BOSTON (AP) – Former Massachusetts House Speaker Salvatore DiMasi and three associates were indicted Tuesday on federal charges alleging they conspired to help a software company win $20 million in state contracts and conceal money they got from the company.

DiMasi, who resigned in January from one of the three most powerful jobs in state government, proclaimed his innocence as he and the others made an initial court appearance.

DiMasi is accused of eight counts, including conspiracy to defraud the federal government, mail fraud and wire fraud.

His friends and business associates – Joseph Lally, Richard McDonough and Richard Vitale – were indicted on identical charges, with Lally facing an additional count of money laundering. Lally initially worked for Cognos before starting his own firm. McDonough is a lobbyist. Vitale is an accountant who also served as DiMasi’s campaign treasurer.

Vitale’s attorney, Martin Weinberg, said his client was innocent and followed the law. “Dick Vitale is not a criminal,” he said.

Thomas Drechsler, an attorney for McDonough, said his client denies any wrongdoing and has “practiced the lobbying profession in an honorable and exemplary manner for over 30 years.”

Lally’s attorney wasn’t immediately available for comment.

“Every decision I have ever made as the speaker or as a state representative was always made in the best interest of my constituents and the people of the Commonwealth of Massachusetts,” the Boston Democrat, DiMasi, said as he left the courthouse.

The indictment alleges that DiMasi first used his position as the leader of the House to help Cognos LLC win a $5.2 million contract with the Department of Education in 2006 and later helped it win a $15 million software contract with the Executive Office of Administration and Finance.

“It’s about time we got business like this,” the indictment quotes DiMasi as saying after a fellow attorney told him about an initial meeting between Cognos, Lally and McDonough.

Gov. Deval Patrick’s administration ultimately canceled the larger contract, and Cognos refunded the money.

Patrick declined to comment on the specific allegations but said the indictment was “deeply disturbing.” He called for a redoubling of efforts to restore public confidence in state government.

Cognos isn’t charged with any wrongdoing. Acting U.S. Attorney Michael Loucks said the company is cooperating with the investigation. He said no other public officials have been implicated in the investigation.

The men did not enter pleas Tuesday. They were released on $10,000 bail agreements, ordered to surrender their passports and not to leave the country. They’re scheduled to be arraigned on Monday.

If convicted, they face up to five years in prison for each conspiracy count, and 20 years for each count of mail and wire fraud. Lally also faces a possible 10 years for the money laundering count.

The indictment claims Cognos paid an attorney who shared office space with DiMasi a consulting fee of $5,000 a month, beginning in April 2005, and that attorney – who was not named – gave $4,000 of it to DiMasi as a “referral fee.” DiMasi received a total of approximately $60,000, according to the indictment.

At one point in 2006, when the attorney stopped receiving the monthly checks from Cognos, DiMasi asked him to ask McDonough what happened, the indictment alleges. When Cognos sent a $25,000 check to the lawyer for the missed payments, DiMasi allegedly told the lawyer he wanted the entire amount but asked him to send the money in four backdated checks to disguise the payments as typical referral fees.

The indictment says that in 2006, DiMasi “caused a budget amendment to be introduced and facilitated its final passage” for the first $5.2 million Cognos contract. Lally allegedly was paid $891,000, and he, in turn, paid McDonough and Vitale $100,000 each for their services, according to the charges.

Vitale has since pleaded not guilty to state charges for allegedly concealing work he did with DiMasi to assist ticket brokers with anti-scalping legislation passed by the House but defeated in the Senate. Those allegations weren’t included in the federal indictment.

The indictment says that in 2007, DiMasi used legislative language provided by Lally, McDonough and Vitale to include provisions for the $15 million software contract in a state capital bond bill. After that bill passed, the indictment alleges, DiMasi also ensured the contract went to Cognos.

Cognos paid Lally $2.8 million and he, in turn, paid Vitale $500,000 and McDonough $200,000, the indictment alleges.

The mail fraud charges relate to letters mailed between Cognos and DiMasi’s law-office mate, as well as Vitale’s accounting office and DiMasi’s Statehouse office.

The wire fraud charges are related to e-mail messages, one of which allegedly was sent from McDonough to Lally on June 30, 2006, with the message, “Mission Accomplished.”

The money laundering count alleges Lally transferred more than $10,000 – the legal gift limit – between the parties.

The indictment seeks the forfeiture of DiMasi’s North End condominium, Lally’s North Reading home, various bank accounts Lally held jointly with his wife, and a 2006 Boston Whaler boat.

DiMasi was the third Massachusetts speaker in a row to quit under an ethics cloud. He became speaker in 2004 after Thomas Finneran resigned during a federal investigation. Finneran pleaded guilty to obstruction of justice for lying during a redistricting lawsuit.

DiMasi’s successor, Democrat Robert DeLeo of Winthrop, served as chairman of the powerful House Ways and Means Committee during DiMasi’s time as speaker and has pledged ethics reforms.

“I am saddened and disappointed by today’s news,” DeLeo said in a statement.

AP-ES-06-02-09 2228EDT

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