Feds Say Sports Equipment Company Execs Defrauded School Districts, Including Lacey

Two former executives of a Pennsylvania company that reconditioned football equipment for many New Jersey schools, including Lacey Township High School, and youth sports leagues have been 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, FL, and former chief financial officer Mitchell Kurlander, 52, of Allentown, PA, directed "a long-running fraud against schools in New Jersey and elsewhere."

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.

According to the indictment, over the course of three years- February 2005, 2006, and 2007- Circle donated $1,550 to a football clinic. Circle 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.

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, including both Ramapo and Lyndhurst in Bergen County. The in his dealings with Circle System.

The indictment against Kurlander and Abeshaus said 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.

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 this morning to FBI agents and the U.S. Department of Education Office of Inspector General.

Both men are expected to appear Wednesday afternoon before U.S. Magistrate Judge Michael A. Shipp in Newark federal court at 2 p.m.