PROVIDENCE — The longtime mayor of struggling Central Falls resigned and has agreed to plead guilty to a federal corruption charge of accepting gifts in exchange for handing out a lucrative contract to board up city houses, according to papers filed Wednesday.
The plea agreements bring an end to a two-year investigation that hung over the state's smallest city, even as it struggled through a painful municipal bankruptcy and faced questions over whether it would have to merge with another city to survive.
Charles Moreau, who resigned as mayor effective noon Wednesday, and his friend, businessman Michael Bouthillette, acknowledged in the plea agreement that Bouthillette paid at least in part for a furnace installed at Moreau's former Central Falls home and for renovations at a home Moreau owned in Lincoln. The total value is estimated at $5,000 to $10,000.
In exchange, Moreau used his emergency powers to order homes that were foreclosed be boarded up by Bouthillette's business.
“This is actually a good day for the citizens of Central Falls,” state Attorney General Peter Kilmartin said at a news conference. “They are putting the bankruptcy behind them. They are putting a corrupt administration behind them. There's a new light at the end of the tunnel for them, and it's a bright light.”
The state took over Central Falls and its teetering finances in 2010. This month, a federal judge approved a fiscal recovery plan for the city that balances the city's budgets through a mix of pension cuts, tax increases and pared expenses.
Court papers say Bouthillette boarded up at least 167 houses from 2007 to 2009 and made “unreasonable profits” of hundreds of thousands of dollars. When employees in the city questioned the amounts Bouthillette was charging for the work, Moreau dismissed the concerns, on one occasion telling an employee to “mind his own ... business.”
In some cases, Bouthillette re-boarded up homes that other companies had already boarded up or where people were still living, the court papers show. As part of his plea deal, he agreed to pay $160,000 to social service, public safety and other agencies to benefit Central Falls.
U.S. Attorney Peter Neronha said prosecutors will recommend prison time for both men. Court papers said they would recommend at least a year in prison for Bouthillette. Neronha said they view Moreau's crime more seriously because he is a public official. He said he expects them to appear in federal court within a few days.
Of Moreau, Neronha said: “He violated his oath to the people of Central Falls. That has brought him down today.”
Lawyers for Moreau and Bouthillette did not return calls for comment.
Moreau was stripped of his duties — and his key to City Hall — in 2010 when the state receiver stepped in. By the time the receiver filed for bankruptcy in August 2011, the city had a deficit of more than $6 million on an annual budget of about $16 million.
State Revenue Director Rosemary Booth Gallogly said a special election for mayor will be held. A date for that hasn't yet been set.
Moreau was first elected to lead Central Falls in 2003. He would have been up for election next year and planned to run again.
Moreau often referred to the receivership as a “dictatorship.” Along with several City Council members, he took a challenge of the state receivership law all the way to the state Supreme Court, arguing unsuccessfully that it violated their rights as elected leaders and infringed on the city's constitutionally protected sovereignty.
A report on the city's financial problems by the first receiver, Mark Pfeiffer, didn't place blame solely on Moreau or the rest of the elected leadership. It cited $80 million in unfunded pension and benefits obligations, a loss in state aid and anticipated revenue that never materialized. But Pfeiffer also noted a “culture of government” that allowed the crisis to spiral.
A federal judge this month signed off on the five-year recovery plan for Central Falls, paving the way for its exit from municipal bankruptcy and, eventually, the return of its elected government. The budget for the current fiscal year has the elected leadership returning in January.
“We want to be looking forward and moving the city in the right direction financially, and we'll work with all the parties that are elected by the citizens to do that,” Gallogly said.