Collection Agency Head Indicted for Alleged Theft of $2.7 Million From City of Boston

A Grand Jury in Suffolk County, Mass. yesterday returned indictments against the president of a collection agency for allegedly stealing millions of dollars worth of excise taxes from the City of Boston.

Stephen Colahan, of Beverly, Mass. is charged with Larceny over $250 by Continuous Scheme and Procurement Fraud. Prosecutors allege that Colahan, over the course of five years, transferred more than $2.7 million from a City of Boston bank account to his own company’s account.

According to a press release from the Massachusetts Attorney General, from 1995 until June 2007 Colahan’s company, Walker Associates, Inc., was under contract with the City of Boston to collect delinquent motor vehicle excise taxes from Boston residents.  Under the terms of the contract, Walker was required to pay over to the city 100 percent of the taxes and statutory fees collected; the city would then pay Walker Associates a percentage of the fees the company had collected.   Each week, Walker Associates was required to pay over to the city the amount of the previous week’s cash payments and cleared checks, and to provide a paper and electronic report detailing the amounts collected from each taxpayer and the date of collection.

Beginning in June 2001, Colahan allegedly began taking money out of the bank account into which his company deposited all of the city’s tax and fee collections, and using that money to cover Walker’s business expenses.  Authorities allege that for the next five years, Colahan repeatedly stole from the city’s account.  From June 2001 through August 2006, authorities allege that Colahan transferred over $2.7 million to his own company account. 

In October 2007, the state’s attorney general’s office began an investigation after the matter had been referred by the Boston Police Department and the City of Boston.

A Suffolk Grand Jury returned indictments against Colahan Tuesday. He is scheduled for arraignment on May 12, 2009, in Suffolk Superior Court.