Former House Majority Leader Gerard Martineau is surrounded by family members and his attorney, Jim O’Neill, left, as he leaves U.S. District Court in Providence yesterday. He faces up to 46 months in prison and a fine of up to $1.8 million for each of two felony corruption counts. Sentencing is scheduled for Feb. 22.

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The Providence Journal / Gretchen Ertl

“Guilty, your honor.”

With those words, uttered in a soft voice in a cavernous federal courtroom in Providence yesterday, Gerard M. Martineau entered the pantheon of corrupt Rhode Island politicians who have sold out their public office for personal gain.

The ex-House majority leader and longtime state representative from Woonsocket pleaded guilty to two felony charges of depriving Rhode Islanders of the right to his honest services — for $891,500 worth of paper and plastic bag contracts from the CVS drugstore chain and Blue Cross & Blue Shield of Rhode Island. In return, Martineau admitted, he used his position to influence health-care and other legislation to the benefit of those two companies.

Martineau faces up to 46 months in prison and a maximum fine of $1.8 million for each count when he is sentenced Feb. 22.

“Obviously, this is a very difficult day for my family and me,” said a choked-up Martineau, standing on the steps of the courthouse flanked by his seven brothers and sisters. “I’d like to say to the court and my family and friends, my former colleagues and all the citizens of Rhode Island how sorry I am.

“I was raised to accept responsibility,” he continued, quavering, as one of his brothers patted him in support. “For me, this is the first step in the process of forgiveness and healing.”

Earlier, as Martineau gathered himself inside the courthouse with his family, U.S. Attorney Robert Clark Corrente told reporters outside that Martineau’s guilty plea is “one more step in the process.”

“We’re one step closer to getting this mess resolved,” Corrente said of the federal corruption probe known as Operation Dollar Bill. “The guilty plea today was an important step involving an important public official. We’re going to keep going.”

Martineau becomes the second public official, following former Sen. John A. Celona, to admit to corruption charges in the nearly four-year-old corruption probe of influence-peddling at the State House.

The investigation started with disclosures by The Providence Journal of Celona’s hidden financial ties to CVS, Blue Cross and Roger Williams Medical Center. Celona subsequently pleaded guilty and agreed to cooperate, and began serving a 2½-year prison term in March. At his sentencing in January, a federal prosecutor said that Celona’s cooperation has helped a federal task force open 14 investigations involving seven politicians and seven companies.

Among those known to have attracted federal interest are: former Senate President William V. Irons, current Senate President Joseph Montalbano, Senate Finance Chairman Stephen Alves, Sen. Daniel DaPonte and former state senator and Blue Cross lobbyist Thomas Lynch. Investigators have also asked questions regarding the relationship of two state representatives, John DeSimone and Robert Flaherty, to the Beacon Mutual Insurance Co.

Celona’s cooperation led to last year’s trial and conviction of two former Roger Williams executives, Robert A. Urciouli and Frances P. Driscoll, who are appealing, and the indictments earlier this year of two former CVS executives, John Kramer and Carlos Ortiz, who are awaiting trial.

A hint at another prominent person in the investigation is contained in Martineau’s plea agreement. The agreement, reviewed by Chief U.S. District Judge Mary M. Lisi during yesterday’s hearing, specifies that Martineau could still face charges for influencing capital-gains tax-cut legislation at the behest of CVS. Thomas Ryan, the CEO of CVS, had supported the tax cut, which was pushed by Martineau and Irons, an insurance salesman who had business with CVS and Blue Cross.

Unlike Celona, Martineau did not agree to cooperate with the authorities. Nor did he admit to any guilt in connection with the authorities’ ongoing investigation of the capital-gains tax legislation.

YESTERDAY’S HEARING took about 40 minutes, with Judge Lisi reviewing the terms of Martineau’s plea agreement and Assistant U.S. Attorney Gerard B. Sullivan summarizing the case that the government would have proven had the case gone to trial. Two prosecutors from the U.S. Department of Justice’s Public Integrity Section in Washington, Daniel A. Petalas and Peter C. Sprung, also attended the hearing.

The session began with a touch of irony, as Martineau, 49, told the judge that his college major was criminal justice.

Lisi explained that Martineau could be sentenced to 37 to 46 months for each count, and that she could impose the sentences consecutively, for a maximum of 92 months — about 7½ years. By pleading guilty, he waived any right to appeal a sentence up to that ceiling. By admitting his guilt, Lisi advised, Martineau would also relinquish his right to vote and to hold public office.

Sullivan outlined how Martineau, elected to the House in 1986, rose to chairman of the House Corporations Committee in 1993 and to House majority leader in 1998. Also in 1998, Martineau left his job as a salesman for a company that sold paper and plastic bags and created his own company, The Upland Group, named for the street where he lived in Woonsocket, and operated out of his house.

Martineau, who had had a prior sales relationship with CVS, began selling bags directly to the national drugstore chain after receiving “solicitations” from the company, Sullivan said. From 1999 through 2002, when he left office, Martineau received $716,000 in commissions from CVS. (He has continued to sell bags to the company.)

Also in 1998, Sullivan said, Martineau solicited bag business from a Blue Cross executive who was lobbying at the State House. At the end of that year, he began selling paper bags to Blue Cross, Rhode Island’s dominant health insurer, and billed it for 10 million bags over the next three years. But Blue Cross, which paid Martineau $175,500, received only 2 million bags.

In an attempt to conceal the relationship, Martineau did not put his name on invoices he sent to Blue Cross, and signed a false name to correspondence. In 1998, 2000 and 2001, he billed Blue Cross just days or weeks before the start of the legislative session. The bag sales ended almost immediately after he left office; Blue Cross refused to pay Martineau another $19,500 after he was out of power.

The money was paid to Martineau, said Sullivan, “to influence his official action.” While Martineau was profiting from the CVS and Blue Cross “schemes,” said Sullivan, he was influencing legislation on their behalf, including controversial pharmacy-choice bills, and failing to disclose his financial ties to the two companies.

After Sullivan finished, Lisi asked Martineau, “Do you admit that you formulated the schemes as described with the intent to defraud the citizens of Rhode Island of your honest services as an elected official?”

“Yes, your honor.”

mstanton@projo.com