TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that three insurance brokers from
Maryland and their two companies were indicted
today on charges that they conspired to
steal $216,495 from the City of Perth Amboy
by collecting payments for a non-existent
“wellness program” for city
employees.
According
to Director Taylor, a state grand jury today
returned an indictment charging Francis
X. Gartland, 69, of Baltimore, Md., his
company, Federal Hill Risk Management LLC,
his son-in-law Derek Johnson, 39, of Lutherville,
Md., their business partner, Thomas B. Kelleher,
62, of Parksville, Md., and another insurance
brokerage company the three men co-owned,
East Coast Administrative Services Inc.
The indictment stems from an ongoing investigation
by the Division of Criminal Justice Corruption
Bureau.
“These
defendants allegedly exploited their position
of trust as insurance brokers for the City
of Perth Amboy in order to steal from the
city and its taxpayers,” said Attorney
General Dow. “In these tight financial
times, it is vital that we root out the
type of corrupt conduct alleged in this
indictment, which raises the cost of government.”
“Municipalities
and school districts spend millions of dollars
each year on insurance coverage, and must
rely on the integrity of the licensed brokers
who arrange that coverage,” said Director
Taylor. “We allege that these defendants
systematically deceived the city and its
medical insurance carrier in order to secretly
line their own pockets. Our investigation
is continuing.”
Federal
Hill was formerly broker of record for health
care insurance for the City of Perth Amboy.
The indictment alleges that between January
2005 and July 2009, the defendants conspired
to fraudulently obtain $216,495 from the
city. The indictment alleges that the defendants
stole the funds by making false representations
to the city’s medical insurance carrier
that the city had authorized the insurance
carrier to increase the city’s insurance
renewal rates beginning Jan. 1, 2007, by
a $15 per employee per month fee to cover
the cost of a wellness program. The representations
were made through Federal Hill as the city’s
broker of record.
The
defendants allegedly directed the city’s
medical insurance carrier to pass those
fees through to East Coast Administrative
Services to administer or provide a wellness
program for the City of Perth Amboy. Wellness
programs typically offer services such as
health care counseling and fitness training
aimed at reducing long-term health problems
and costs. In this case, there allegedly
was no program.
East
Coast allegedly received a total of $216,495
in fees. Of those fees, East Coast allegedly
distributed $133,210 to the defendants.
It is alleged that Federal Hill received
$70,000; Gartland received $20,000; Kelleher
received $25,210; and Johnson received $18,000.
The
five-count state grand jury indictment charges
all five defendants with conspiracy (2nd
degree), theft by deception (2nd degree),
making false representations for a government
contract (2nd degree), and falsifying or
tampering with records (4th degree). The
indictment also charges Gartland, Johnson
and Kelleher with misconduct by a corporate
official (2nd degree).
Deputy
Attorneys General Dianne C. DiGiamber Deal
and Pearl Minato presented the case to the
state grand jury for the Division of Criminal
Justice Corruption Bureau. The investigation
was led for the DCJ Corruption Bureau by
Detective Benjamin Kukis, Sgt. Dino Dettorre,
Detective Lee Bailey and Deputy Attorney
General Deal.
The
second-degree charges carry a maximum sentence
of 10 years in prison. The defendants also
could face fines of up to $450,000 on certain
of the second-degree charges. The fourth-degree
charge carries a maximum sentence of 18
months in prison, along with a fine of up
to $10,000 for the individual defendants
and up to $30,000 for the corporate defendants.
The indictment is merely an accusation and
the defendants are presumed innocent until
proven guilty.
The
indictment was handed up to Superior Court
Judge Linda R. Feinberg in Mercer County,
who assigned the case to Middlesex County,
where the defendants will be ordered to
appear in court at a later date to answer
the charges.
A
copy of the indictment is linked to this
press release at www.njpublicsafety.com.
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