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More legal trouble for lobbyist convicted in DiMasi case

Richard McDonough
Richard McDonough Globe File/2011

Richard W. McDonough, a lobbyist who was convicted in a federal corruption case along with former House speaker Salvatore F. DiMasi, could be facing more jail time after he was indicted Monday for allegedly defrauding the state pension system.

McDonough, who is serving a seven-year sentence in a New Jersey federal prison, is accused of falsely claiming to be a full-time state employee eligible for retirement benefits. Under the alleged scheme, he was given a sham job with an education agency, allowing him to receive medical benefits and a state pension that he was not entitled to, the attorney general’s office said.


“We allege that this defendant falsely represented himself as a full-time state employee in order to collect a state pension, while at the same time running a full-time lobbying business,” Attorney General Maura Healey said in a statement. “Actions such as the ones alleged here defraud taxpayers and undermine the integrity of the pension system.”

To qualify for the pension, McDonough had a lobbying client, the Merrimack Education Center, put him on the payroll of a related agency, the Merrimack Special Education Collaborative, which provides education and treatment services for special needs students from 10 school districts.

McDonough was the collaborative’s director of public affairs and government relations, though he did not actually perform any duties, officials allege. Neither the employees, nor most of the top officials, knew he was on the payroll. He had no desk, no phone, and no work product, according to former inspector general Gregory Sullivan, whose office uncovered the alleged scheme.

At the same time, he was working at his lobbying firm, McDonough Associates, earning more than $1 million a year.

The 69-year-old veteran lobbyist was indicted Monday by a Suffolk County grand jury on charges of presentation of a false claim and procurement fraud, the attorney general’s office said. If convicted, he could serve up to five years in prison and be fined up to $10,000.


His former lawyers said they no longer represent McDonough and the Globe could not determine whether he has a new lawyer.

The inspector general’s office referred the case to the attorney general’s office, which began its probe in 2011.

“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 A. Cunha. “I am extremely pleased that our long collaboration with the AG’s office in this case has resulted in an indictment.”

In early 2009, McDonough submitted a retirement application to the State Board of Retirement in which he said he was a full-time employee of the Merrimack Special Education Collaborative between 2003 and 2008. Between May 2009 and February 2012, he received a total of $96,515 in pension payments, prosecutors said.

The retirement board suspended McDonough’s pension in February 2012 after the misconduct allegations arose. If convicted, he would forfeit the pension and could be ordered to reimburse the state for the payments he received, officials said.

Officials of the Merrimack Special Education Collaborative, which has changed its name to the Education Collaborative, referred questions to its lawyer, Thomas Lent, who could not be reached for comment.

In a statement, Treasurer Deborah Goldberg, who oversees the state pension system, said her office will “continue to defend our case during the appeal process on behalf of hard-working public servants who have contributed to this fund.


“Protecting the integrity of the public pension system is one of my top responsibilities as treasurer,” she wrote.

A former top executive of the Merrimack Education Center is facing federal charges for allegedly defrauding the state pension system by putting McDonough and three other Education Center employees on the collaborative’s payroll so they could qualify for retirement benefits. Carl A. Nystrom was indicted by a federal grand jury in December 2013.

The former executive director of both the collaborative and the Education Center, John Barranco, has been accused of diverting millions of dollars from the collaborative to pay him and a former girlfriend high salaries and to cover thousands of dollars in personal expenses.

McDonough, formerly of Foxborough, is serving his sentence at Fort Dix, N.J., for his role in the bribery scheme that toppled DiMasi.

A longtime friend of DiMasi’s, McDonough was the lobbyist for the software company Cognos that funneled money to DiMasi as it was looking for multimillion-dollar state contracts.

McDonough, who was also fined $50,000 and ordered to forfeit $250,000, is to be released on Jan. 3, 2018, according to the US Bureau of Prisons website.

Last month, he filed a motion to vacate his sentence, asserting his lawyer did not defend him properly.

Martin Finucane can be reached at martin.finucane@globe.com. Andrea Estes can be reached at andrea.estes@globe.com.