The Hummel Report

Investigative Reports That Get Results

A Rhode Island 501c3 Non-Profit

Rehoboth Breaking News


Developing story: Rehoboth Board Chairman accused of housing fraud.



REHOBOTH - The state's inspector general has accused the newly-elected chairman of the town's Board of Selectman of conspiring nearly five years ago with his elderly mother to improperly obtain a home under the state's affordable housing program.


In a 13-page decision Inspector General Gregory W. Sullivan accuses Selectman Michael Costello of perjuring himself when he and his mother, Marie, signed and submitted an affordable lottery application for Horton Estates in 2005, which is designated for residents 55 years and older.

The inspector general has no law enforcement power and the charges against Costello are not criminal. But the report offers recommendations to the Massachusetts Housing Financing Agency, which oversees the affordable housing program, that include Costello's being forced to come up with the difference between the $155,000 he paid for the house in March 2007 and the approximate $400,000 market price of other homes in the neighborhood.

Costello tells the Hummel Report he has done nothing wrong and will appeal the inspector general's finding, should the state's housing agency take any action against him. He also said it would not affect his position as chairman of the board of selectmen and he has no plans to resign his position.

``I've been elected to do the right thing in this town and that's what I'll continue to do,'' Costello said in an interview. ``In no way was there any fraud. I did this totally above board.''

Costello, a longtime member of the town's Planning Board, defeated incumbent Select Board Chairman Ken Foley, by a 3-to-1 margin in a townwide election six weeks ago. Last month he and Selectman Joe Tito, who also won a seat in April, voted to suspend Police Chief Stephen Enos after a lengthy public meeting where Enos asked Costello to recuse himself. Enos said that night Costello was the target of an investigation being conducted by the chief.

Costello said Enos had nothing to do with the housing investigation, but the chief was looking into a flier circulating around town right before the election that alluded to Costello's residency at Horton Estates  and potential criminal background.

Costello said he spoke with both the inspector general and an agent from the FBI's Lakeville office early in 2010 about the allegations, adding that he heard nothing since. It is also unclear why an agent from the FBI was involved.

``I was very surprised (about the report issued Friday),'' Costello said. ``A year and a half had gone by with no communication. I had heard rumblings during the election, but they didn't have any evidence to go by.''

The inspector general's report says otherwise. Inspector Sullivan says that Costello, who was 51 at the time, and his mother Marie, 71 at the time, were initially unsuccessful in their application to get into Horton Estates. The report says Marie Costello never moved into the home, which as part of the affordable housing program was designated for those 55 years of age and older.

Costello tells The Hummel Report, his mother did move in with him ``for  a period of time'' but then moved to an assisted living residence in Attleboro as her health declined. The inspector general maintains that she lived there all along and never resided in Rehoboth.

In December 2009, Michael and Marie Costello transfer ownership of 11 Judith Ann Circle solely to Michael Costello and  Marie Costello’s name was removed from the deed.


``It is the opinion of this Office that Michael and Marie Costello had entered into a conspiracy in order for Michael Costello, to obtain an affordable housing unit that he was not entitled to purchase,'' the report says. ``In order to realize this scheme, it appears that both Michael and Marie Costello perjured themselves when they signed and submitted the affordable lottery application for Horton Estates.''