In 2005, Connolly was indicted on murder and conspiracy to commit murder charges in the 1982 slaying of John B. Callahan and the 1981 murder of
Roger Wheeler, owner of the World Jai Alai sporting corporation. Connolly stood trial in 2008 in state court in
Miami, Florida. Connolly was prosecuted in part by Boston Assistant United States Attorney
Fred Wyshak, the attorney who investigated and ultimately prosecuted Bulger. This unusual arrangement required Wyshak to be cross designated as a states attorney for Florida. Callahan was murdered by
John Martorano, who left the corpse in the trunk of a
Cadillac in a
Miami International Airport parking lot. Prosecutors alleged that Callahan was killed on the orders of Whitey Bulger and Stephen Flemmi, after Connolly told them that the FBI was investigating Callahan's ties to the Winter Hill Gang in their ongoing investigation into Wheeler's death. Martorano had killed Wheeler in
Tulsa, Oklahoma, in May 1981. During the trial, Bulger associates Flemmi, Martorano, and
Kevin Weeks testified for the prosecution detailing Connolly's ties to Bulger and Flemmi. Flemmi testified that he and Bulger paid Connolly $235,000 over the years, but started cutting his payments in the late 1980s after he started attracting attention through too many luxury purchases, including a boat. IRS special agent Sandra Lemansky testified that during the 1980s Connolly bought a 27-foot Sea Ray for $46,567; a South Boston condo for $63,000, with a $12,000 down payment; a Brewster condo for $80,000, with a $15,000 down payment; land in Chatham for $98,000; and then built a house on the Chatham property for $132,000. During the 1980s, Connolly's annual FBI salary started at $45,000 and gradually increased to $65,000, she said. Denise Taiste, an FBI employee who worked as an assistant to Connolly in 1988 testified that on one occasion when he was not in the office, Connolly instructed her to leave his paycheck in his desk. Taiste admitted that she looked at the check, which was for $2,078.61, then opened the middle drawer of his desk and saw about 10 more uncashed checks inside. Bulger's former girlfriend, Theresa Stanley, testified for the defense about her travels with Bulger. Flemmi testified that Connolly warned them that the FBI wanted to question Callahan in the death of Wheeler, and that Callahan "wouldn't hold up" and would probably implicate them. Also testifying against Connolly was his former FBI superior, John Morris, who admitted that he had accepted $7,000 in bribes from Bulger and Flemmi. Morris stated that he began leaking information to them after Connolly delivered a case of wine and an envelope stuffed with $1,000 cash from the pair. Former
U.S. Attorney and
U.S. District Senior Judge Edward F. Harrington testified for the defense, stating that Connolly was a star agent who was credited with using informants to help weaken the
New England Mafia. On November 6, 2008, a jury convicted Connolly of
second-degree murder. According to the prosecutors, Connolly faced a possible sentence of 30 years to life in prison. Sentencing was postponed until January 2009, while Circuit Judge Stanford Blake considered a motion by the defense to dismiss the case. The defense argued that in Florida, when Connolly was convicted, the
statute of limitations had expired for second-degree murder. On January 15, 2009, Judge Blake sentenced Connolly to 40 years in prison, saying that Connolly "crossed over to the dark side." The judge agreed with the defense's argument involving the statute of limitations but noted that their motion was past the deadline for such motions. The judge accepted the prosecutors' argument that Connolly abused his badge and deserved more than the 30-year minimum. The 40-year state sentence runs consecutively with the 10-year federal sentence. Connolly served his time in FCI Butner Low facility at the
Federal Correctional Complex, Butner, North Carolina. He was released from federal custody on June 28, 2011, On May 28, 2014, Connolly's murder conviction was overturned by a panel of
Florida's Third District Court of Appeal by a vote of 2–1. The panel held that since Connolly did not "carry or discharge the gun that was used to kill John Callahan in South Florida", it was not appropriate to convict him of murder. On July 29, 2015, the full court
en banc reinstated Connolly's murder conviction by a vote of 6–4, finding that the conviction was legally proper, even though he was on Cape Cod when Martorano killed Callahan. Judge Leslie B. Rothenberg, who had been the lone vote for conviction in the earlier hearing, wrote, "It now no longer matters whether the defendant hired (procured) a hit man, turned to his mob friends to murder Callahan, served as a lookout, provided the gun, or pulled the trigger himself, he is a principal in the first degree." Under Florida sentencing guidelines, Connolly was required to serve at least one-third of his sentence before becoming eligible for parole. Connolly was paroled from prison in Florida in 2021 without objection from Callahan's widow after prison officials learned he was gravely ill with melanoma and diabetes and possibly had only another year to live. He returned to Massachusetts, but will remain under supervision until 2047. Despite his convictions, Connolly retained and continues to receive pension benefits, since federal employees only lose their pension if convicted of espionage or treason. == Personal life ==