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Just the ticket for brokers

They hire an associate of DiMasi, watch scalping bill pass the House

Email|Print|Single Page| Text size + By Andrea Estes and Stephen Kurkjian
Globe Correspondent / April 27, 2008

The 2007 Red Sox season was just underway when a group of professional ticket brokers held an unusual meeting in a private room at the Baseball Tavern, the storied bar in the shadows of Fenway Park. The main item on their agenda: How to persuade Massachusetts officials to keep ticket-resale profits rolling.

One man was there with an offer of help. He was not a broker, had no known experience as a political strategist, and has never registered as a State House lobbyist.

But Richard Vitale had something that the two dozen brokers came to believe was even more important to their cause - a close personal and professional relationship with Salvatore F. DiMasi, the speaker of the Massachusetts House. Vitale told the group that he could "do things a registered lobbyist couldn't do - behind the scenes," according to one ticket seller in attendance who asked that his name not be used.

Others present also told the Globe they left the meeting with a clear understanding that Vitale was close to DiMasi. What they did not know when they decided to retain him through his firm, WN Advisors, was just how close. Vitale is the speaker's personal accountant and former campaign treasurer. And he had given DiMasi a $250,000 third mortgage on his North End condominium, according to public records. It was an unorthodox line of credit, apparently at below-market interest rates for such a loan, that DiMasi in an interview ac knowledged he had used.

Vitale's sales pitch worked, and, to a point, his promised efforts on behalf of the brokers may have worked, too.

At the urging of the group's leader, James Holzman, the president of Ace Ticket Worldwide, the brokers paid Vitale what two members in attendance at the meeting that day described as many thousands of dollars to help their cause. Months later, legislation to lift regulations on the ticket resale business glided through the House of Representatives with DiMasi's support. After passing the House, the bill got bottled up in the Senate, where it remains today.

A lobbyist or a strategist
But because Vitale, a Charlestown accountant with the firm of Vitale, Caturano & Co., was not registered as a lobbyist when he helped the brokers with their bill - and because of his financial ties to the speaker - the episode raises questions on how DiMasi and his political allies conduct business on Beacon Hill.

If Vitale was paid more than $5,000 to influence lawmakers - and several brokers briefed on his fee arrangements said he most certainly was - he would have had to register as a lobbyist. And if he was working as a lobbyist, his ongoing financial relationship with DiMasi - namely, the loan -would have run afoul of state conflict of interest laws that prohibit lobbyists from granting anything of value to a public official.

Also, if he had registered as a lobbyist, he would have been required to disclose how much he was paid by the ticket brokers for his services. Failing to register as a lobbyist carries a civil penalty of $500. Violators of conflict-of-interest law face civil fines up to $2,000 and possible criminal prosecution.

Vitale, through a spokesman, denies lobbying. The spokesman, George Regan, said Vitale worked as a "strategist" on the ticket brokers' legislation. Vitale has a "brilliant mind" and had worked as a strategist on other policy issues, Regan said, refusing to identify the other issues. "These are private, confidential matters that one's business does not reveal to the public," said Regan.

Holzman denied that the association hired Vitale because of his ties to DiMasi. He would not comment further or explain why the brokers chose an accountant with no lobbying experience to represent them.

DiMasi said neither he nor anyone on his staff ever spoke with Vitale about the ticket broker legislation; he said he ultimately backed and voted for a bill that favored the brokers because he thought it was good for consumers, too. The speaker said he took out the $250,000 line of credit with his old friend in 2006 because he needed some money, but that their personal and financial connections played no role in the fate of the ticket brokers' Beacon Hill agenda.

"I had no idea that he was working for them or what his relationship was," said DiMasi. "He's never talked to me about any legislation at all."

DiMasi said he borrowed $250,000 from Vitale because Vitale, his financial adviser, counseled him to. He said he did not go to a bank because he thought he would need the money for only a short period of time.

"I was trying to shift gears to get more income from my law office, and thought I could pay off that temporary line of credit," he said, adding that he has made some payments of principal and interest.

"I didn't accept anything from a lobbyist, no," said DiMasi, who was accompanied to an interview by a spokesman, the House legal counsel, and his chief of staff. "It has nothing to do with any legislation or anything I've done up here."

According to the mortgage filed with the Suffolk County Registry of Deeds, repayment of the June 22, 2006 loan - a revolving line of credit for five years - is not due until 2011. It was issued by Washington North Realty Corp., an entity created in the 1980s by Vitale to engage in consumer lending, according to records in the Massachusetts scretary of state's office.

Prime condo loan secured
The loan was unusual in several respects. It was secured by a third mortgage on Dimasi's Commercial Street condominium. According to real estate specialists, third mortgages are rare, and usually done through a private lender. They are essentially unsecured loans, because in the event of a foreclosure it would be unlikely the third lienholder would recoup the investment. Because of the risk, such loans generally carry interest rates that are substantially higher than prevailing mortgage rates, specialists say.

"If you're looking at a third mortgage you're probably looking at 16 or 17 percent, maybe higher," said David Milton, director of the Master of Science in Real Estate Management program at Bentley College.

But in this case, the loan was offered at prime rate, according to DiMasi's statement of financial interest, a public disclosure document he is required to file. At 8.3 percent at the time, the prime rate was significantly lower than what a borrower would ordinarily have been charged for a third mortgage, Milton said. DiMasi told the Globe on Friday that House counsel Louis Rizoli had informed him recently that the interest rate on the Vitale mortgage was actually prime plus 1 or 2 points.

DiMasi already had a $503,000 first mortgage and a $75,000 home-equity second mortgage on the property, which the city of Boston assessed last year at $973,200.

Through his spokesman, Regan, Vitale would not answer questions about the line of credit that he extended to DiMasi. Regan also would not say how Vitale came to be hired by the ticket brokers' group, what specifically he had done on their behalf, with whom he had met, whether he had spoken to DiMasi or any of his lieutenants, or how much he had been paid by the brokers association.

The legislation Vitale's clients sought to influence last year would significantly affect what agents can charge for tickets offered for resale.

Under current law, ticket resellers may charge no more than $2 above a ticket's face value, plus a service charge, though the law is rarely enforced, observers say. Consumer advocates had been pressing for tighter price controls after receiving complaints that tickets to sporting events and concerts were being sold for many times their original price.

By late September 2007, months after the brokers hired Vitale, the measures sought by consumer advocates were dead in the House. And in their place, a broker-friendly bill lifting all pricing restrictions had emerged with a favorable recommendation from the Joint Committee on Consumer Protection and Professional Licensure. A week later, that bill passed the full House.

The committee co-chairman from the House, Democrat Michael J. Rodrigues of Westport, who sponsored the bill, said he pressed the committee members to give it a favorable recommendation and forward it to the full House. Rodrigues said he initially felt that more consumer-oriented pricing restrictions should be placed on ticket sales, but that after hearing testimony during a committee hearing and consulting his staff, he decided to join a movement among several states to remove all pricing controls, and mandate instead that the ticket brokers be licensed and bonded.

"We don't have price controls on any other commodity, not even drugs, yet we try to enforce them on the resale of tickets," Rodrigues said. "It doesn't make any sense and it doesn't work."

Bill stalled in the Senate
Rodrigues said he never met Vitale. He said he spoke to DiMasi about the bill, but that the speaker only asked if there were adequate consumer safeguards in the legislation and never asked him to advance it.

The assumption of the joint committee's Senate co-chairman, Michael Morrissey, who objected to the bill, was otherwise.

"I told him I didn't think it was ready for prime time," said Morrissey. "He said he wanted to take a shot at it. I assume it came from the speaker, though I don't know."

Consumer advocate Colman Herman, who has urged tighter price controls and enforcement on the ticket brokers since 2005, decried the bill that passed the House. "This is a pro-industry bill disguised as pro-consumer," Herman said. In the interview, DiMasi said the bill was good for consumers because it allows them to sell their own tickets over the Internet or outside sporting events and concert halls.

This year, the legislation is languishing in the Senate with uncertain prospects. Morrissey said he plans to propose changes in the Senate that would put caps on ticket prices into the bill.

One of the ticket agents interviewed by the Globe was stunned to learn that the Massachusetts Association of Ticket Brokers was unlikely to have as much success in the Senate as it had in the House.

"Does this mean the bill won't pass?" he asked incredulously.

Andrea Estes can be reached at estes@globe.com. Stephen Kurkjian can be reached at kurkjian@globe.com.

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