UNION CITY--A Union City employee admitted on Tuesday to misapplying more than $400,000 intended for city improvement projects, state U.S. Attorney Paul J. Fishman said in a release.

Johnny Garces, 52, pleaded guilty to his role in a bid rigging scheme that diverted at least $400,000 in federal grants meant for sidewalk repairs, home improvements and other projects, Fishman said. As an inspector at the Union City Community Development Agency, Garces made sure certain contractors secured agency funds by creating bogus contracts and instructing company owners to submit fake bids, according to court documents.

Garces resigned from the agency on Friday, Union City Mayor and state Sen. Brian Stack said in a statement. He said that the city is cooperating with federal authorities who are investigating the misconduct of agency employees. He declined to answer additional questions about the case, as the investigation is ongoing...