BOSTON -- The state Ethics Commissoin has dropped its cases against former head of special-education collaboratives accused of using millions for personal gain because of an ongoing federal investigation.
John Barranco was accused of violating the conflict of interest law by arranging for a lobbyist to receive illegal public pension benefits. Barranco headed both the Merrimack Special Education Collaborative (MSEC) and the Merrimack Education Center (MEC). The conflict-of-interest case against the lobbyist, Richard McDonough, has also been dropped.
According to the state Ethics Commission, the cases were dismissed because there's already an ongoing related federal investigation by the U.S. Attorney's Office. In addition, the commission noted that McDonough is in federal prison after being convicted on unrelated charges and is not scheduled to be released until 2018.
McDonough, who was convicted on federal corruption charges in a case involving kickbacks taken by then House Speaker Sal DiMasi, worked as a contract lobbyist for MEC in the 2000s.
In an indictment handed down from the U.S. Attorney in December, McDonough was never officially named, But The Sun learned that McDonough was one of the MEC employees placed in the payroll computer system to allegedly fraudulently enroll in the state's pension plan.
MEC is a private nonprofit that provides educational and technological resources to schools, towns and other nonprofits.
The private firm previously worked closely with MSEC, a public agency that provides resources to special-needs children and adults, and MEC provided management and payroll services to MSEC.
McDonough, who was sentenced to seven years in prison after the DiMasi trial in 2011, was one of those employees in the indictment from December, according to cross-checks from the indictment and 2011 inspector general reports.
The inspector general report states that there is "virtually no trace" of McDonough working for MSEC. Former employees and board members interviewed by the inspector general's staff had no idea that McDonough was on MSEC's payroll.
"Those that could recall ever seeing Mr. McDonough noted that it was a rare occurrence, typically at a social event and they assumed he was a guest of his friend, MEC Executive Director John B. Barranco," according to that 2011 report.
Barranco put McDonough on the payroll in 2003 and signed four of McDonough's six employment contracts, the 2011 report states. Barranco refused to be interviewed by the Inspector General's staff.
Barranco was fired in September 2011, after he was accused of misusing at least $37 million in taxpayer funds while leading the agencies.
A state inspector general's report accused Barranco of misusing $37 million of MSEC funds, spending some of that money on parties, bar tabs, and golf outings. The inspector general also accused Barranco of misusing nearly $57,000 of MEC funds by charging shoes, dinners, furniture and a trip to the Kentucky Derby on MEC's American Express card.
Attorney General Martha Coakley's office has been investigating Barranco's activities for more than two years, but has yet to close the investigation or file charges.
For more on this story, read Wednesday's edition of The Sun and visit www.lowellsun.com.