Accountant for former Bennington Schools Inc. settles matter with state and federal governments


BENNINGTON >> The accounting firm for the former Bennington Schools Inc., which saw four of its administrators convicted of tax fraud in 2013, has settled its own matter with the state and federal governments.

According to the United State's Attorney for the District of Vermont, the Pittsfield, Mass. firm, Kushi and Myers PC, will pay the state and federal Medicare programs a total of $105,000, with $51,618 going to Vermont and $53,382 to the federal program.

The firm should have known there were problems with filings made by school officials to obtain Medicaid funding, said Assistant U.S. Attorney Nikolas P. Kerest.

Assistant (Vermont) Attorney General Steven Monde said that Kushi and Myers is not, nor has it ever been, facing either criminal or civil charges.

Bennington Schools Inc. was a boarding facility that offered "therapeutic and educational" services to socially and emotionally challenged boys and girls. It's founder and president, Matthew Merritt Jr., agreed in 2014 to plead guilty to federal charges of health care fraud and tax evasion. Also pleading guilty to tax evasion were the school's plant manager Matthew Merritt III, and its chief financial officer, Ray Crowley, who was also Merritt Jr.'s son-in-law. Each agreed to pay $3 million split between the state and federal governments. The school's former executive director, Jeffrey Labonte, also pleaded guilty to tax fraud and agreed to pay $1.3 million.

Bennington Schools Inc. (BSI) came under new ownership in 2013. It now goes by "Vermont School for Girls," providing essentially the same services as before, but only to females.

According to a release from the U.S. Department of Justice, many of the students at Bennington Schools Inc., a for-profit corporation, were placed there by the state. Funding for their placement was covered partially by the Medicaid program as well as funds from multiple state agencies such as the Agency of Education, Department of Mental Health, and the Department for Children and Families.

How much funding Bennington Schools got was based on a rate set by the Division of Rate Setting (DRS) within the Agency of Human Resources. Part of how that rate was determined came from expenditure reports filed by the school.

"From at least 2002 through 2011, Raymond Kushi and Kushi and Myers, PC, submitted the rate setting materials, including the school's reported allowable expenses, to DRS for purposes of BSI obtaining Medicaid funding," according to the release. "The Government's investigation showed that not all of BSI's claimed allowable expenses contained in the materials submitted by Raymond Kushi and Kushi and Myers, PC were in fact legitimate and allowable for the rate calculation."

Prosecutors say Kushi and the firm share responsibility for the false information provided in the reports, however neither Kushi nor the firm admit to any liability by agreeing to pay the $105,000. Likewise, the government makes no concessions as to its claims not being well founded.

This matter, and the larger tax fraud case, were investigated by the U.S. State's Attorney's Office, the Medicaid Fraud and Abuse Unit of the Vermont Attorney General's Office, the Office of Inspector General of the U.S. Department of Health and Human Services, the Internal Revenue Service, and the Federal Bureau of Investigation.

Kushi and Myers PC was represented by attorney Warren Hutchinson, of the Boston law firm LeclairRyan. Hutchinson did not respond Monday to an email seeking comment.

— Contact Keith Whitcomb Jr. at 802-447-7567 Ext. 115


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