BOSTON — More than three years after a bombshell inspector general’s report unveiled allegations of more than $37 million of taxpayer funds being misused at the former Merrimack Special Education Collaborative, a second criminal indictment was issued Monday.
Imprisoned lobbyist Richard McDonough, 69, of Foxboro, was indicted on charges of procurement fraud and presentation of a false claim for allegedly collecting more than $96,000 in state pension payments by falsely claiming to have worked for the troubled agency, according to state Attorney General Maura Healey.
“Actions such as the ones alleged here defraud taxpayers and undermine the integrity of the pension system,” Healey said.
McDonough joins MSEC’s former chief financial officer, Carl Nystrom, 55, of Pelham, N.H., as the only men indicted in connection with allegations surrounding the public agency, which provides resources to special-needs children and adults.
The allegations of financial impropriety also involved the Merrimack Education Center, a private, nonprofit company that provides educational and technological resources to schools and towns. The agencies formerly worked closely, as John Barranco served as executive director of both at one time.
Barranco has never faced criminal charges, though the attorney general’s investigation into the case remains ongoing.
Christopher Loh, a spokesman for Healey, declined to comment on whether more people could face charges.
McDonough was on MSEC’s payroll from 2003 to 2008 as the agency’s full-time director of public affairs and governmental relations, even as he continued earning up to $1.1 million per year from his unrelated lobbying business, according to prosecutors.
The state inspector general, in an earlier report, said McDonough was paid $80,000 a year by the organization.
In early 2009, McDonough applied for and received a pension from the State Board of Retirement for his alleged work at MSEC, and from May 2009 to February 2012 he received $96,515 in pension payments, according to prosecutors.
That pension was blocked by the state retirement board in February 2012, when that board determined McDonough had not actually worked for MSEC.
“An investigation revealed that McDonough did very little actual work for the organization,” Healey’s office said in a press release. “Authorities allege that McDonough never produced any work product, did not have an office at any of the Collaborative’s work locations or an office phone number, and he never regularly reported to people in management.”
A message left with McDonough’s attorney was not immediately returned.
McDonough is the first person to be prosecuted in state court in connection with the allegations surrounding MSEC.
Nystrom, the former chief financial officer, was indicted in federal court in late 2013 for wire and mail fraud after U.S. Attorney Carmen Ortiz’s office accused him of putting ineligible people on MSEC’s payroll.
A day after Nystrom was indicted, The Sun reported McDonough was one of four people Nystrom allegedly added to the agency’s payroll.
McDonough is serving a seven-year sentence at a federal prison in New Jersey after he was convicted alongside former Speaker of the House Sal DiMasi in connection with an unrelated influence-peddling scheme that also landed DiMasi in prison.
According to the 2011 Inspector General’s Report that first revealed allegations of impropriety at MSEC and MEC, Barranco signed four of McDonough’s employment contracts.
That 2011 report accused Barranco of misusing over $37 million in taxpayer funds, spending some of it on parties, bar tabs, and golf outings, among other things.
In 2013, a former prosecutor with experience in forensic accounting cases told The Sun that criminal investigations into such matters can take years, as complex paper trails are followed.
“Mr. McDonough’s actions not only defrauded the state pension system but also were an abuse of funds meant for educating children with special needs,” said Inspector General Glenn Cunha. “I am extremely pleased that our long collaboration with the AG’s office in this case has resulted in an indictment.”
Last year, MSEC’s board changed the agency’s name to the Valley Collaborative in an effort to give the agency a fresh start as reform efforts were underway.
Tyngsboro Superintendent Don Ciampa — who serves as chairman of the board for the Valley Collaborative — declined to comment on the pending criminal cases, but provided a brief statement regarding the agency’s current status.
“In the years since the inspector general’s report, the Valley Collaborative has successfully severed all ties with the Merrimack Education Center and implemented other recommendations made by the inspector general and Auditor Suzanne Bump’s office,” Ciampa said. “Today the collaborative’s focus continues to be on its programs, students and communities.”
Material from the Associated Press was used in this report.
Follow Robert Mills on Twitter and Tout @Robert_Mills.
