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

Two former executives of a Pennsylvania company that reconditioned football equipment for many New Jersey school districts and youth sports leagues have been indicted by a federal grand jury on fraud charges, including overcharging Barnegat schools more than $7,500 for sports equipment and other items, federal officials said on 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."

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 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.

According to the indictment, Kurlander and Abeshaus offered the following "gifts" to Barnegat Township School District athletic officials before fraudulently billing the district for them:

• August 2004: 24 boxes of high-end golf balls. Deducted from credit created by submitting false invoices: $1,056
• October 2004: Desktop computer and accessories. Deducted from credit created by submitting false invoices: $4,200.
• February 2005: Video equipment. Deducted from credit created by submitted false invoces: $753.
• March 2005: Golf bag. Inflated the number of golf bags purportedly going to the school’s golf team: $90.
• March 2005: 24 boxes of high-end golf balls. Deducted from credit created by submitted false invoces: $1,230
• August 2005: Camera accessories. Billed as boys and girls lacross equipment that was not provided: $265.

Kurlander and his father-in-law, Abeshaus, 79, were each indicted with one count of mail and wire fraud conspiracy. Kurlander also is 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 to FBI agents and the U.S. Department of Education Office of Inspector General. Both men were expected to appear at 2 p.m. Wednesday before U.S. Magistrate Judge Michael A. Shipp in Newark federal court.