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Ex-special needs chief is penalized

Will lose more than $764,000 over 6 1/2 years

The embattled former director of a Merrimack Valley agency for special needs children will forfeit more than $764,000 in public pension payments over the next 6 1/2 years due to a recent decision by the Massachusetts Teachers Retirement System.

The agency concluded that John B. Barranco, who is the target of a federal grand jury investigation, exceeded the allowable limit on earnings from a public agency while receiving retirement funds.

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A hearing officer’s report that accompanied the decision said that Barranco failed to disclose hundreds of thousands of dollars in income and bonuses from the retirement system and accused him of attempting to thwart the officer’s investigation, at one point refusing to turn over a 2010 W-2 form and using deception in a key payroll document.

The retirement system’s decision means that the 69-year-old Barranco will not receive any pension money until the system recoups the excess benefits it paid him since he retired in 2005 as executive director of the Billerica-based Merrimack Special Education Collaborative.

“We’re recouping his past employment earning violations of $764,504 by essentially stopping his pension for the next 6 1/2 years,’’ said Sean P. Neilon, spokesman for the retirement system.

Nicholas Poser, a specialist in public pension law who represented Barranco before the retirement system, attacked the decision, calling it “the most elaborate construction of fact and innuendo that I have ever seen in my 26 years at the bar.’’ He also disputed the hearing officer’s suggestion that Barranco used deception in a payroll document as “completely contrary to the facts.’’

Poser appealed the decision Friday, but Barranco’s pension will continue to be withheld at least until his appeal is decided by the Contributory Retirement Appeal Board.

The retirement system’s decision, made last Thursday and released yesterday, is only the latest in a string of bad news for Barranco, whose woes have been mounting since a June report by state Inspector General Gregory W. Sullivan accused him of siphoning $11.5 million from the collaborative and transferring the money to a related nonprofit group that he controlled.

Barranco, Sullivan said, then used to funds to cover lavish salaries for himself, a former girlfriend and a group of close associates and to pay for personal expenses such as Kentucky Derby tickets and improvements to two vacation homes.

It was Sullivan in April who first alerted the retirement system that an earlier decision to dock Barranco’s pension by $51,000 may have underestimated how much Barranco’s pay had exceeded allowable earnings since 2005.

Yesterday, Sullivan commended the retirement system saying, “they have done excellent work that will save the public more than $760,000 over the next six years.’’

Since Sullivan issued his findings, Barranco has been the subject of investigations by variety of state officials, including Auditor Suzanne M. Bump, who found that the Merrimack Valley collaborative may have misspent more than $30 million in public funds. The Globe reported in August that a federal grand jury is investigating Barranco.

The retirement system’s decision to recover the $750,000 in pension money from Barranco stems from the dual positions he held as executive director of the Merrimack Valley collaborative and a related nonprofit, the Chelmsford-based Merrimack Education Center.

Although Barranco retired from the collaborative, a public agency, in 2005, he continued working as executive director of the center, which provided a variety of administrative services for the collaborative and billed the agency for executive salaries.

In its initial investigation last year, the retirement system determined that although Barranco was officially retired from the collaborative, he was spending 25 percent of his time working on matters related to the agency and was being paid more than the law allowed a pensioner to collect from a public agency.

The retirement system then docked Barranco’s pension $51,000, which it has since recouped.

Barranco appealed that decision, asserting he did not spend any substantive time working on matters related to the collaborative. The appeal is pending.

But Sullivan, in his letter to the retirement system, said his investigation showed that Barranco might have been spending 55 percent of his time on matters related to the collaborative and urged the retirement system to review its decision to dock Barranco’s pension by only $51,000.

On Thursday, Robert G. Fabino, the hearing officer who investigated Barranco’s pension, said he agreed, citing documents from the collaborative and noting that Barranco did not appear at an August hearing, presented no witnesses, and offered no credible documentary evidence.

“Simply put, Dr. Barranco has not presented any reliable evidence in the form of memos, contracts, minutes of meetings, or even e-mails to detract from a conclusion that he devoted 55 percent, not 25 percent, of his services to the collaborative,’’ Fabino wrote.

“If Dr. Barranco’s involvement with the collaborative was limited,’’ Fabino added, “to an occasional visit or inquiry, as he has asserted in the past, then he would have been able to offer at least some reasonable explanation as to why the 55 percent allocation as set forth [in collaborative documents] should not be relied upon.’’

Michael Rezendes can be reached at rezendes@globe.com. Follow him on Twitter @RezGlobe.

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