The Boston Globe
June 22, 2011
Michael Rezendes

The former director of the Merrimack Special Education Collaborative is facing allegations that he fleeced the publicly funded organization, set up to provide education services to special needs children, of more than $10 million while paying himself, a former girlfriend, and a handful of top staff extravagant salaries and bonuses.

In letters mailed Monday, Gregory W. Sullivan, the state’s inspector general, said that John B. Barranco also racked up more than $50,000 in personal expenses on a credit card issued by a related nonprofit organization, including tickets to the Kentucky Derby, improvements to vacation homes in New Hampshire and Florida, Christmas gifts for a daughter, luxury clothes, and nearly $16,000 in gasoline, purchased from 2003 through 2010.

“This is one of the most outrageous abuses this office has ever seen,’’ Sullivan told the Globe. “Both of these entities were created to help educate children with special needs. Instead, top officials have been helping themselves to high salaries, inflated pensions, lavish parties, and personal expenses, all on the taxpayer’s dime.’’

In addition, Sullivan said Barranco used deception to increase his teacher’s pension to $157,000 while collecting an inflated salary and bonuses from the nonprofit. Barranco’s total compensation from the nonprofit exceeded $500,000 in 2009.

To help pay for the exorbitant salaries, Barranco siphoned tax dollars from the 10 school districts in northern Massachusetts that belonged to the collaborative through the related nonprofit organization under his control, the Merrimack Education Center, which charged the collaborative inflated prices for office space and other administrative services.

Sullivan has recommended that the collaborative sever its financial ties with the nonprofit and demand $11.5 million in repayment. In addition, he has told the Teachers Retirement System that he does not believe Barranco is entitled to the pension he is receiving.

The retirement system has moved to reduce Barranco’s pension, and Barranco has appealed the action.

Barranco did not respond to numerous calls for comment, but a public relations firm defended the quality of the services provided by the nonprofit.

Attorney General Martha Coakley, who has jurisdiction over public corruption cases and nonprofit organizations, is reviewing Sullivan’s findings and has the authority to launch a criminal investigation.

“Our office takes allegations of the misappropriation of funds very seriously,’’ said Brad Puffer, Coakley’s spokesman.

In addition, Sullivan’s findings could prompt action by federal authorities, including the Internal Revenue Service, which also has jurisdiction over tax-exempt organizations.