kenneth E. Reeves '72, a CCA-endorsedcouncillor, took a more conciliatory stanceyesterday.

"We must have compassion for a colleague whoselife is falling apart," Reeves said. "It is alegal matter and we must let the courts decide."

Reeves said, "the city council has no plans toaddress Walsh's indictment at its meeting nextMonday and that "the indictment of CouncillorWalsh does not touch on the public process ofCambridge."

Other long-time political opponents of Walshsaid, however, that the city council should notremain silent.

"I don't think the city can turn the other wayand pretend nothing's happened," said Michael H.Turk, cochair of the Cambridge Tenants' Union, apro-rent control organization that has beentracing Walsh's real estate dealings since 1989.

Turk, who says Walsh should resign, adds it isunlikely that Walsh kept his private dealsseparate from his interests as a city councillor.

The Independent camp, which holds the minorityin city council, has not only supported Walsh inthe political arena but has also been linkedclosely to Walsh's private real estate dealings.

Councillor Sheila T. Russell, an Independentwho has been both political ally and financialdealer with Walsh, would not comment on hercolleague's indictment. Former City Clerk JosephP. Connarton, who had financial investments withWalsh, also declined to comment, only saying thatthe indictment was "very unfortunate.