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Gartland, 70, pleaded guilty before state Superior Court Judge Bradley J. Ferencz in New Brunswick 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 city.

Under a plea agreement, the state will recommend that Gartland be sentenced to 15 years in state prison on the money laundering charge, including 7½ years of parole ineligibility, and seven years in prison on the theft charge. The sentences will run concurrently .

As a condition of the plea agreement, Gartland and his three companies must pay restitution of $2,593,400 to the school board, and $216,495 to the city. They must also pay public corruption profiteering penalties totaling $8,429,400 and a fine of $500,000.

The charges were contained in two separate indictments obtained in 2010 as a result of an investigation by the state Division of Criminal Justice Corruption Bureau. Deputy Attorney General Pearl Minato took the guilty pleas. Ferencz scheduled sentencing for Gartland for Sept. 10.

Gartland’s companies also pleaded guilty: Gartland and Co. Inc. and E-Administrative Systems Inc. pleaded guilty with him to the money laundering charge; and Federal Hill Risk Management pleaded guilty to the theft charge. Gartland and his companies will be permanently excluded from government contracts in New Jersey.

“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,” state Attorney General Jeffrey S. Chiesa said. “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,” state Criminal Justice Director Stephen J. Taylor, said. “Rooting out fraud in public contracting is a top priority for the Division of Criminal Justice.”

Regarding the school board, Gartland and Co. 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 school board 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 school board 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, 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.

The investigation was conducted for the Division of Criminal Justice Corruption Bureau by Det. Benjamin Kukis, Sgt. Dino Dettorre, Deputy Attorney General Dianne C. DiGiamber Deal, Deputy Attorney General Minato, Det. Lee Bailey and Det. Shaun Egan.

—TOM HESTER SR., NEWJERSEYNEWSROOM.COM