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BUSINESS B5
Point made
Boom in pools
OUR OVERUSE OF THE
EXCLAMATION MARK
abcde
VOLUME 281
NUMBER 117
Suggested retail price
$1.25
$2.00 outside of
Metro Boston
SPORTS: SOX COMPLETE A SWEEP OF TWINS, 7-6
SQUISH FULFILLMENT
Today: Cloudy, showers later.
High 57-62. Low 44-49.
Tomorrow: Mostly sunny, breezy.
High 57-62. Low 36-41.
High Tide: 3:01 a.m. 3:38 p.m.
Sunrise: 5:46 a.m. Sunset: 7:38 p.m.
*
Full Report: Page B13
Th u rsday , A pril 2 6, 201 2
In the news
Supreme Court justices appeared inclined to uphold
Arizona’s requirement that
SEASON’S SUDDEN END
officers determine the immigration status of anyone they
stop if they suspect the person
to be an illegal immigrant. A2.
France raised the idea of UN
military intervention in Syria
as frustration rose over the
continuing violence. A3.
An online religious group
urged Bishop Robert McManus of Worcester to lift his ban
on Victoria Reggie Kennedy as
commencement speaker at
Anna Maria College. B1.
East Boston man faces
racketeering charges
Counseling and grants worth
$16 million will be offered to
By Milton J. Valencia
struggling Massachusetts
homeowners under a program
that uses proceeds from a
settlement with big banks. B5.
GLOBE STAFF
four, six weeks of playoff hockey, but now
the bull gang can melt the cold sheet and
switch to parquet for the rest of the
spring. The NBA postseason doesn’t start
until this weekend and already hockey is
done for the year.
Bring on the Celtics and Atlanta
Hawks. Bring on the NFL draft. Bring on
the (gulp) Red Sox. We won’t see the
Bruins again until September.
‘‘We definitely had obstacles this
season,’’ said Bruins captain Zdeno
Anthony L. DiNunzio, the reputed leader of the New England Mafia who allegedly
bragged that he would enforce his authority by burying opponents alive, was
charged with racketeering and extortion
Wednesday in US District Court in Rhode
Island, in yet another blow to a criminal organization that continues to see its power
erode.
DiNunzio, 53, the younger brother of
the convicted mobster Carmen ‘‘ The
Cheese Man’’ DiNunzio, is the sixth consecutive boss or acting boss of the New England Mafia to face criminal charges. His
predecessors have all been convicted.
DiNunzio, of East Boston, was arrested
just before 7 a.m. at the Gemini Social Club
in the North End of Boston. Wearing glasses and a windbreaker jacket, he pleaded
not guilty in federal court later to charges
of racketeering conspiracy, extortion, and
traveling to aid extortion.
Prosecutors have asked that he be held
without bail, and a hearing is scheduled in
Providence May 3.
‘‘Organized crime likes to believe their
reach is long,’’ US Attorney Peter F.
Neronha said at a press conference after
the hearing. ‘‘Our reach is longer.’’
Neronha said the indictment should
serve as a message to organized crime figures who hope to assume DiNunzio’s role.
SHAUGHNESSY, Page A16
DINUNZIO, Page A10
Governor Deval Patrick refused to negotiate with the
Wampanoag of Aquinnah over
a casino, saying the tribe surrendered gambling rights in a
1980s land accord. B1.
Media power Rupert Murdoch
acknowledged close contact
JOHN TLUMACKI/GLOBE STAFF
Andrew Ference hugged goalie Tim Thomas after the Bruins bowed out in Game 7. Coverage, C1. Fans’ reaction, B2.
with political leaders but said
he did not try to manipulate
British governments. A5.
Dan Shaughnessy
Concord residents voted to
ban the sale of single-serving
Capitals knock out champion Bruins, 2-1, in OT
plastic water bottles. The bylaw
still needs approval of the
attorney general’s office. B3.
Retiring Representative Barney Frank said President
Obama erred by pushing for a
health care overhaul in 2009
before trying to change the
financial system. A12.
Newt Gingrich said he will
suspend his long presidential
quest next week and formally
Reputed
Mafia
boss is
indicted
It was not a good New
England winter for ice.
Maybe that was a sign.
The Boston Bruins,
Stanley Cup champions
who skated until mid-June
in the glorious spring of
2011, are done for the
season. The Spoked-Bs were sent home
Wednesday night, losing Game 7 of their
first-round series to the upstart Washington Capitals, 2-1, in the third minute of
overtime, in front of a stunned TD Gar-
den sellout crowd.
Winger Joel Ward scored the winning
goal, muscling the puck past Tim Thomas after a rush by former Bruin Mike
Knuble.
‘‘We had to really grind it out,’’ said
Bruins coach Claude Julien. ‘‘It was a
challenging year for the guys. At the end
of the day when you look at your team,
your team wasn’t playing its best in this
series.’’
It’s somewhat of a shocker. We
thought there would be another two,
endorse Mitt Romney. A13.
Citizens
in $137.5m
overdraft
settlement
‘This is the
engineers finally
passing the baton to
the creative folks
and retailers.’
Have a news tip? E-mail
[email protected] or call
617-929-TIPS (8477). Other
contact information, B2.
POINT OF VIEW:
YVONNE ABRAHAM
‘‘About 1,000 of the
state’s roughly 166,000
employers paid the Fare
Share contribution in
2010. Some of them
deserved the fine, and
more. But shouldn’t we
make a distinction
between employers of
good faith who can’t get
employees to sign up for
health insurance, and the
scofflaw employers who
simply won’t?’’ B1.
Inside
Features
Classified
Business
B5-9 Legal notices B6
Deaths
B10-12 g
Editorials
A14
TV/Radio, Comics,
Lottery
B2 Crossword,
Weather
B13 Sudoku, KenKen,
Movies, Horoscope
© Globe Newspaper Co.
For breaking news, updated
stories, and more, visit our website:
BostonGlobe.com
17439
0
947725
4
JULIE WORMSER
Boston Harbor Association
All-out effort
to get people
to waterfront
this summer
Events showcase
local attractions
By Joseph P. Kahn
GLOBE STAFF
The Big Dig was completed
five years ago, resulting in the
Central Artery’s demolition and
creation of the Rose Fitzgerald
Kennedy Greenway, 15 acres of
public land. Once-polluted Boston Harbor has become not only
a chic dining destination but
clean enough to swim in.
For many Bostonians, though,
the waterfront neighborhood
and Greenway remain terra incognita. How to lure them down
there? That is the aim of a consortium of nonprofit organizations, governmental agencies,
and business owners behind a
campaign labeled ‘‘Summer on
the Waterfront: Eat, Splash,
Shop, Learn.’’ Backed by a six-figure marketing effort, it will be
formally unveiled June 1 and celebrated with a kickoff ceremony
June 2 on the Greenway. The
campaign runs through Labor
Day.
Along with a dedicated webWATERFRONT , Page A11
Bank accused
of manipulation
to increase fees
By Beth Healy
and Todd Wallack
GLOBE STAFF
DAVID L. RYAN/GLOBE STAFF
A six-bedroom president’s house with swimming pool and ocean views is part of the
campus of the National Graduate School of Quality Management in Falmouth.
A tiny tax-exempt school
gives president a lavish life
Critic calls board
a ‘puppet group’
By Brian Jordan,
Kristina Finn,
and Walter V. Robinson
GLOBE CORRESPONDENTS
FALMOUTH — It is a tiny
school, with an enrollment the
size of a modest elementary
school. There is no campus, just a
small office building. Its 400
part-time students are invisible
here, attending classes at off-site
facilities across the country.
Yet the National Graduate
School of Quality Management
awarded its president, Robert J.
Gee, $732,891 in compensation
two years ago. By comparison,
the president of Tufts University,
with 10,800 employees and
5,500 students, had nearly identical compensation the same
year, $738,596.
Gee has champagne tastes. In
2009, he persuaded the Massachusetts Development Finance
Agency to authorize $2.64 million in low-interest bonds. That
made possible his school’s purchase of a $3.25 million waterfront compound on Oyster Pond
with spectacular views of
Martha’s Vineyard, especially
from the six-bedroom house earmarked to be Gee’s presidential
residence.
SCHOOL, Page A10
State-backed bonds
with low interest rates
helped Robert J. Gee
open his school.
Citizens Bank customers hit
with questionable overdraft fees
could receive refunds under a
settlement announced Wednesday in which the bank agreed to
pay $137.5 million to settle
charges it manipulated customers’ debit card and ATM transactions.
The bank was accused of processing the transactions in a way
that made overdrafts more likely, boosting the income it collected from customers forced to pay
overdraft fees.
Citizens did not admit
wrongdoing in the case, which is
being heard in federal court in
Miami.
The court must still approve
the settlement.
Details of how customer refunds would be distributed will
be determined after the settlement is approved.
In a statement, the bank’s
spokesman, Jim Hughes, said,
‘‘We are pleased to have this
matter behind us. As our industry evolves, we continue to provide our customers with choices
to help them manage their accounts and their finances.’’
Overdraft fees, which disproportionately affect lower-income
CITIZENS, Page A8
T
A10 The Region
H E
B
O S T O N
G
L O B E
THURSDAY, APRIL 26, 2012
400-student school gives president a lavish life
º SCHOOL
Continued from Page A1
Five months later, the school,
which focuses on a particular
field of business management,
purchased new automobiles to fit
the estate setting: a silver
Mercedes-Benz S550 sedan for
Gee and a silver Mercedes-Benz
station wagon for his wife, Aileen
Waters Gee. The cost: $130,638,
or about 2 percent of the school’s
revenues that year.
There was no sales tax,
because the school is tax-exempt.
For years, the school’s revenues have financed a lavish lifestyle for Gee and for his wife,
who has been paid at least
$100,000 a year since 2003. And
they have vacationed together at
school expense: The school owns
a deluxe winter getaway in the
US Virgin Islands for their use,
part of a 17-year employment
contract that expires in 2023,
when Gee will be 79.
Gee, after ignoring the Globe’s
calls and e-mails for more than a
month, issued a statement
Wednesday asserting that his
compensation and perks are warranted. He said that they are
comparable with those given to
leaders of similar institutions,
but did not identify any.
Attorney General Martha
Coakley, who oversees public
charities, said Gee’s ‘‘compensation, employment contract, and
other benefits . . . seem excessive.’’ After reviewing the reports
at the Globe’s request, Coakley’s
office sent a letter to the school
Wednesday demanding information from board members.
The public documents, she
said, ‘‘raise questions about the
appropriate use of charitable
funds, as well as the organizational governance process that
led to their approval.’’
Elizabeth K. Keating, a nonprofit finance expert who
reviewed the school’s documents,
went further: ‘‘If I sat down to
write a fictional case study that
was designed to wave red flags
about an organization that is
misusing its tax exemption for
personal gain, this would be it.’’
Gee’s extraordinary compensation was discovered as part of a
Globe analysis, conducted by
Northeastern University investigative reporting students, of data
culled from publicly available tax
returns filed by more than
22,000 nonprofits in Massachusetts.
While compensation agreements at nonprofits are supposed
to be scrutinized by boards of directors, it is not clear how diligently the National Graduate
School’s board carried out its duties. Several board members, including its chairman, Thomas
Kneaval of Delaware, refused to
discuss their role.
One former member, Scott
Adams, said the board was mostly a ‘‘puppet group’’ of Gee’s
friends. Sometimes, he said, the
board was not consulted about
important decisions. Often, he
said, the board was informed
after the fact. It was, he said, ‘‘a
one-way conversation.’’
Adams, a board member from
2004 to 2007 and subsequently a
DAVID L. RYAN/GLOBE STAFF
A statement from the school’s president, Robert J. Gee, said the Falmouth compound was never intended to be his residence, but
school records said it would be. Gee said his $732,891 compensation was justified in part because he was the school’s founder.
full-time official at the school,
said Kneaval’s attitude seemed to
be that it was Gee’s school and
the board was to do what Gee
wanted. Adams said he does not
remember that Gee’s 17-year
contract even came to the board
for approval in October 2006.
‘‘If that contract came to the
board, it would have been
rubber-stamped,’’ Adams said.
Gee agreed during a brief telephone interview on April 11 to
answer questions, which were
sent to him the next day. On April
16, Gee promised to provide answers by Monday of this week,
but did not, asking for another
delay. Late Wednesday, Gee emailed some answers to the
Globe, saying they should be
attributed to Kneaval, the chairman.
The statement said Gee’s compensation is justified because he
is the school’s founder and because he maintains a full teaching load.
The statement said the Oyster
Pond compound was never
intended to be his residence,
even though the school’s own
documents, some with Gee’s signature, consistently said it would
be. It said his wife’s hiring had
nothing to do with her being his
spouse. The statement was silent
about her Mercedes-Benz.
Gee, who is 67, founded the
school in 1994. Its focus is
graduate-level coursework in
total quality management, the
practice of training workers and
managers, and even customers
and suppliers, to more efficiently
manage production and processes. These practices, which
helped make Japan an economic
superpower, are now widely used
by American manufacturers and
have become a staple in business
school course catalogues.
Keating, who teaches at
Boston College and at Boston
University and has written extensively about executive compensation, said that Gee’s salary and
perquisites are so excessive that
the Internal Revenue Service
might levy substantial excise tax
The school
earmarks barely
half of its expenses
for services.
assessments against the school
and Gee. If the IRS finds the violations extreme, she added, the
school could be stripped of its
tax-exempt status.
Even without scrutiny from
Coakley and the IRS, the school
that Gee built faces other financial issues, according to its tax
return and auditor’s report for
the fiscal year that ended June
30, 2011, which the Globe
obtained Tuesday.
There is a long lag time between the time nonprofits file
their returns and when they are
publicly available.
In the prior year, when Gee’s
compensation was $732,891, the
school’s revenues were $7.1 million. In the most recent year, revenues fell to $5.7 million, and
Gee’s total compensation tumbled to $539,610. That is close to
what Bentley University pays its
president, Gloria Cordes Larson.
In 2010, Bentley had $227 million in revenue and 4,200 students.
(Ironically, Larson’s husband,
Allen R. Larson, sits on the board
of Gee’s school.)
The 20 percent drop in revenue may have triggered problems
with Bank of America, which
holds the $2.64 million mortgage
on the Island Pond property that
was approved by MassDevelopment. The school’s auditor, G.T.
Reilly & Co. of Milton, noted that
the school failed to maintain the
required ratio between its debt
and net worth, but had negotiated new requirements with the
bank.
The auditor, however,
expressed concern that the
school could still default on the
debt. Wednesday, Gee did not
respond to written questions asking whether the school is current
on its debt payments.
What’s more, the Falmouth
assessor refused to waive property taxes for the Oyster Pond
compound and an adjacent
waterfront property the school
bought for $1.25 million in 2010,
citing its intended use for lodging
for Gee and others. The school,
which now faces annual property
taxes of $25,000, has appealed
the decision to the state Appellate Tax Board.
Gee and his wife are in the
process of getting a divorce,
according to court records. She
began a two-year stint as board
chairman in July 2001, 11
months before she and Gee were
married. In July 2003, she left
the board and joined the staff at
$100,000 a year. The same year,
the school bought the couple
their first two Mercedes-Benzes,
which were replaced with new
models in 2009.
But it is the two high-season
timeshare units in St. John that
remain perhaps the most curious
expenditure for the school.
According to several annual
reports by the school’s audit firm,
the school loaned Gee $41,990 in
2006 to help him buy two wintertime weeks at the posh timeshare. Later the same year, the
school took over the mortgage
and assumed ownership of the timeshares. It later refunded Gee
$20,462 for the timeshares,
though the audit does not say
why.
Since 2006, the school has
been paying $36,648 a year on
the timeshare mortgage, at an interest rate of 16.9 percent.
But that is not the school’s
only contribution to Gee’s St.
John vacations. In Gee’s 2006
compensation agreement, the
school agreed to pay the roundtrip travel for Gee and his wife
and ‘‘related expenses.’’
And if Gee is unable to take
the time, the school reimburses
him $1,000 a week.
In the written response
Wednesday, the school said the
timeshares were part of a ‘‘strategic expansion’’ that was later
‘‘modified.’’
The agreement awarded Gee a
base salary of $400,000 a year, an
annual cost-of-living adjustment,
annual incentive compensation
of ‘‘not less than’’ 15 percent of
his base pay, and a deferred com-
pensation package that has yet to
be determined.
Other provisions in Gee’s
compensation include:
ª Four weeks’ vacation and
30 sick days a year, as well as pay
for days he does not take.
ª An expense account that
allows ‘‘expenses well above the
norm,’’ according to the wording
in the contract.
ª Pay for the cost of clothing
and luggage ‘‘damaged or depleted’’ during his extensive travel
ª Reimbursement ‘‘on a perevent basis for renovations and
refurbishment to his residence
preparatory to host employer
events.’’
The agreement provides for
Gee to have one automobile, not
two.
Eric Nelson, a former highranking school official, recalled
in an interview that Gee bought
the second set of Mercedes just
after telling his staff in 2009 that
the school had no money for salary increases.
After reviewing the school’s financial reports and the employment agreement, Keating, the
nonprofit finance expert, expressed disbelief that the Massachusetts Development Finance
Agency would fund the project in
light of the spending practices
that are evident in the school’s financial reports.
Aside from the compensation
and perks, Keating pointed to a
more obvious red flag, that the
school now earmarks barely half
of its expenses for delivering program services.
A recent analysis of 102 colleges and universities in Massachusetts, she said, showed that,
on average, they devoted 80.5
percent of expenses to program
services.
‘‘The lending criteria and the
lack of due diligence by MassDevelopment is pretty shocking,’’
Keating said.
MassDevelopment, a quasistate agency that helps not-forprofits find affordable financing
for capital projects, made all of
its records about the loan available to the Globe.
Laura Canter, the agency’s
executive vice president for
finance programs, said the agency’s review is intended ‘‘to ensure
that the borrower and the project
are eligible for tax-exempt financing.’’
As for the school, Canter said,
both faculty housing and housing
for presidents are eligible for financing under the tax code.
‘‘We do not make arbitrary
judgments about who is or is not
worthy,’’ Canter said. ‘‘If projects
are eligible, they are eligible.’’
In addition to Jordan and Finn,
this article was reported by Betty
Wang, Sara Feijo, Samantha
Laine, Matt Kauffman, and
Melissa Tabeek for a seminar in
investigative reporting at
Northeastern University. Their
work was overseen by
journalism professor Walter V.
Robinson, a former editor of the
Globe Spotlight Team. He can be
reached at [email protected].
Confidential messages can be left
at 617-929-3334.
Reputed Mafia boss charged in US court
º DINUNZIO
Continued from Page A1
‘‘These are not light punches,’’
he said. ‘‘These are heavy blows,
and we hope they will . . . continue to have an effect.’’
DiNunzio’s lawyer, Robert
Sheketoff, would not comment
outside the courtroom Wednesday.
DiNunzio was ensnared in a
case that began in Rhode Island
two years ago and was followed
by a nationwide sweep of Mafia
figures in January 2011, the largest roundup of Mafia figures of
its kind in history.
In the Rhode Island case, several Mafia figures, including former acting boss Luigi ‘‘Louie’’
Manocchio, and their associates
were accused of and later pleaded guilty to extorting thousands
of dollars in protection payments from strip clubs, including the Satin Doll and the
Cadillac Lounge. Manocchio and
several associates have yet to be
sentenced.
Manocchio, 84, yielded control of the Mafia around late
2009. For a short time, according to law enforcement officials,
Peter Limone, one of the men
vindicated after serving 33 years
in prison for a gangland murder
he did not commit, assumed the
role of acting boss. Limone was
subsequently arrested and convicted in Massachusetts state
court on bookmaking charges.
Authorities said Wednesday
that DiNunzio, whose criminal
record includes an extortion
conviction, then took control of
the New England Mafia, overseeing operations in Boston and
Rhode Island.
DiNunzio
immediately
sought to collect on the cash payments that Manocchio’s crew
was receiving from the Rhode
Island strip clubs, according to
court documents filed Wednesday. He named a top Mafia member from Rhode Island, Edward
Lato, as head of the organization
in that state and had him deliver
money, authorities said.
DiNunzio also sought the permission of the New York-based
Gambino crime family to require
payoffs from someone involved
in the adult entertainment
industry who was doing business in Rhode Island, authorities
said.
DiNunzio, according to the
authorities, defined his leadership style.
‘‘As soon as I took over, I
changed everything,’’ he allegedly told an associate.
According to court records,
DiNunzio issued the warning to
bury alive those who defied his
rule during a meeting with an
associate at My Cousin Vinny’s
restaurant in Malden in June
2011. . If someone disobeyed
him, he allegedly said, ‘‘I get to
watch you die in the ground.’’
He added: ‘‘I stay there 10
[expletive] hours until your [sic]
dead. And I’ll dig you back up
and make sure you are dead.’’
Several of DiNunzio’s conversations were recorded on wiretaps, including those he apparently had with members of the
Gambino family. The other
members of the Mafia were not
identified in court records and
are referred to only as Mafia
members or associates.
DiNunzio began to suspect he
was under investigation after
Lato and other associates were
charged, along with Manocchio,
in 2011, according to court
records. DiNunzio was searched
and had $5,000 seized by the FBI
after Lato had given him the
money.
DiNunzio told an associate
from the Gambino family that he
had come to realize that he was
being recorded during a meeting
at Billy Tse Chinese restaurant in
Boston, the records say, confiding to an associate that the
Rhode Island investigation could
be his downfall.
‘‘That’s the only thing I could
think that could set me up,’’ he
allegedly said.
Law enforcement officials
said Wednesday that the case
against DiNunzio shows the
inner workings of organized
crime. DiNunzio can be heard on
wiretaps discussing the process
of becoming a ‘‘made’’ member,
for instance, according to court
records.
The officials pledged to continue investigating organized
crime in Rhode Island and
Boston.
‘‘This is a regional problem
that crosses state borders,’’ said
Richard DesLauriers, special
agent in charge of the FBI office
in Boston.
To date nine people, including DiNunzio, have been
charged in the extortion of
Rhode Island strip clubs, and six
have been convicted. Before
DiNunzio and Limone, New
England Mafia bosses Frank
‘‘Cadillac Frank’’ Salemme, the
late Nicholas Bianco, and
Raymond ‘‘Junior’’ Patriarca
were convicted.
‘‘The Justice Department and
its law enforcement partners are
determined to put La Cosa
STEVEN SENNE/ASSOCIATED PRESS
‘‘Organized crime likes to believe their reach is long,’’ said
Peter Neronha, US attorney for Rhode Island, in announcing
the arrest of Anthony DiNunzio. ‘‘Our reach is longer.’’
Nostra out of business, and we
won’t stop until we’ve done just
that,’’ said James M. Trusty, chief
of the organized crime and gang
unit for the Justice Department.
Officials acknowledged, however, that the arrest of DiNunzio
opens a window for someone
else to assume the leadership
role and that the Mafia continues to operate.
DiNunzio, according to court
records, has told associates that
his son was working with La
Cosa Nostra as ‘‘an administrative guy.’’
He has also told an associate
that he would not yield his power, not even after an arrest, the
records say.
‘‘If I go to the can, I’m still the
boss . . . no matter what,’’ he
allegedly said.
Milton J. Valencia can be reached
at [email protected].
Follow him on Twitter
@MiltonValencia.