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	Money, the Church and a Ponzi Scheme The City Pays $135,000 to Settle a Lawsuit over a Controversial Department Head By Noah Schaffer Worcester Magazine [Worcester MA] March 11, 2006 http://www.worcestermag.com/archives/2006/03-09-06/city_desk.html The city of Worcester has paid $135,000 to settle a sexual harassment claim and lawsuit filed by a city employee. Among the claims in the case were that Stephen Willand, the Catholic head of the city's Office of Employment and Training, wrongfully denied a promotion to an employee, Edward Gagne, who had sued the Catholic Church for alleged sexual abuse by priests. The case also claimed that Willand had sexually harassed Gagne. A deposition in the case by another former employee casts Willand, who is paid $107,000 a year to manage the region-wide Workforce Central operation, as a vindictive manager. The deposition suggests that Willand was angry with Gagne over the demise of a Ponzi scheme cooked up by a one-time Workforce Central official that embarrassed several prominent Worcester families. Beyond the titillating details found in the case documents is perhaps a more serious charge: that Willand is violating federal funding guidelines by failing to separate Workforce Central from the organization that supposedly oversees it, the Regional Employment Board. A state spokeswoman says it isn't clear if Worcester is properly adhering to the federal guidelines. Documents relating to the case, long the subject of City Hall rumors, were obtained by Worcester Magazine following Freedom of Information Act requests to the city and state. Gagne, a youth programs coordinator who joined the office in 1987, complained in a 2003 lawsuit that he was receiving a "discrepancy in pay" by being listed as a "staff assistant" when his co-workers were "coordinators." He requested civil service protection for his position. In a deposition for the lawsuit, Elaine Baltas, a practicing attorney and a former supervisor at the OET, stated under oath that Willand had been discriminating against Gagne for reasons that included sexual orientation. That deposition was referenced in a complaint Gagne filed with the Massachusetts Commission Against Discrimination. Gagne added that he had "been the victim of sexual harassment by Mr. Willand .... [He] approached me, grabbed and twisted my tie in order to see its tag. His demeanor was invasive and intimidating in nature." On another occasion, claimed Gagne, Willand "fixed my suit collar by wrapping both hands around my neck and then proceeded to slide his hands down my chest; needless to say this was unwelcome and unwarranted." In her testimony, Baltas noted that when she was leaving the office in 1996, numerous employees were receiving promotions and salary upgrades. But Gagne was not one of them. "...[Willand] was very angry at him," said Baltas in her deposition, giving three reasons. The first was the Austin MacLaughlin affair. MacLaughlin once held the No. 2 position at OET before being sent away to jail for a Ponzi scheme. As Baltas put it, he ran "the scam on a number of people in this area, including Mark Smith and his wife from the [Foothills] theater group, the good folks from Sharfman Jewelers and whatnot .... Austin, in his Ponzi scam, had convinced people here, including a very well-respected member of the bar [Burton Chandler], that he was an heir to the Spreckles sugar fortune, and that at some point in time in the very near future ... he was due to receive an astronomical amount of money from the Spreckles estate and that he planned on creating these foundations, and some people loaned Austin money on that basis. And Austin also enlisted many members of the [OET] staff who had at some point in time in this plan or scheme of things would be leaving the office and going to work for Austin's foundations." MacLaughlin, a gregarious 300-pound man known for treating large groups to expensive dinners and gifts, turned out to be pulling a fast one. And Gagne played a role in the unraveling of the scam while on a trip to California. "He had the occasion to come upon the Spreckles Foundation, and I guess he went in and noticed that Austin didn't exist on the family tree and made some inquiries," testified Baltas. "He learned that Austin, in fact, was a fraud, came back to Worcester, and I don't know who he spoke to first, but I do know he spoke — probably [to Willand] about what he had found out in California and Stephen had told him to keep it quiet, not to tell anyone. As t happened, Stephen spoke to me about the situation." Willand's "concern was that he had loaned Austin money — he wanted to get his money back before everyone learned of the situation and the Ponzi scam that he had been running, because then he would never be able to get his money back." Baltas doesn't know whether Gagne went along with his boss's demand or not. (Through his attorney, Gagne declined to be interviewed for this story.) The Ponzi scheme quickly unraveled. "At that time the scheme, as any Ponzi scheme, was about ready to explode. Austin was not meeting his obligations in terms of his investment payments to his investors and people were getting quite a bit upset," explained Baltas. She said Willand was angry when a story about the scandal implicating OET staffers hit the local press. The second issue between Willand and Gagne involved Gagne's suit against the Catholic Church for abuse Gagne allegedly suffered at the hands of two priests, Baltas testified. "Mr. Willand was visibly upset about that, that day that it hit the newspapers ... he had a very difficult time understanding why anyone could sue the church. Because ... Mr. Willand considered himself a very prominent member of St. George's parish in Worcester, and the suit would affect him, it would affect his relationship with the parish's men's club, and was a very bad image for both him and the city manager and the City of Worcester." When Baltas suggested that Gagne should get a promotion and raise like his colleagues were receiving, "Willand indicated to me that that was not going to happen, most certainly, because he was suing the church, and he wasn't going to reward that." Willand's anger over the Catholic Church abuse lawsuit spilled out into areas beyond Gagne's employment classification, testified Baltas. She described how Gagne's tenor made him a popular choice to sing the National Anthem at OAT-sponsored events at the Centrum, involving projects such as a basketball tournament for at-risk youth, which included the participation of the Worcester Police Department Gang Unit. "After the suit [against the Church] became known, and until I left the office, he was never asked to sing again," she said. Willand was proud of the fact that he could recite the Act of Contrition faster than anyone in his class, testified Baltas. "I would say, in his mind, that he has a very close identity with the church. He went to St. Peter's, he went to Holy Cross, graduated from Holy Cross College" and was heavily involved with the Bishop's Fund, she testified. His daughter "Christine was a student at Notre Dame Academy, which is a Catholic all-girls high school in Worcester. And at that time [former City Manager] Jeff Mulford was on the Board of Directors of Notre Dame Academy and Maryann Grennon, who was Jeff's [and Thomas Hoover's] personal secretary ... her daughter was at Notre Dame also. So there was another tie that Stephen felt he had with the church." Baltas added that when Willand found out Gagne was gay, it "did not endear him .... It was not something he was happy about." In its response to the complaint, city solicitor Keith Hood wrote that Gagne was well paid when compared to similar employees of other area cities, and that he was seeking leverage from the MCAD for a raise. "Nothing could be a more cynical use of the system. The discrimination laws prevent employees from discrimination in the workplace .... It is a perversion of the law to try to use it as a club to get a raise," wrote Hood. Hood also called the complaints about Willand and Gagne's collar "insulting because they allege that ordinary behavior is sexual harassment. Since when is looking at a tie or fixing someone's collar a sexual act? People often fix someone else's flipped-up collar. It happens every day, in every venue. It is a matter of common courtesy .... Dr. Willand has no recollection of either of the alleged acts. If they even happened, Mr. Gagne did not object or protest." A few months later, the city settled the case for $135,000. Michael O'Brien had just been named acting city manager. The two officials most heavily involved with the case, Hood and former Human Resources head Janice Borg Silverman, were both terminated a few months later. A copy of the check shows it is drawn on funds from the City of Worcester, and a city document shows it was paid for via the OET. But exactly where those specific funds originate is less clear. Several city sources familiar with the settlement say that all OET funds come not from city taxpayers, but from the state and federal government. Spokespersons for both the U.S. Department of Labor and the state Department of Workforce Development say they are not aware that their funds were used in the settlement. The issue of separation between the OET, the Regional Employment Board and the Workforce Central one-stops is raised in the Baltas deposition. Baltas notes that the Workforce Investment Act called for a so-called "Chinese wall" between the Regional Employment Board and the entity doing "the administrative or grant recipient activities." Yet Willand identifies himself as the Executive Director of the Central Massachusetts Regional Employment Board. State Department of Workforce Development spokeswomen Linnea Walsh says that "if this is the fact, it is something we'd want to monitor. Under the federal law, workforce investment boards are not permitted to operate a one-stop career center. They can charter one, but day-to-day management and decision-making must be done by a separate entity." Gagne's attorney, Daniel Shea, is now representing another client who is suing Willand and the city. Linda Jeneski claims her job should have been given civil service protection. (See "A Civil Service action," Worcester Magazine, April 21, 2005.) In a footnote in that case, still winding its way through the courts, Shea mentions the potential issue of Willand wrongly being at the helm of both the Regional Employment Board and Workforce Central. "If what [Shea] contends was occurring with an overlap, that could potentially be problematic," says Walsh. When contacted to comment for another story, Willand was asked about litigation involving his department, and he replied that he could not comment. o Comments? E-mail editorial@worcestermag.com.
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