Cognos - Federal Investigation

Federal Investigation

In August 2007, the Massachusetts state Information Technology Division awarded Cognos a $13 million dollar contract for performance management software. This followed a 2006 $4.5 million state contract awarded to Cognos by the Massachusetts Department of Education. These contracts came under scrutiny from the State Ethics Commission and the office of state Inspector General Gregory Sullivan when several conflicts of interest surrounding Speaker of the Massachusetts House of Representatives Salvatore DiMasi and his accountant Richard Vitale came to light.

In the course of these investigations, a payoff from former Cognos sales executive Joseph Lally in the amount of $600,000 was found to have been made to Vitale's company WN Advisors. Vitale and WN Advisors were not registered as state lobbyists and did not disclose the payments, the bulk of which were apparently made on the same day that the state wired funds for the multimillion dollar contracts to Cognos. The disposition of the funds has not been disclosed and the State has rescinded the contracts. IBM, who now owns Cognos, has refunded the improperly awarded $13 million paid to Cognos. A second close associate of DiMasi's, lawyer Steven Topazio, was placed on a two year $5,000 a month retainer for unspecified purposes. This retainer stopped the same month as the second Cognos contract was awarded.

In addition to the payoffs made to close associates of DiMasi, it is known that Vitale helped arrange a below-market mortgage for DiMasi, which violated state Ethics laws.

On December 17, 2008, the Boston Globe confirmed that the State investigations were being joined by a Federal Grand Jury probe investigating the allegations and potential violations of Federal law. On June 2, 2009, DiMasi, Vitale, Lally, and Cognos lobbyist Richard McDonough were indicted "on a battery of...corruption charges" as a result of that probe.