by Jonathan Wells and Jack Meyers, Boston Herald

Thursday, January 20, 2000

A federal grand jury is probing a series of real estate transactions by former FBI agent John J. Connolly as part of an ongoing investigation into corruption and criminal wrongdoing in the FBI's Boston office.

Sources confirmed yesterday that the grand jury being run in Worcester by Assistant U.S. Attorney John Durham subpoenaed Connolly's real estate records in April.

The subpoena sought records from Connolly's purchase and sale of a house on Thomas Park in South Boston, as well as records involving a vacation home in Chatham, sources said.

Durham's grand jury indicted Connolly last month on racketeering and obstruction of justice charges stemming from his unusually close relationship with Winter Hill mob bosses James J. ``Whitey'' Bulger and Stephen ``The Rifleman'' Flemmi.

Bulger and Flemmi, whom Connolly handled as ``top echelon'' FBI informants, were charged in the same indictment.

The Worcester grand jury is continuing to collect evidence that could result in a second, superseding indictment against Connolly, sources said.

Meanwhile, sources said federal investigators also subpoenaed Connolly's expense account records from his employer, Boston Edison, where he has worked as a lobbyist since 1990. He is currently on paid leave.

One source said Connolly ``was using his Edison credit card to purchase large amounts of liquor'' at the South Boston Liquor Mart, which was controlled by Bulger and Flemmi. Edison officials were quizzed by agents about the credit card records late last year, the source said.

The subpoenas point to the grand jury's interest in examining Connolly's finances, sources said, and indicate Durham is trying to determine whether the veteran FBI agent enriched himself as a result of his relationship with Bulger and Flemmi.

One of the real estate deals federal authorities are looking into involves Connolly's purchase of a house at 48 Thomas Park in South Boston from a local bookmaker.

Registry of Deeds records show Connolly bought the two-story house for $63,000 in February, 1980 from Robert W. Ford, a well-known bookie in South Boston who also had a contracting business and owned stores in the neighborhood.

Connolly converted the house into two condos in 1988 and by 1993 had sold both for a total of $340,000. In 1990 Connolly sold the larger unit for $240,000 and three years later he sold the other unit for $100,000.

Sources said it is likely that Ford, as a bookie, was required to pay tribute to Bulger and Flemmi, who had tight control over illegal gambling in South Boston. Ford has since died.

After Connolly sold the home he had bought from Ford, he moved to a townhouse at 335 West Fourth Street in South Boston, which was part of the same condo development where ``Whitey'' Bulger and his top lieutenant, Kevin Weeks, had recently bought units.

The complex was developed by Barbara A. Buckley and her husband, convicted arsonist Francis K. Fraine, who reported selling all six units the same day, Aug. 19, 1988. None of the buyers, Bulger and Weeks included, reported using a bank to finance the sales.

Records show Buckley sold Unit 327 to a middleman for ``less than $100'' and he turned around and sold it the same day for $150,000 to Bulger. The same arrangement was used that day for Weeks' unit next door at 329 West Fourth Street.

Bulger sold his unit in June, 1990 for $186,000 and Weeks sold his for $142,000 in October, 1990, the day before Connolly sold the condo he was living in at Thomas Park.

Connolly, who has maintained he did nothing illegal in his years of handling Bulger and Flemmi as informants, could not be reached last night for comment on the grand jury subpoenas.

The Herald reported yesterday that Connolly reportedly received free household appliances for his house on Thomas Park from Broadway Appliance, a South Boston store controlled by Bulger and Flemmi. Connolly denied the report.

Weeks, 43, a trusted aide to Bulger and Flemmi for nearly 20 years, was indicted for racketeering in November and recently began giving information to federal and state investigators on the criminal activities of his former colleagues.

Last Thursday, Weeks led investigators to a spot in Dorchester near Florian Hall where the skeletal remains of three Winter Hill Gang victims were buried.

Weeks also directed authorities to a small structure behind the home of Flemmi's mother in South Boston, where they seized a cache of ammunition. Sources said some of that ammunition matches weaponry recovered on the gun-running vessel called the Valhalla, which was used by Bulger and others to ship weapons to the IRA.

It is expected that FBI agents assigned to Durham's special task force will soon be asking Weeks what he knows about Bulger and Flemmi's dealings with the Boston office of the FBI.

That task force is made up of agents from FBI offices around the country - none from Boston. Prior to this assignment, Durham was a prosecutor in the U.S. Attorney's office in Connecticut.

In another development, sources said Boston FBI agent John Newton, who worked with Connolly on organized crime cases, has been charged internally by the FBI with obstruction of justice and lying to a federal officer. But there has been no resolution to the investigation.

One source said internal charges such as those filed against Newton can lead to termination and criminal indictment.

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