Reaction to Schroeder indictment in Illinois

This from the QuadCities Dispatch Online:

Riverdale School Board head faces

fraud, conspiracy charges

Thomas Schroeder, the president of the Riverdale School Board and the executive director of the Rock Island County Council on Addictions, was indicted Wednesday in Louisville, Ky., on charges of conspiracy and mail fraud.

The federal indictment alleges that Mr. Schroeder, of Rapids City, and Robert Felner, formerly a dean at the University of Louisville, used federal grant money intended to pay for student assessments at various school systems for their own purposes.

The U.S. Attorney's Office alleges that the pair received fraudulent payments totaling more than $2 million.

The government seeks the forfeiture of property and other assets derived from the alleged scheme.

Herb Schultz, Mr. Schroeder's attorney, said his client is innocent.

“We will fight this vigorously. We maintain our innocence,” he said. He said his client would not be made available for comment...

U.S. Attorney David Huber in Louisville said the University of Rhode Island, where Mr. Felner was director of the School of Education from 1996 to 2003, was the biggest victim in the scheme.

"People who are in a trusted position, who have credibility, are able to get away with things to a point," Mr. Huber said. "Eventually, things come crashing down."

University of Rhode Island spokesman Dave Lavallee declined immediate comment.

In a previous interview, Mr. Schroeder said he formed the National Center on Education and Prevention Inc. (NCEP), a non-profit corporation, in 2001 at Mr. Felner's request. It was to that organization, the indictment says, payments intended for the Rhode Island center were instead sent.

Some of the funds came from federal grants, including a $450,000 federal earmark awarded to the University of Louisville.

Other funds came from consulting work done for school districts in Atlanta; Buffalo, N.Y.; and Santa Monica, Calif., Mr. Huber said. Mr. Huber said the men appear to have done the work requested by the school districts, but diverted the money to their own accounts. The money was supposed to be paid to the education center in Rhode Island.

"There is no dissatisfaction as far as we know," Mr. Huber said of the school districts. "They are not the victims of the fraud."

And this:

Although Thomas Schroeder wouldn't speak to the media after he was indicted Wednesday ... he was willing to speak in July.

According to the indictment, Mr. Schroeder and Mr. Felner created a corporation called the National Center on Public Education and Prevention to obtain funds fraudulently for work performed by the Rhode Island-based National Center on Public Education.

This allowed Mr. Schroeder and Mr. Felner to appear as if they were operating as the Rhode Island center, causing other entities to believe they were dealing with the National Center on Public Education, according to the indictment.

After it was reported this summer that he had been interviewed by federal agents, Mr. Schroeder, of Rapids City, discussed the investigation and his role with the organization with The Dispatch and The Rock Island Argus.

During that interview, he said he was cooperating with investigators, and that he was upset and felt betrayed by his longtime friend, Mr. Felner.

"It is real strange," he said. "We were close friends and professional colleagues, then this happens."

In that interview he denied any knowledge of wrongdoing.

He said he formed the non-profit corporation in 2001 at Mr. Felner's request, and it was to serve as the fiscal agent for educational assessment projects directed by Mr. Felner. Mr. Felner served, at different times during their association, in posts at the
University of Rhode Island and the University of Louisville.

His organization, he said, handled payments for two projects -- one in Atlanta
public schools and another for the Santa Monica, Calif., school district. He placed the value of those contracts at $525,000.

The indictment, however, alleges the work for those projects was conducted by the Rhode Island organization, and that Mr. Schroeder and Mr. Felner diverted payments of $1,005,972 from the Atlanta project, and $375,000 from the Santa Monica project to the accounts of Mr. Schroeder's non-profit for their own use.

The indictment also alleges they concealed payments of $326,000 from a project in
Buffalo, N.Y. Mr. Schroeder made no mention of that project in the interview.

Mr. Schroeder said in 2007 his organization received a contract from the University of Louisville to provide and administer education surveys, funded by a federal grant, in connection with No Child Left Behind.

Mr. Schroeder said he received two payments for work that was to be done as part of that project, one for $200,000 and another for $50,000. Both checks were returned, uncashed, to Mr. Felner at his direction, Mr. Schroeder had said.

The indictment, however, alleges the university received invoices totalling several
hundred thousand dollars for work not performed.

At the time, Mr. Schroeder said, he was receiving $3,000 a month for his work with the organization and was being paid $2,400 a month by the University of Louisville
to serve as Mr. Felner's research assistant.

U of L grant checks end up in local bank

Golly geez. Turns out a suspected grant money collector can't even enjoy a Bats game without Jake sniffing him out. Thanks to Page One.

This from Nancy C. Rodriguez and Andrew Wolfson at the Courier-Journal:

Three checks totaling $450,000 — money that former University of Louisville education dean Robert Felner said was intended to pay for research — instead ended up being deposited in a Louisville bank, records show.

The records, which The Courier-Journal obtained in an open-records request, don’t identify who deposited or endorsed the checks. But Felner’s lawyer, Scott C. Cox, said his client is cooperating with federal investigators in “locating and reimbursing any funds that could be in question.”

Cox declined to say how much Felner is paying back. He has said that Felner is the focus of a federal investigation into the possible misappropriation of federal grant money that he controlled.

The records show that BB&T posted a check made out to “Natl Ctr on Public Education Prevention” for $200,000 on April 10, 2007, that had an endorsement stamp saying “credited to the account of the within named payee in accordance with the payee’s instructions.”

A second check for $50,000 on July 31, 2007, was endorsed with a stamp from the “National Center on Public Education and Prevention Inc.,” or NCPE.

A third check for $200,000 on Jan. 4 of this year had a hand-written endorsement of “NCPE. Deposit only.”

Wes Beckner, the regional president for BB&T, said the bank is cooperating with the federal investigation.

“We are giving them what they need,” he said, declining to elaborate.

The records show that U of L issued three checks totaling $450,000 to the National Center for Public Education and Prevention Inc. in Illinois, whose president is Thomas Schroeder, Felner’s colleague and friend.

Schroeder’s lawyer, Herbert Schultz, said that at Felner’s request, Schroeder returned to Felner the only two checks he was sent, which totaled $250,000. Schroeder previously said he didn’t know about a third check for $200,000.

But university officials said none of the money was ever returned to U of L. U.S. Attorney David Huber declined to comment on the checks or whether Felner is making reimbursements.

Updated:

Checks came from grant

The money for the checks came from a $694,000 federal grant received by U of L's Research Foundation. Felner -- who headed the university's College of Education and Human Development from 2003 until June -- directed the grant, which was intended to create a center to help schools boost achievement under the No Child Left Behind law.

Schroeder's Illinois center is a nonprofit corporation that Schroeder has said he set up in 2001 at Felner's request. The state dissolved the Illinois center in 2006 after Schroeder failed to file the required paperwork with the secretary of state.

Schroeder told a newspaper in Rock Island that he was the fiscal agent for the grant project but wasn't aware of any work the center produced.

The three checks for $450,000 were deposited in Louisville under an account bearing the same name as the Illinois center but listing a phone exchange at U of L. The number's last four digits were not legible in the copy of the check provided the newspaper.

U of L spokesman John Drees declined to comment yesterday on the checks or anything related to the federal investigation.

Team since early '90s

Felner and Schroeder worked together on projects dating to Felner's employment as a psychology professor at the University of Illinois in the early 1990s.

Felner later worked as a professor and director of the School of Education at the University of Rhode Island, before being hired as U of L's dean of education in 2003.

University of Rhode Island officials confirmed this week that Schroeder was paid about $53,500 from August 1997 to June 2001 to work as a consultant on various projects involving Rhode Island's National Center on Public Education and Social Policy, which Felner directed until 2006.

Felner also hired Schroeder to work as a consultant at U of L in 2004, and he later hired Schroeder to work as his personal grant research assistant from 2005 until this past April, paying Schroeder $2,400 a month.

Schroeder is executive director at the Rock Island County Council on Addiction and president of the Riverdale Community Unit School District No. 100 Board of Education.

So far, no documents have suggested any grant-related research was conducted in Kentucky.

The other subcontracts in the grant to come to light include two $60,000 contracts with the University of Rhode Island's National Center on Public Education and Social Policy.

Officials there said that in the first, a 2006 contract, data on public schools were collected from schools in Rhode Island and Buffalo, N.Y. In a 2008 contract, data were collected from Rhode Island schools only, according to the university.

Huber said he expects the investigation to take at least another month.