Walsh Weathers Controversy, Inquiries

During a year in which allegations of financial wrongdoing ended the careers of several national politicians, one Cambridge councillor has survived accusations of shady dealings and evaded an almost-certain political death.

Federal officials launched an investigation of fourth-term City councillor William H. Walsh for suspected bank fraud in December.

But so far Walsh appears to have weathered the controversy over his questionable real estate dealings.

Justice Department officials are currently investigating if Walsh artificially inflated condominium prices to obtain larger mortgages from banks and prevent the failure of his 70-unit condominium development in Weymouth.

According to newspaper reports, Walsh is also under investigation for illegally transferring ownership of dozens of condominiums.

Walsh--who owns condos throughout the suburban Boston area--flatly denies all the charges.

But a federal grand jury subpoenaed documents in late January as evidence for the two counts of fraud with which Walsh may be charged.

Walsh says that even if federal charges are eventually leveled, they will not stick. Walsh says he has won all civil suits brought against him by banks, former clients and former partners. Walsh has already battled a slew of lawsuits and it currently entangled in at least 25 more that allege Walsh engaged in financial improprieties.

Although no findings in the federal investigation have been leaked to the press recently, the shadow of impropriety still looms over Walsh.

The councillor, however, has managed to continue with his law firm and council duties, even though the suspicions are widespread, persistent and allegedly infringing on his career in the public sector.

Walsh, an Independent councillor, has battled rent-control and has a history of having a pro-development stance in the council.

Questions about the integrity of Walsh's financial business circulated Cambridge long before federal investigators announced their probe in mid-December.

The questions of Walsh's actions were intensified by his active efforts at city Hall to push for the passage of some of the strictest ethics regulations in the nation.

The legislation requires the city's elected officials to publicly disclose financial holding and the names of all business partners.

The law was designed to prevent councillors from confusing the differences between public and private interests of city officials.

And although Walsh was a major backer of the ethics legislation package just before the investigation began, suspicions of his dealings have been floating around the city for years.

Walsh's business transactions have intermingled with the lives of eminent Cantabrigians and colleagues including fellow Councillor Sheila T. Russell, former Police Chief Anthony G. Paolillo and City Clerk Joseph E. Connarton.

The City Council recently voted not to reappoint Connarton to another term because he is aligned with the interests of Independent councillors, according to several political observers.

Walsh firmly denies all allegations of political and financial conflicts of interest, all accusations made by federal investigators and any impropriety in his real estate deals.

"To my knowledge, everything was 100 percent legitimate," Walsh says.

But according to an affidavit submitted by former partner Dennis M. Cargill, Walsh's innocence is questionable.

"Walsh exuded a cocky self-confidence based on his legal/political clout and believed that he could do most anything [in his business deals]," Cargill stated. He also wrote that Walsh's transactions "had serious conflicts of interest."

In addition, rent control activists contend that Walsh's investments in rent control properties have been converted to uncontrolled condominium developments.

"What's been a concern to us is the way in which permits have been removed where [Walsh's] office has been involved," says Michael H. Turk of the Cambridge Tenants Union. "There is a question as to whether there have been illegal removals as well as legal."

Despite a sizable and perhaps growing political faction against the councillor, and despite acknowledgement by councillor and then-Mayor Alice K. Wolf that his dealing may be construed as "possible conflicts of interest," Walsh still maintains a substantial bastion of political support from the big business and Independent sectors.

"He was always a representative of the real estate industry," said Councillor Edward N. Cyr at the height of the controversy. "People vote for him knowing that that's what he does."

And although federal probes into financial wrongdoings of politicians can lead to abrupt endings of political careers, Walsh may be comfortably ensconced enough in the conservative political scene to avoid considerable damage to his base of constituents.

"I do hope to seek re-election," says Walsh. "I will continue to tell my side of the story to the people. And they can be the judge."