NEWPORT CITY — A Newport contractor accused of accepting a huge overpayment from the City of Montpelier and then depositing it into his business account will pay a $10,000 fine and a $2,000 donation to the State General Fund.Dan Scott, 64, in Orleans County District Court Friday, entered a plea of no contest to "false claim greater than $500." In turn, the state dismissed two additional charges of false claim greater than $500 and a grand larceny charge of greater than $900.Scott's Construction Inc. (SCI) was working on two water projects in the City of Montpelier. The overpayment was for a project called “Bailey/Memorial 16.” The project started in 2004 and concluded in 2006. SCI invoiced the city eight times from start to finish. Court records state that the administrative assistant for the City of Montpelier, Virginia Mackey, mistakenly entered the amount due SCI to be $548,110.83 instead of the amount owed of $85,774.70. Stephen Gray, from the Montpelier Public Works Department, approved the check. On or about Dec. 24, 2004, the council approved the check. The city issued the check on Dec. 22, 2004. On Dec. 23, 2004, someone from SCI picked up and deposited the check into Scott’s business account.On Sept. 19, 2005, SCI scent the City of Montpelier an invoice that showed the city paid $633,885.53 when the true payment was $1,096,221.66. On May 22 2006, SCI sent the city another invoice that listed payments that totaled $748,446.71, but did not reflect the overpayment. Court records state that attorney Steve Stitzel told Lt. Thomas Hango of the Vermont State Police that SCI deposited the overpayment into its business account on Dec. 23, 2004. Court records state that on Dec. 28, 2004, $500,000 was used to pay down a line of credit for SCI.On Oct. 27, 2009, police met with Mackey who said the overpayment was a mistake. On Oct 28, 2009, Hango met with SCI employee Sherry Alger at the State Police Barracks in Derby. Alger said she contacted Tom Howell, an investigator with the Attorney General’s Office, after hearing about the story on the news. Alger told Hango she remembered the overpayment. She said Scott had been stating for weeks that the company needed to show a profit and retain its bonding and keep its line of credit. Eric Montminy, controller and accountant for SCI, told Hango that Scott told him to put the check in the bank and he would deal with it when the city noticed the problem. Hango said Scott figured the city would notice the problem in the spring of 2005. Montminy didn’t think things were done correctly and left the company because he didn’t want to be with SCI when the City of Montpelier discovered the error.Court records state that Scott had Montminy create a miscellaneous job in which to record the overpayment. The overpayment made the company look profitable for the year when it actually wasn’t. This prevented the company from losing its bonding and line of credit.Gray told Hango the overpayment was a mistake. On Dec. 21, 2009, Hango met with Montpelier City Manager William Fraser to determine if city officials had hidden or inappropriately kept information from the public regarding the debt. Fraser presented Hango with paperwork that stated overpayment to SCI was discovered Oct. 11, 2006. On Dec. 29, 2006, Scott signed a promissory note to the city for the full amount due but wasn't able to pay the money back.On Dec. 8, 2010, Hango left Scott a voice mail message to contact him. Two days later Hango received a voice mail message from Attorney David Sleigh who indicated he represents Scott who would be invoking his right to remain silent. Assistant Attorney General Ultan Doyle told Judge Howard VanBenthuysen that Montpelier’s insurance company reimbursed the city. A companion civil case has been on hold pending the outcome of the criminal case. Doyle believes the insurance company is seeking reimbursement for its payout. That case is in Washington Superior Court.Scott paid $6,000 toward the fine Friday and will pay the balance within 45 days.