A federal investigation of alleged corruption and influence-peddling at the State House heated up last week with the announcement that Gerard M. Martineau, former House majority leader and corporations committee chairman, had agreed to plead guilty to federal mail fraud and influence-peddling charges.
U.S. Attorney Robert Clark Corrente and Federal Bureau of Investigation Special Agent in Charge Warren T. Bamford announced the deal with Martineau last Tuesday after filing a two-count information in U.S. District Court, Providence.
Martineau had waived his right to have a grand jury review the case against him.
The charges against Martineau involve dealings between The Upland Group, a company he established in 1998, and two unnamed companies that have previously been identified as Blue Cross & Blue Shield of Rhode Island and what is now CVS Caremark Corp.
The court documents describe the companies only as the pharmacy benefits management division of a pharmacy company that is “a for-profit corporation incorporated under the laws of the State of Delaware,” and a health insurer that is “a not-for-profit corporation incorporated under the laws of the State of Rhode Island as a hospital service corporation” and “the largest health care insurer in Rhode Island.”
Thomas Connell, a spokesman for Corrente, said federal prosecutors are not allowed to identify any entities not specifically charged.
According to documents filed with the court, Martineau set up deals with both companies for Upland to sell them promotional prescription bags. At the same time, both companies were lobbying the General Assembly on issues over which Martineau had a major influence.
Martineau billed the companies for lots of 1 to 3 million bags at a price of $19,500 per million – in some cases, just days or weeks before a legislative session began.
In return, prosecutors contend, Martineau changed his position on “pharmacy freedom of choice” or “any willing provider” legislation, which both companies opposed, and on other legislation on the companies’ agendas.
Martineau had been a supporter of pharmacy freedom of choice until 1999, when he “announced his opposition to the legislation and subsequently used his position as majority leader to stymie its passage,” Corrente’s office said in a news release.
Between 1999 and the end of the 2002 Assembly session, Martineau also worked for or against other legislation on the two companies’ agendas, including a 1999 bill that would have facilitated the insurer’s sale to a for-profit company, federal officials said.
“Martineau is alleged to have been paid more than $900,000 in the two schemes,” Corrente noted.
In all, the information said, the former legislative leader contracted to sell the insurer 10 million bags but manufactured fewer than 2 million, billing the insurer $195,000 for the bags and receiving payments totaling $175,500 – for all but the final $19,500 invoice submitted in 2003 – while also receiving $716,435 in payments from the pharmacy, on contracts to provide the company with promotional bags.
The Federal Bureau of Investigation, other federal agencies, the R.I. State Police and Corrente’s office have been examining those and other companies’ dealings with legislators for a long time, in a probe dubbed “Operation Dollar Bill” that already brought down former state Sen. John A. Celona and former Roger Williams Medical Center executives.
“For many months, this office, along with Public Integrity Section of the Department of Justice, the FBI and other federal law enforcement officials, and the R.I. State Police, has been actively engaged in a large and complex public corruption investigation into relationships between Rhode Island legislators and entities that have interests in legislation and activities of the General Assembly,” Corrente said in a statement.
“To date,” he noted, “that investigation has yielded a number of convictions. One former state senator is in federal prison. And the Roger Williams Medical Center is operating under the terms of a deferred prosecution agreement.”
When asked for comment, BCBSRI spokeswoman Kim Keough told Providence Business News: “We are cooperating fully with the investigation. Because it is an ongoing investigation it would be inappropriate to comment at this time.”
CVS had been named in the case against Celona. Reached last week, CVS spokesman Michael J. DeAngelis said that, “as has been previously reported, CVS has had a business relationship with Mr. Martineau since the 1980s, prior to his joining the legislature, which has continued since he left the legislature. The company has fully cooperated with the government in connection with its investigation of this matter since its inception.”
Martineau is charged with two counts of “honest services mail fraud,” for using the mail to deprive Rhode Island citizens of their right to his honest services in the General Assembly, Corrente said. Each count carries a maximum penalty of five years in prison and a fine of $250,000 or twice the amount of the gain or loss.
Martineau was slated to be arraigned in U.S. District Court on Friday, past Providence Business News’s deadline.
The announcement noted that “even though Martineau has signed an agreement to plead guilty, he has not yet entered a plea. He will have an opportunity to formally enter a plea at a U.S. District Court hearing.” •
