Ex-Bennington School chief to serve 18 months
By Patrick McArdle
Staff Writer | February 07,2014
BENNINGTON — The founder and former president of the Bennington School will serve 18 months in prison and has already paid $2.6 million to resolve a case of tax and health care fraud, according to a press release from the U.S. attorney’s office in Vermont.
The Bennington School is a private school not affiliated with Bennington’s public schools despite the similarity between its name and the public school, the Bennington Elementary School. The residential school, which serves troubled students, has continued to operate and has been under different ownership for more than a year.
Its former owner, Matthew Merritt Jr., 82, of West Stockbridge, Mass., was sentenced Wednesday after he pleaded guilty to charges that he was part of a scheme to defraud a health care program and committed tax fraud. He pleaded guilty to both crimes and was sentenced to serve 18 months on each, but those sentences will be served simultaneously.
Merritt Jr. was released after the sentencing, but is still under release conditions. He was ordered to surrender himself April 1 to begin serving his sentence.
Merritt Jr. will also serve one year on supervised release at the end of his prison sentence.
No fine was imposed on Merritt Jr. because he had already paid a $2.6 million settlement.
There were two relatives of Merritt Jr.’s who were part of the case. His son, Matthew Merritt III, 55, was the plant manager at the Bennington School, and his son-in-law, Raymond Crowley, 59, was the CFO at the school.
Both pleaded guilty to one felony charge each of federal tax fraud. On Dec. 23, Merritt III and Crowley were each ordered to serve a one-year term of probation, six months of that time on home confinement, and 200 hours of community service.
Both Merritt III and Crowley had paid $200,000 as part of the settlement, making the family’s total settlement $3 million, but Merritt III was also fined $30,000.
Jeffrey LaBonte, 60, the former executive director of the school, was the first to be sentenced. On Nov. 18, LaBonte was sentenced to a one-year term of probation, with four months of that time on home confinement, a $30,000 fine and 100 house of community service.
LaBonte paid $1.3 million to resolve his potential civil health care fraud liability.
According to the U.S. attorney’s office, of the $4.3 million that was recovered, Vermont has received $2,113,708 and the United States has received $2,186,292.
The Bennington School received much of its funding through the Vermont Medicaid program which included state and federal money.
The four men charged had implemented a system where certain school employees were compensated trough personal benefits like cars, gas and heating oil and reimbursement of personal expenses, but the expenses, which were not allowable, were not reported on those employees’ tax returns.
The expenses became part of the financial records at the school which increased the amount of state funding the school received.
When officials at the Bennington School requested a rate change, an audit was launched in 2011 which found irregularities and determined that the school had received about $3.4 million more than it had been due between 2003 and 2012.