PROVIDENCE – Former House Majority Leader Gerard M. Martineau was sentenced today to 37 months in federal prison and ordered to pay a fine of $100,000 for his role in the Operation Dollar Bill influence-peddling scandal. He was ordered to report to prison on March 14.
The sentence, announced this afternoon by U.S. Attorney Robert Clark Corrente and Assistant Atty. Gen. Alice S. Fisher of the Department of Justice, Criminal Division, was imposed by Chief U.S. District Court Judge Mary M. Lisi.
The former state legislator from Woonsocket had admitted to arranging personal business dealings with a local pharmacy company and health insurer, then using his position to affect the fate of legislation in which those companies were interested.
Operating as the Upland Group, he had arranged to sell paper bags to hold customers’ prescriptions to Blue Cross & Blue Shield of Rhode Island for use as promotional items, and had arranged to sell paper and plastic bags to the pharmacy company, prosecutors said. He sold the bags in lots of 1 million to 3 million, at a price of $19,500 per million.
The U.S. Department of Justice has declined to reveal the name of the insurer, stating that “We are not permitted by the rules we operate under to identify any entities not specifically charged.” But, “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,” CVS Caremark Corp. spokesman Michael J. DeAngelis told PBN in October, when Corrente’s office announced it had reached a a plea agreement with Martineau“The company has fully cooperated with the government in connection with its investigation of this matter since its inception.”
After beginning to sell the promotional items, Martineau announced he had changed his position on the so-called Pharmacy Freedom of Choice measure – a bill opposed by both client companies. He later used his position as majority leader to help stop the legislation. He also worked to promote or block other legislation on the companies’ agendas.
Between 1999 and the end of 2002, he received $891,935 in commission payments for the bags: $716,435 from the pharmacy and $175,500 from BCBSRI. The insurer did not pay his final invoice for $19,500, which Martineau submitted in 2003, after he left the General Assembly.
The legislator took steps to conceal the business relationship, and never disclosed his conflicts of interest to Rhode Island citizens, noted Assistant U.S. Attorney Gerald B. Sullivan, one of the prosecutors in the case.
Martineau pleaded guilty on Nov. 2 to two counts of “honest services” mail fraud: using the mail to deprive Rhode Island citizens of their right to his honest services. (READ MORE.) Each count carried a maximum penalty of five years in prison and a fine of up to $250,000 or twice the amount of the gain or loss.
Besides Sullivan, the case was prosecuted by Assistant U.S. Attorney Stephen G. Dambruch and trial attorneys Daniel A. Petalas and Peter C. Sprung of the Department of Justice, Public Integrity Section. The section is headed by William M. Welch II.
The charges against Martineau were the result of a continuing public corruption investigation by the R.I. State Police, Federal Bureau of Investigation and other federal agencies into the relationships between R.I. legislators and entities with local legislative agendas.
R.I. Sen. John Celona pleaded guilty to similar charges in August 2005 and was sentenced to 30 months in prison.
In December, BCBSRI agreed to pay $20 million and establish a new ethics monitor position as part of a deal to avert prosecution. That same month, Roger Williams Medical Center concluded a similar arrangement, which had been announced in 2006. (READ MORE.)
Additional information is available from the Office of the U.S. Attorney, District of Rhode Island, at www.usdoj.gov/usao/ri/.
