City Councillor Pleads Innocent To Bank Fraud

BOSTON--Cambridge City Councillor William H. Walsh pleaded innocent to 59 count of bank fraud and conspiracy at a federal court house in Boston yesterday.

Magistrate Judge Lawrence P. Cohen said he wanted to hear more testimony and delayed any decision on whether Walsh should be released on bail. The judge ordered the four-term councillor to return to court on Tuesday.

Immediately following the five-hour arraignment and detention hearing, Walsh was handcuffed in the court room and escorted in a windowless truck to Plymouth House jail, where he will remain until Tuesday.

Walsh was indicted on September 30, but did not turn himself in to authorities until last Wednesday.

U.S. Prosecuting Attorney Mullin said that Walsh's six-day disappearance and failure to turn himself in increase likelihood that the councillor will leave town if released on bail.

"He knew the FBI had an investigation and he knew he was wanted," said Mullin. "This shows that there's a serious risk of flight."

Despite assurances from Walsh's attorney, Jeremiah T. O'Sullivan, that Walsh would have "no propensity to flee" if released until his trial, the judge said he needed further evidence of the councillor's links to Cambridge before granting the bail.

"I want to make sure that there is a financial tie as well as a personal tie," Cohen said.

Cohen ordered Catherine Walsh, the councillor's 85-year-old mother, to appear in court as well. Cohen said he wants to hear testimony from Walsh's mother to establish the councillor's exact financial ties to the city.

Walsh pleaded innocent to 59 counts of bank fraud, conspiracy and makingfalse statements to a federally insured bank. Ifconvicted on the charges. Walsh faces up to 208years in prison and $14.75 million in fines.

Classified as a "fugitive from justice," thecouncillor said yesterday he spent a week inCalifornia before surrendering to the FBI lastWednesday.

Although the prosecution yesterday argued thatWalsh was attempting to flee, O'Sullivan arguedthat the councillor was simply shocked andconfused following the indictment.

"He was not wanting to deal with reality," saidO'Sullivan. "He was entirely overwrought, but hehas come here on his own and turned himself in."

Wearing a gray suit, light blue shirt and astriped tie, the usually self-assured andcontentious Walsh delivered his testimony inhushed tones, sitting on the edge of the witnesschair.

Walsh said he did not know about his indictmentbefore boarding a 3:45 p.m. American Airlinesflight on September 30 to San Jose.

The councillor said he was informed about theindictment a few hours later when he called GeraldM. Haines II, the grand jury investigation lawyer,during a stopover in Chicago.

"I just remember [Haines] saying, 'I'm sorry totell you this, you were indicted and you shouldcome back,'" said Walsh during the prosecution'scross-examination. "I was just so shocked. Thewhole thing was an unbelievable change of events."

Walsh described living the subsequent days in astate of shock. He said that he was not able todrive and that he left all the vacation plans andorganization to this hostess, Paula O'Mara, anacquaintance residing in California.

"It was a nightmare," said Walsh. "I couldn'tunderstand what had happened, how my life couldhave changed in one second from one thing toanother."

Walsh said he kept in contact with severalpeople in Cambridge throughout his trip, usuallycalling from public telephone with rolls ofquarters. The councillor added that he never lefta telephone number where he could be reached.

"I wanted to call O'Sullivan, but I knew hewasn't coming back till Tuesday so I didn't calltill Tuesday," said Walsh.

Walsh returned to Boston six days after hisofficial indictment on a 1 a.m. flight fromPhoenix with stopovers in Minnesota and New York,according to his testimony.

The prosecution argued that Walsh should bedenied bail because in recent years Walsh'sconnections to the city have been weakened.

According to Mullin, a growing number oflawsuits against Walsh's real estate holdings andthe diminished prestige of his law firm have leftthe councillor with little to hold onto in thecity.

"There has been a complete reversal of hisfortunes," said Mullin. "But to some extent, allhis circumstances have changed.

"And I can't believe being indicted is good forhis political future," Mullin added.

Although the prosecution at tempted to arguethat Walsh could flee to Ireland if released, hevigorously denied the charge.

"I've only been in Ireland twice in the past 22years," Walsh said. "I wouldn't do it."

O'Sullivan contended that Walsh, who has lived48 years at 26 Hurlbut St. in Cambridge, hasfamily, political, social and religiousconnections to the city.

"He has extreme ties to Cambridge as a lawyer,a public official, a son and an employer," saidO'Sullivan. "I suggest that Walsh is not going torun out on his mother."

Defense witnesses also testified that Walshwould not leave Cambridge.

"He has a withdrawal syndrome, he is veryattached to Cambridge." said Mary Praught, anassociate attorney in Walsh's law firm. "And hismother depends on him completely."

Walsh will appear in court again on Tuesday at9 a.m

Classified as a "fugitive from justice," thecouncillor said yesterday he spent a week inCalifornia before surrendering to the FBI lastWednesday.

Although the prosecution yesterday argued thatWalsh was attempting to flee, O'Sullivan arguedthat the councillor was simply shocked andconfused following the indictment.

"He was not wanting to deal with reality," saidO'Sullivan. "He was entirely overwrought, but hehas come here on his own and turned himself in."

Wearing a gray suit, light blue shirt and astriped tie, the usually self-assured andcontentious Walsh delivered his testimony inhushed tones, sitting on the edge of the witnesschair.

Walsh said he did not know about his indictmentbefore boarding a 3:45 p.m. American Airlinesflight on September 30 to San Jose.

The councillor said he was informed about theindictment a few hours later when he called GeraldM. Haines II, the grand jury investigation lawyer,during a stopover in Chicago.

"I just remember [Haines] saying, 'I'm sorry totell you this, you were indicted and you shouldcome back,'" said Walsh during the prosecution'scross-examination. "I was just so shocked. Thewhole thing was an unbelievable change of events."

Walsh described living the subsequent days in astate of shock. He said that he was not able todrive and that he left all the vacation plans andorganization to this hostess, Paula O'Mara, anacquaintance residing in California.

"It was a nightmare," said Walsh. "I couldn'tunderstand what had happened, how my life couldhave changed in one second from one thing toanother."

Walsh said he kept in contact with severalpeople in Cambridge throughout his trip, usuallycalling from public telephone with rolls ofquarters. The councillor added that he never lefta telephone number where he could be reached.

"I wanted to call O'Sullivan, but I knew hewasn't coming back till Tuesday so I didn't calltill Tuesday," said Walsh.

Walsh returned to Boston six days after hisofficial indictment on a 1 a.m. flight fromPhoenix with stopovers in Minnesota and New York,according to his testimony.

The prosecution argued that Walsh should bedenied bail because in recent years Walsh'sconnections to the city have been weakened.

According to Mullin, a growing number oflawsuits against Walsh's real estate holdings andthe diminished prestige of his law firm have leftthe councillor with little to hold onto in thecity.

"There has been a complete reversal of hisfortunes," said Mullin. "But to some extent, allhis circumstances have changed.

"And I can't believe being indicted is good forhis political future," Mullin added.

Although the prosecution at tempted to arguethat Walsh could flee to Ireland if released, hevigorously denied the charge.

"I've only been in Ireland twice in the past 22years," Walsh said. "I wouldn't do it."

O'Sullivan contended that Walsh, who has lived48 years at 26 Hurlbut St. in Cambridge, hasfamily, political, social and religiousconnections to the city.

"He has extreme ties to Cambridge as a lawyer,a public official, a son and an employer," saidO'Sullivan. "I suggest that Walsh is not going torun out on his mother."

Defense witnesses also testified that Walshwould not leave Cambridge.

"He has a withdrawal syndrome, he is veryattached to Cambridge." said Mary Praught, anassociate attorney in Walsh's law firm. "And hismother depends on him completely."

Walsh will appear in court again on Tuesday at9 a.m