Contractor jailed for widespread fraud

KEN YUSZKUS/Staff photo. Contractor James McCarthy is in Salem Superior Court for allegedly defrauding dozens of people. 01/30/15

SALEM —  His list of victims stretches from Plum Island to Groveland and the Boston suburbs. It includes homeowners, contractors, banks, building supply houses, a clothing shop, and even his own mother, son, sister and cousin. 

James McCarthy, 54, of Boxford, will pay for his crimes, a list that includes larceny, forgery, home improvement contractor violations, identity theft and other charges, with 3 to 3 1/2 years in state prison, a judge ordered Friday.

The prison time was warranted, “because of the repeated and complicated nature of your acts, and because of the fact that you have a history, some district court dispositions, for similar conduct, that shows clearly that the probation you were under before didn’t persuade you that this type of conduct is inappropriate,” said Salem Superior Court Judge Thomas Drechsler. 

McCarthy’s prison time will be followed by six years of probation, during which he’s forbidden from working as a self-employed contractor, Drechsler ordered. 

McCarthy, whose various schemes netted him, at a minimum, more than $100,000, isn’t being ordered to pay restitution in the case because, prosecutor Philip Mallard believes, he’s unable to do so. Some of McCarthy’s victims have also pursued civil suits against him, the prosecutor noted. 

McCarthy pleaded guilty to a total of 69 counts, out of 84 counts he was indicted on by a grand jury last year.

In addition to the charges listed above, he also admitted to money laundering, failing to have workers compensation insurance, attempted embezzlement, credit card fraud, making fraudulent electronic funds transfers, misrepresentation to a bankruptcy trustee, passing forged documents and attempted larceny.

Numerous schemes

It took more than two hours for all of the charges to be read and explained to McCarthy and Drechsler, and then another hour to sentence him.

Mallard, an Essex County assistant district attorney, described McCarthy’s schemes, some of them fairly complex. And, said the prosecutor, many victims were frustrated at the inability of law enforcement, including the Attorney General’s office, to do anything to help.

It wasn’t until a Groveland police detective and later, police detectives from Salem, Wenham and the state police began putting the pieces together that the bigger picture emerged. Mallard also credited press coverage about the case. 

Some of the schemes appeared to have been part of a long-term “modus operandi” of accepting money for contracting jobs McCarthy was not licensed for and had no intention of completing, Mallard said McCarthy. Those jobs were in communities including Salem, Wenham, Groveland, Newton, Cambridge, Winchester and Watertown.

Mallard said investigators believe McCarthy knew that if he did just a small amount of the work, most law enforcement would consider the matters civil, not criminal. 

But the number of times McCarthy did the same thing shows his intent, said the prosecutor, comparing the case to one in Chicago where a pair of crooked contractors’ motto was “One nail, no jail.” 

In the Groveland case a customer gave McCarthy at least $10,000 to do work on a home in 2012. He also let McCarthy use a credit card to buy supplies.

Instead, McCarthy used the credit card at locations in Peabody, Danvers and Andover. Then, he “reimbursed” the homeowner for the fraudulent charges by giving him a $5,000 check drawn on the bank account of a woman Mallard described as a “former paramour.” The check bounced.

Identity fraud

After the case began receiving media attention, McCarthy, who at the time was out on bail and wanted to continue working, began using the names of other, licensed contractors, whom he didn’t know, and creating fictitious companies.

He became “Jeff Schwartz” of Pegasus Construction for some jobs; on others, including a subcontracting job for Plum Island contractor Bill Barrett, he became “Bill Mitchell,” purportedly an employee of Pegasus. But “Mitchell” also purportedly owned another compay, “Blue Whale.”

And when “Bill Mitchell” failed to pay a Newbury business, Pearson Landscaping, the $1,400 that Barrett had given to him to pay for Dumpsters on a Plum Island job site, one of the real Bill Mitchells, a New Hampshire contractor, wound up being dragged into court on larceny charges, said Mallard. 

Meanwhile, Middleton Building Supply had agreed to deliver materials to the Plum Island site, but sent an employee, Andy Carberry, to make sure the work was actually being done. He was there on the afternoon that McCarthy (still using the name Mitchell) was operating heavy equipment to demolish a cottage.

Carberry captured video of McCarthy as he struggled to demolish the home, then swung the excavator around and knocked over the chimney on he house next door. Then, McCarthy sent some untrained workers to fix the damage, and they improperly capped the chimney, potentially creating a carbon monoxide hazard. 

Family matters

There were other complicated financial schemes, some of them involving relatives. 

When McCarthy, who along with a sister, had power of attorney over his mother’s affairs, learned that there had been a bank error on a piece of property that was jointly owned by his mother and a cousin, he tricked his sister into signing forged documents that would have given him control of the property, said Mallard. 

The sale, which was about to go through when McCarthy was arrested again last January, would have netted him $75,000. 

Some of the larcenies were comparatively small: The Andover Shop, a clothing store, was stiffed for hundreds of dollars worth of clothing, the prosecutor said. 

McCarthy’s lawyer, Patrick Regan, suggested that his client’s father, though a successful businessman, was an alcoholic, which led to a difficult upbringing. McCarthy also lost a set of twins shortly after birth and later, a daughter to cancer. 

And though McCarthy attended private schools and graduated from Northeastern University, Regan said the recession that started in 2008 led to financial difficulties. 

“He did it in large part to support a large family that was essentially falling apart,” said Regan.  “Everything he did was for them, but it was wrong, as he knows.” 

McCarthy, who asked to stay seated during much of his hearing due to what he said was a bad hip, also offered a brief apology at the end of the hearing. 

“I’m just sorry for my actions the last four years, and I just want to move on with my life,” he said. 

Courts reporter Julie Manganis can be reached at 978-338-2521, via email at jmanganis@salemnews.com or on Twitter @SNJulieManganis.

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