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TRENTON
– Attorney General Paula T. Dow and
Criminal Justice Director Stephen J. Taylor
announced that Maryland insurance broker
Francis X. Gartland, two of his companies,
and a second broker from Summit, N.J., were
indicted today on charges that they conspired
to steal more than $2.5 million from the
Perth Amboy Board of Education by submitting
fraudulent bills.
The
Division of Criminal Justice obtained a
prior indictment in June charging Gartland,
his son-in-law and a business partner from
Maryland, and their companies with stealing
$216,495 from the City of Perth Amboy by
collecting payments for a non-existent “wellness
program” for city employees.
According
to Director Taylor, today’s indictment,
returned by a state grand jury, charges
Francis X. Gartland, 69, of Baltimore, Md.;
Brian Foley, 36, of Summit, N.J.; and Gartland’s
companies Gartland and Company Inc. (“GAC”)
and E-Administrative Systems Inc. (“EAS”)
with conspiracy (1st degree) , money laundering
(1st degree), money laundering (structuring)
(2nd degree), theft by deception (2nd degree),
making false representations for a government
contract (2nd degree), falsifying or tampering
with records (4th degree), and forgery (4th
degree). Gartland is also charged with misconduct
by a corporate official (2nd degree).
The
indictment stems from an ongoing investigation
by the Division of Criminal Justice Corruption
Bureau.
“We
allege that these insurance brokers systematically
stole more than $2.5 million from the Perth
Amboy School District through a fraudulent
scheme in which the district was billed
for services for employees that were never
provided or authorized,” said Attorney
General Dow. “Those are dollars stolen
from taxpayers and from the school children
of the City of Perth Amboy.”
“This
is the second indictment we have obtained
charging Gartland with exploiting his position
as an insurance broker for public entities
to steal very large sums of money,”
said Director Taylor. “We will diligently
pursue the evidence wherever it leads us
in this ongoing investigation.”
GAC
was the broker of record for health benefits
insurance for the Perth Amboy Board of Education
(“PABOE”), and was authorized
to act on the PABOE’s behalf with
its medical insurance carrier. The indictment
alleges that between November 2003 and July
2009, the defendants and an unnamed co-conspirator
conspired to fraudulently obtain $2,593,400
from the PABOE by charging it for nonexistent
or unauthorized healthcare related programs
and services, including wellness programs
and employee assistance programs.
Foley
and the unnamed co-conspirator, worked for
an unnamed insurance brokerage firm where
the co-conspirator was the co-broker of
record for the PABOE and was also authorized
to act on its behalf with the insurance
carrier. The defendants alleged used GAC’s
position as broker of record for the PABOE
and the other firm’s position as co-broker
of record to authorize or cause to be authorized
payments to GAC and EAS for the nonexistent
or unauthorized programs and services.
The
indictment alleges that the defendants falsely
represented to the insurance carrier that
the PABOE authorized the insurance carrier
to pay fees on behalf of the PABOE from
its medical claims bank account for the
programs and services. The defendants allegedly
submitted fraudulent and forged PABOE authorization
letters and fraudulent billing invoices
from vendors to the insurance carrier resulting
in payments from the PABOE medical claims
bank account.
The
indictment identifies 15 alleged instances
in which checks or payments were received
from the insurance carrier by GAC and EAS
as a result of fraudulent billing. They
included payments of $341,400, $391,000,
$436,000, $465,000, $480,000, as well as
9 payments of $40,000 each and one payment
of $120,000 ($480,000 total). The indictment
alleges that the funds were deposited into
the bank accounts of GAC, EAS and the defendants
subsequently disbursed payments from those
accounts to benefit themselves and others.
Gartland
issued checks to himself from the GAC and
EAS accounts. In disbursing funds for the
benefit of the others involved in the conspiracy
from GAC and EAS accounts, Gartland allegedly
concealed the fact that the funds were disbursed
for their benefit in various ways, including,
for example, by directly paying the personal
bills of the unnamed co-conspirator and
by issuing checks to Foley’s wife
in her maiden name, all as set forth in
the indictment.
The
defendants allegedly engaged in transactions
designed to conceal or disguise the source,
ownership and control of the funds obtained
by fraud. It is alleged that, in transactions
with banks involving the fraudulently obtained
funds, they deliberately broke down the
funds into amounts small enough to evade
state and federal currency transaction reporting
requirements.
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
Detectives Benjamin Kukis, Sgt. Dino Dettorre
and Deputy Attorneys General Deal and Minato,
assisted by Lee Bailey.
First-degree
charges carry a maximum sentence of 20 years
in state prison, while second-degree charges
carry a maximum sentence of 10 years in
state prison. Fourth-degree charges carry
a maximum sentence of 18 months in prison.
The defendants also face fines of up to
$5,186,800 for the individual defendants,
and fines of up to $15,560,400 for the corporate
defendants. In addition, a $2,880,000 public
corruption profiteering penalty would also
apply. The money laundering charges carry
an additional anti-money laundering profiteering
penalty of up to $7,780,200 for the first-degree
offense and up to $551,400 for the second-degree
offense.
The
indictment is merely an accusation and the
defendants are presumed innocent until proven
guilty. The indictment was handed up to
Superior Court Judge Edward M. Neafsey in
Mercer County, who assigned the case to
Middlesex County, where the defendants will
be ordered to appear in court at a later
date. The indictment is linked to this press
release at www.njpublicsafety.com.
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