John B. Barranco, the former education official under criminal investigation for allegedly siphoning more than $10 million from a Merrimack Valley agency for special needs children, will begin collecting his $10,000 monthly teachers pension again — at least temporarily — after a decision reached last week by a Middlesex Superior Court judge.
The Massachusetts Teachers’ Retirement System had cut off Barranco’s pension checks in October 2011, concluding that he had already collected more than $750,000 in pension funds he was not entitled to receive. At the time, the board said it would withhold Barranco’s pension for six and a half years to recoup the money.
But Judge Kenneth V. Desmond Jr. ruled on Feb. 19 that the 70-year-old Barranco should receive a lump sum of $157,000 in addition to his monthly pension payment until his appeal of the retirement system’s action is resolved — a process that Barranco’s attorney said is unlikely to begin before 2015.
Sean P. Neilon, spokesman for the retirement system, expressed “deep disappointment’’ at Desmond’s decision.
“We believe that our case is very strong and that Mr. Barranco will have to repay the earnings that exceeded the statutory limits,’’ Neilon said.
But Nicholas Poser, Barranco’s attorney on pension matters, called the decision “a huge victory’’ and predicted that, after Barranco’s appeal is heard, the former educator would prevail.
In a legal filing, Poser said that Barranco, who once earned more than $500,000 a year at the non-profit Merrimack Education Center, has received no income other than Social Security since late 2011.
Former Inspector General Gregory W. Sullivan blew the whistle on Barranco in 2011, accusing him of orchestrating the transfer of $11.5 million from the Merrimack Special Education Collaborative — which is funded by nine public school districts — to the nonprofit Merrimack Education Center that he controlled. Sullivan said Barranco used the money to pay himself, a former girlfriend and a small coterie of aides lavish salaries while covering personal expenses such as Kentucky Derby tickets and improvements to his Florida vacation home.
State Auditor Suzanne M. Bump subsequently released similar findings and both the US Attorney’s office and state Attorney General Martha Coakley launched criminal investigations that are continuing. In addition, the state Ethics Commission has accused Barranco of violating the state’s conflict of interest law by awarding a no-show job to a well-known lobbyist so that he could increase his state pension.
Sullivan said that Barranco engineered the transfer of millions from the taxpayer-funded collaborative to the nonprofit Merrimack Education Center in part by having the center overcharge the collaborative for a variety of services, including rents and administrative costs.
Sullivan’s report recommended that the taxpayer-funded collaborative sever all financial ties with the Chelmsford-based education center, which the collaborative is now doing, according to the agency’s attorney, Thomas E. Lent.
Late last year, the collaborative and the education center settled many of the financial issues raised by Barranco’s alleged misconduct when the center paid the collaborative nearly $4.2 million and agreed to forgive nearly $4.3 million in purported debts.
On Wednesday, the collaborative’s board voted to return $1 million of themoney to the member school districts, and may decide to return additional funds, according to Lent.
The collaborative also renegotiated lease agreements with the nonprofit and does not intend to renew them. It also is phasing out transportation contracts and is no longer purchasing telephone and email services from the nonprofit.
“Overall, the collaborative is terminating its contractual and services relationship with the Merrimack Education Center,’’ Lent said.
Glenn A. Cunha, who replaced Sullivan as inspector general, said on Tuesday that the nonprofit’s “decision to repay some of the millions it took from the collaborative is an acknowledgment of just how far the two organizations strayed from their public mission.’’
Barranco for many years served simultaneously as director of the collaborative and the Merrimack Education Center. In 2005 he retired from the collaborative, which is funded by taxpayers in nine school districts, and began collecting his pension. But he retained his full-time job at the center, where his pay was boosted to more than $500,000, until 2011, when he resigned following Sullivan’s investigation.
The retirement system found that Barranco exceeded allowable limits on outside income from a government agency while he was working for the nonprofit education center because the center was essentially paying him to do government work. Much of Barranco’s time was spent overseeing the collaborative’s operations, according to a hearing officer for the retirement system.
But Poser argued that because Barranco’s check came from a non-profit group rather than a government agency, the limits on outside income from a government agency cannot apply to him.
“He was the employee of the Merrimack Education Center, not a government entity, so there’s no direct payment to him,’’ Poser said. “There has been no case ever that has forbidden his kind of arrangement.’’
Poser also argued that because the retirement system in 2009 decided to withhold approximately $52,000 in pension payments to Barranco — money it has since recovered — it’s subsequent decision to withhold an additional $764,000 in payments made over the same period of time violated Barranco’s due process rights.
“You can’t do that,’’ Poser said.
Desmond let stand the retirement system’s decision to recoup the $52,000.
Retirement system officials are considering an appeal of Desmond’s decision on the $764,000 in pension payments. And Neilon said the agency is requesting an expedited hearing on Barranco’s appeal of its decision, in hopes of reducing the more than two years that Barranco’s lawyer expects the process will take.
The appeal will be considered by the Contributory Retirement Appeal Board after a fact-finding hearing by the Division of Administration and Law Appeals. And a decision by the Retirement Appeal Board could be appealed in court.
“We have asked for an expedited hearing and hope our request will be granted,’’ Neilon said.