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Little Light Shed in Seven-year Probe of Special-ed Spending

September 1, 2018
Little Light Shed in Seven-year Probe of Special-ed Spending

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BILLERICA -- Seven years have passed since an explosive report from the state Office of the Inspector General alleged the misuse of over $37 million in taxpayer dollars at Merrimack Special Education Collaborative.

A slow trickle of developments continued into this year, as retirement boards try to recover pensions paid out to two men previously connected to Merrimack Education Center and MSEC, now called Valley Collaborative.

Meanwhile, state and federal agencies are mum regarding any further investigations or pursuit of criminal charges against John Barranco, former director of MSEC and MEC. A 2011 report from the Office of the Inspector General, alleged Barranco wined and dined local school superintendents, picking up the tab for bar tabs, hotel rooms, Boston Harbor cruises and trips to Florida and the Kentucky Derby.

The Massachusetts Office of the Attorney General declined to comment on the status of an investigation.

The United States Attorney General’s Office -- which has been involved in the case, according previous reports -- declined to comment when asked about the existence of an investigation, any recent indictments or other developments.

“We do not confirm or deny investigations,” spokeswoman Kristina Mastropasqua wrote in an email.

Tom Lent, an attorney representing Valley Collaborative, also declined comment.

Guilty Plea

In March of this year, former lobbyist Richard McDonough pleaded guilty to one count of presenting a false claim, regarding his pension application with the Massachusetts State Retirement Board, according to a press release from the Office of the Inspector General. In 2015, he was indicted on this charge and one count of procurement fraud.

A state judge declined to enter a guilty finding and continued the case without a finding for two years, according to the release.

On his pension form, McDonough claimed he worked full time for MSEC from 2003 to 2008, but an investigation by the office found he did little work for the organization and did not have an office or phone number.

After McDonough filed his retirement in Feb. 2009, the State Retirement Board paid him $96,516 in total at a rate of about $2,400 a month. The board is seeking to recover $10,852, the difference between the amount in McDonough’s retirement account and the amount the board paid him in pension benefits, according to the release. He is appealing this decision to the Division of Administrative Law Appeals.

The judge ordered McDonough to pay the difference to the State Retirement Board, but stayed the order pending the result of the appeal and payment of federal fines and restitution in connection with a separate case, according to the Office of the Inspector General.

In 2011, McDonough was sentenced to seven years in prison after he was convicted on federal corruption charges involving kickbacks taken by House Speaker Sal DiMasi.

Indictment Dismissed

MSEC’s former chief financial officer, Carl Nystrom, was indicted in late 2013. Nystrom faced charges of wire and mail fraud after the office of former U.S. Attorney Carmen Ortiz accused him of putting ineligible people on MSEC’s payroll.

Beside McDonough, he is the only other person known to be indicted as a result of the investigation. In October 2015, a judge accepted a motion by Ortiz to dismiss the indictment, according federal to court documents.

“In support of this dismissal, the government states that dismissal of the indictment is in the interests of justice,” the motion states.

Pension Recouped

In February, the Massachusetts Teachers’ Retirement System finished collecting the $815,757 from pension payments that a magistrate for the Division of Administrative Law Appeals determined Barranco owed the agency in a December 2015 decision, according to court documents.

A representative from the Massachusetts Teachers’ Retirement System said Barranco has appealed this decision.

The decision found Barranco was subject to excess earning limitations, because, though he retired from the executive director position at MSEC, he continued to work for a related nonprofit, MEC.

Between 2005 and 2010 Barranco received $786,962 in pension payments, according to court documents.

MSEC, now Valley Collaborative, continues to operate under the leadership of Chris Scott who was named to the position in 2012, after Barranco came under fire. For five years in a row Valley Collaborative has returned money to its nine member communities, a feat Scott credits to sound financial management and enrollment.

Follow Elizabeth Dobbins on Twitter @ElizDobbins.

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