TRENTON
– Attorney General Jeffrey S. Chiesa
announced that a Maryland insurance broker
pleaded guilty today to charges that he stole
nearly $2.6 million from the Perth Amboy Board
of Education by submitting fraudulent bills,
and also stole $216,495 from the City of Perth
Amboy by collecting payments for a non-existent
“wellness program” for city employees.
Francis
X. Gartland, 70, of Baltimore, Md., pleaded
guilty before Superior Court Judge Bradley
J. Ferencz in Middlesex County to first-degree
money laundering, related to the $2.6 million
fraud against the school district, and second-degree
theft by deception, related to the fraud
against the municipality. Under the plea
agreement, the state will recommend that
Gartland be sentenced to 15 years in state
prison on the money laundering charge, including
7 ½ years of parole ineligibility,
and seven years in prison on the theft charge.
The sentences will run concurrently.
The
charges were contained in two separate indictments
obtained in 2010 as a result of an investigation
by the Division of Criminal Justice Corruption
Bureau. Deputy Attorney General Pearl Minato
took the guilty pleas. Judge Ferencz scheduled
sentencing for Gartland for Sept. 10.
Several
companies operated by Gartland also pleaded
guilty: Gartland and Company Inc. and E-Administrative
Systems Inc. pleaded guilty with him to
the money laundering charge; and Federal
Hill Risk Management LLC pleaded guilty
to the theft charge. Gartland and his companies
will be permanently excluded from government
contracts in New Jersey. As a condition
of the plea agreement, Gartland and the
companies must pay restitution of $2,593,400
to the Perth Amboy Board of Education, and
$216,495 to the City of Perth Amboy. They
must also pay public corruption profiteering
penalties totaling $8,429,400 and a fine
of $500,000.
“Insurance
is a major expense for municipalities and
school districts, and taxpayers shouldn’t
be forced to pay more so that dishonest
brokers can line their pockets,” said
Attorney General Chiesa. “In Perth
Amboy, Gartland stole $2.6 million from
an Abbott school district, which needs every
dollar to provide a better education for
its children, and stole another $216,000
from a city struggling to pay for essential
services. We’re seeking a lengthy
prison sentence for his corrupt conduct.”
“This
guilty plea reflects our determination to
expose crooked brokers and vendors and bring
them to justice when they abuse government
contracts to steal from the public,”
said Stephen J. Taylor, Director of the
Division of Criminal Justice. “Rooting
out fraud in public contracting is a top
priority for the Division of Criminal Justice.”
Regarding
the Perth Amboy Board of Education, Gartland
and Company was the broker of record for
health benefits insurance for the board
and was authorized to act on the board’s
behalf with its medical insurance carrier.
Gartland admitted that between November
2003 and July 2009, he conspired with the
other defendants named in the indictment
to fraudulently obtain $2,593,400 from the
board of education by charging it for nonexistent
or unauthorized healthcare related programs
and services, including wellness programs
and employee assistance programs.
Gartland
admitted that they falsely represented to
the insurance carrier that the board of
education authorized the insurance carrier
to pay fees on behalf of the board from
its medical claims bank account for the
programs and services. The defendants submitted
fraudulent and forged board authorization
letters and fraudulent billing invoices
from vendors to the insurance carrier resulting
in payments from the board’s medical
claims bank account.
Regarding
the City of Perth Amboy, Gartland’s
company, Federal Hill Risk Management, was
formerly broker of record for health care
insurance for the city. Gartland admitted
that between January 2005 and July 2009,
he and the other defendants named in the
indictment conspired to fraudulently obtain
$216,495 from the city by making false representations
to the city’s medical insurance carrier.
They represented 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.
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
was no wellness program.
Charges
are pending against Gartland’s son-in-law,
Derek Johnson, 41, of Lutherville, Md.,
and a second corporate defendant, East Coast
Administrative Services Inc., in the indictment
related to the fraud against the City of
Perth Amboy.
The
investigation was conducted for the Division
of Criminal Justice Corruption Bureau by
Detective Benjamin Kukis, Sgt. Dino Dettorre,
Deputy Attorney General Dianne C. DiGiamber
Deal, Deputy Attorney General Pearl Minato,
Detective Lee Bailey and Detective Shaun
Egan, under the supervision of the Bureau’s
Chief, Supervising Deputy Attorney General
Christine Hoffman, its Deputy Chief, Deputy
Attorney General Anthony A. Picione, and
Lt. Robert Stemmer.
### |