Indictment: Watchung Hills Hit in Long-Running Fraud

is among 26 New Jersey schools defrauded in a long-running athletics equipment billing scam, an indictment handed up this week alleges.

Two former executives of a Pennsylvania company that reconditioned football equipment for many New Jersey school districts and youth sports leagues were indicted by a federal grand jury on fraud charges, federal officials said Wednesday. U.S. Attorney Paul J. Fishman announced the former chief executive officer of Circle Systems, Alan Abeshaus, 79, of Highland Beach, Fla., and former chief financial officer Mitchell Kurlander, 52, of Allentown, Pa., directed "a long-running fraud against schools in New Jersey and elsewhere."

The indictment against Kurlander and Abeshaus alleges they, along with Drill and others, conducted fraudulent business practices including keeping duplicated payments, submitting fake price quotes, buying school officials gifts and then charging back the costs of gifts and donations in their billing.

“The indictment alleges that these corporate executives and the educators that may have participated in this scheme willingly abused their positions of trust by defrauding school districts, students, and taxpayers for personal financial gain. Such egregious conduct is unacceptable,” Steven D. Anderson, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s  Mid-Atlantic Region, who led the OIG effort together with Special Agent in Charge Brian M. Hickey of the OIG’s Northeastern Region, said in a prepared statement. “I’m proud of the work of our OIG special agents and our partners in law enforcement in holding these individuals accountable for their actions.”

Former president David Drill pleaded guilty to fraud charges in December 2008, admitting that his company participated in fraudulent business practices, including overcharging schools for services and not conducting safety tests on reconditioned helmets, and misreporting testing data to raise the company's profits. Drill testified that many school officials were aware of the "scam" and to date more than a dozen school districts around the state have been served with subpoenas related to the investigation. The in his dealings with Circle System, Clark Patch reported at the time.

Kurlander and his father-in-law, Abeshaus, 79, were each indicted with one count of mail and wire fraud conspiracy.  Kurlander is also charged with nine counts of mail fraud and 12 counts of wire fraud. 

Kurlander, a part owner of the company, was responsible for "overseeing and managing accounts payable, accounts receivable, billing and the submission of bids and quotes to Circle's customers," according to the indictment.

Abeshaus was "the largest single shareholder" of the company, according to the indictment, prior to the sale of Circle System to Schutt Holdings, Inc. in September 2005.

Kurlander and Abeshaus surrendered Wednesday morning to FBI agents and the U.S. Department of Education Office of Inspector General.