School District Unaware of Sports Equipment Company's Scam

The Lacey Township School District was unaware that Circle Systems, a company that the high school athletic department did business with for several years, was committing fraud, business Administrator James Savage said.

Principles of Circle Systems, a company that reconditioned football equipment for many New Jersey Schools and youth sports leagues was , federal officials said Wednesday.

The company participated in fraudulent business practices, including keeping duplicate payments by schools that should have been returned or credited back to schools, submitting fake quotes to school officials, and submitting fraudulent invoices to schools, said U.S. Attorney Paul Fishman.

According to the indictment, over the course of three years- February 2005, 2006, and 2007- Circle Systems charged Lacey Township School District for $1,550 in donations to a football clinic. Circle Systems then recouped their donation by fraudulently billing the high school for the reconditioning of shoulder pads that they did not perform and for the replacement of football helmet liners and cages that they did not provide.

While many school officials across the state were aware of the “scam” and accepted gifts including televisions, radio systems, laptops, golf clubs and more, Lacey Township School District was unaware, Savage said.

"The board has been honoring the situation. At this point it would appear that the Lacey Township School District is a victim of this fraud and not an active participant as was the case in other districts up north. And we continue to wait for further information from the prosecutor’s office so we can get to the bottom of this and find out what the details are that led to this happening," said Jack Martenak, President of the Board of Education.

Dozens of school districts were served subpoenas related to the investigation, including Lacey in January 2011, when Lacey originally found out about the case, Savage said.

Lacey Township School district was served a subpoena for documents including bills and purchase orders, Savage said.

According to Savage, Circle Systems was contracted by the high school and adjusted bills for three donations- one for the Governor’s Bowl and the others for Nike Coaches Clinics- events the high school was not associated with.

“I don’t know the intricacies of what they did or what they did wrong. We did have some dealings with Circle Systems," said Karen Hughes, high school athletic director. "We were not involved in any of their wrongdoings either because we didn’t get involved in it or we were astute."

The athletic department signed off on the bill for payment and was approved by the school board, but the FBI told Savage that it would have been very difficult for the school district to catch the adjustment, he said.

The high school athletic department only did business with Circle Systems for one year under Hughes’ tenure but was contracted for several years under the previous athletic director, Hughes said.