School Board Authorizes Lawsuit To Recover $2.6M Loss

(Reprinted from Amboy Beacon, Jan. 19, 2011)

PERTH AMBOY — The Board of Education voted last week to authorize Board

Secretary/Business Administrator Derek Jess and Board Attorney Victor Medina to

negotiate contingency rates with the Edison-based law firm of Methfessel &

Werbel to pursue the recovery of $2,593,400 allegedly bilked from the Perth

Amboy school district over nearly six years for healthcare-related programs

that never existed.

The Resolution was moved by Mark Carvajal, seconded by Board Vice President

Kenneth Puccio and adopted 8-0. Member Israel Varela left the meeting

before the vote was taken.

The Board also voted to authorize the filing of a lawsuit against insurance

brokers Francis Gartland, 69, of Baltimore, MD; Brian Foley, 36, of Summit,

and two of Gartland’s companies, Gartland & Co. Inc. and E-Administrative

Systems Inc., who have been indicted by a State Grand Jury on charges of

participating in the alleged scheme.

That Resolution was moved by Carvajal, seconded by Kurt Rebovich Jr. and

adopted 8-0.

Board President Samuel Lebrault said that Jess and Medina will negotiate

with Methfessel & Werbel for contingency rates “a little lower” than those

presented by attorney Steven Kluxen in a closed-door executive session with

the Board to discuss the scope of the litigation.

At a Board meeting last year, Medina explained that the massive loss

occurred over such an extended period of time because of “a mastermind scheme” in

which “funds were diverted from our health-benefits account” by people

with “superior knowledge” that “was, for all intents and purposes,

undetectable” because it was “designed to avoid detection.”

Professionals working on the district’s behalf “had looked-over everything

and were sure that everything was Kosher,” Medina said at that time.

“Nobody could find what had occurred; couldn’t find what they did — that’s

how-well they covered their tracks.”

Frank Cotroneo, 59, a Bernardsville insurance broker, has admitted that he

participated in bilking the district out of those funds and has agreed to

pay restitution of $2.6 million to the Board, along with a Public Corruption

Profiteering Penalty (PCPP) of $2.9 million.

Gartland and another of his firms, Federal Hill Risk Management LLC;

Gartland’s son-in-law, Derek Johnson, 39, of Lutherville, MD, and their business

partner, Thomas Kelleher, 62, of Parksville, MD, also have been indicted by

a State Grand Jury for allegedly conspiring to steal $216,495 from the City

of Perth Amboy by collecting payments for a non-existent “wellness program”

for city employees at a cost to Perth Amboy of $15 per employee per month.