Broker Pleads Guilty in Bribery, Kickback, Fraud, and Perjury Scheme Involving Toms River Schools
|U.S. Attorney’s Office April 02, 2012|
TRENTON—The former insurance broker for the Toms River Regional School District today admitted his role in a scheme to pay bribes and other benefits to the then-superintendent of schools to get and maintain a contract to provide insurance services for the district, U.S. Attorney Paul J. Fishman announced.
Francis X. Gartland, 70, of Baltimore, Maryland, pleaded guilty today before U.S. District Judge Joel A. Pisano in Trenton federal court to charges of mail fraud, conspiracy to defraud the IRS, and perjury.
According to documents filed in this case and statements made in court:
From 2002 to 2010, Gartland and co-conspirators Frank D’Alonzo, 54, a former administrator at the Toms River Regional School District; Frank Cotroneo, 61, an insurance broker; and others paid $1 million to $2 million in bribes and other benefits to Michael J. Ritacco, 65, who was then the superintendent. The payments were made to allow Gartland to obtain and keep the insurance contract with the district. Gartland admitted that in 2002, he, Ritacco, Cotroneo, and D’Alonzo agreed to have Ritacco approve a workers’ compensation insurance contract between Gartland and the school district in which the contract fee would yield $500,000 to $600,000 per year in excess fees, which would be used to pay bribes and kickbacks to Ritacco.
Gartland admitted his role in conspiring with Ritacco to defraud the IRS by hiding these bribes and other benefits that were paid to Ritacco—and to other individuals at Ritacco’s direction—during the same period. To conceal the scheme, Gartland and Ritacco agreed to use middlemen, shell companies, sham consulting contracts, and third-party payments to secretly pass hundreds of thousands of dollars in cash bribes and other payments to Ritacco. Gartland also admitted to filing fraudulent individual tax returns for tax years 2004 through 2007 and to conspiring with Cotroneo and Thomas O’Leary to evade their respective federal income taxes.
Gartland also admitted that on January 23, 2012, he committed perjury before the U.S. District Court in Trenton when he submitted a false affidavit that stated his payments to D’Alonzo and another individual identified in the superseding indictment as the “Intermediary” were not, and were never intended to be, disguised bribes to Ritacco.
Gartland admitted his role in a scheme to funnel thousands of dollars in illegal campaign contributions through straw contributors to the Democratic primary election campaign of Joseph Vas, 57, who was running for Congress in 2006. Gartland also admitted that he participated in a scheme with co-defendant Thomas O’Leary, the former executive director of the South Amboy Housing Authority, to use “straw” or “conduit” contributors to make contributions to the 2005-2006 Vas congressional campaign. During that time period, Gartland, through his various companies, was the insurance broker of record for the city of Perth Amboy and the Perth Amboy Board of Education. Gartland received thousands of dollars in commissions for those representations and split a portion of those commissions with O’Leary. The purpose of the straw contributions to Vas, then the mayor of Perth Amboy and a New Jersey State assemblyman, was to ensure that Gartland maintained the lucrative insurance brokerage representations with the city of Perth Amboy and the Perth Amboy Board of Education. Gartland acknowledged that he recruited approximately 10 straw contributors to contribute $2,000 each to Vas’ federal campaign committee that he reimbursed by cash or check with funds provided by him. Straw contributions are prohibited by the Federal Election Campaign Act.
Gartland also admitted to filing fraudulent individual tax returns for tax years 2004 through 2007 and to conspiring with Cotroneo and Thomas O’Leary, 50, to evade their respective federal income taxes.
The mail fraud to which Gartland pleaded guilty in punishable by up to 20 years in prison; on the conspiracy charges, up to five years in prison; and on the perjury charge, up to five years in prison. All the counts are also punishable by fines of the greater of $250,000 or twice the amount of loss or gain. Sentencing is scheduled for July 9, 2012.
Pleading guilty to a related charge on March 27, 2012 was Carl Amenhauser, 66, a former insurance service provider in Hidden Valley, Pennsylvania. Amenhauser admitted that he made false statements to the FBI when questioned about monies that Gartland directed Amenhauser to pay to D’Alonzo in order for Amenhauser to obtain and maintain his insurance service contract with the Toms River Regional School District.
Amenhauser stated that in May 2002, Ritacco hired Amenhauser to provide workers’ compensation consulting services to the school district. Gartland then instructed Amenhauser to pay Gartland $6,000 per month and D’Alonzo $3,000 per month under the workers’ compensation consulting services contract. Amenhauser made these payments, believing that unless he made them he could not retain his contract with the Toms River school district. Amenhauser admitted that he made false statements to the FBI regarding the $3,000 monthly payments to D’Alonzo.
The count to which Amenhauser pleaded is punishable by a maximum of five years and a fine of the greater of $250,000 or twice the amount of loss or gain. Sentencing is scheduled for June 26, 2012.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Michael B. Ward, and IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge JoAnn S. Zuniga, for the investigation leading to today’s pleas.
The government is represented by Assistant U.S. Attorneys Dustin Chao, Harvey Bartle, IV, and Lee M. Cortes, Jr. of the U.S. Attorney’s Office Special Prosecutions Division.