A city contractor has admitted underpaying his employees and overcharging the city for janitorial and landscaping services.

Nelson Aguinaldo, owner of Diversified Janitorial Services, reached a plea agreement with city prosecutors in which he entered a deferred guilty plea to a single felony charge of theft.

As part of the plea deal, Aguinaldo was sentenced to five years of probation and ordered to pay $64,060 to the city in restitution and to perform 300 hours of community service.

Five other charges, including racketeering, money laundering and theft were dismissed.

Circuit Judge Michael Town Monday sentenced Aguinaldo.

After entering the plea, Aguinaldo paid the restitution in full, his lawyer, Todd Eddins, said yesterday.

Aguinaldo "feels it is a fair resolution to a complex case," Eddins said.

"He takes full responsibility for the loose financial policies" that his company practiced.

Under the deferred guilty plea, the criminal case against Aguinaldo would be stricken from the public record if he stays trouble-free during his five years of probation.

Aguinaldo admitted in the plea deal that he paid less than city-required wages to his employees but did not lower his bills by commensurate amounts.

Another charge — that Diversified provided fewer workers than were required by the city on various cleaning and landscaping crews — was dismissed as part of the plea deal.

"The city always received high quality work at low prices," Eddins said yesterday, referring to Aguinaldo as "a hard-working small businessman."

Because Aguinaldo has not technically been convicted of a contract-related felony, he can continue to bid for, and receive, government contracts, Eddins said.

"That was a critical aspect for Nelson in resolution of the case because he still wants to secure government contracts," he said.

While the plea deal was being negotiated, Eddins said, Diversified Janitorial landed a city contract to clean work areas occupied by prosecutor's office personnel.

And while Honolulu Police Department white-collar crime detectives investigated the case, the company landed multiple new city contracts, including jobs to clean Police Department facilities.

It could not be determined yesterday how many contracts the company now holds with the city. From 1999 to 2004, the company received more than two dozen contracts worth some $461,000.

Reach Jim Dooley at jdooley@honoluluadvertiser.com.