NEWARK, N.J. (AP) — Two former executives of a sports gear company admitted in federal court Tuesday that they routinely overbilled schools by forging fake price quotes from competitors in a decade-long fraud scheme that extended to 12 states.
The company, Easton, Pa.-based Circle Systems Group, even cooked up inflated invoices to recoup money it had donated to schools' fundraising and charity efforts, Mitchell Kurlander admitted.
"So, you gave with one hand and took back with the other?" U.S. District Judge William Walls asked Kurlander, Circle's former chief financial officer.
"Yes, your Honor," Kurlander replied.
The 54-year-old Kurlander, of Allentown, Pa., and his father-in-law, Alan Abeshaus of Highland Beach, Fla., each pleaded guilty to one count of conspiracy to commit wire fraud and mail fraud. The count carries a maximum prison sentence of 20 years, but federal prosecutors said they will not oppose a motion that could keep the 81-year-old Abeshaus out of prison. Kurlander faces between 41 and 51 months in prison under terms of his plea agreement.
Abeshaus said in court he would pay restitution of $1 million; the U.S. attorney's office said the amount of Kurlander's restitution is to be determined.
The two were arrested in 2011 and charged in a 22-count indictment. Their trial was to have begun Tuesday.
Neither man commented after the plea hearing. William DeStefano, an attorney representing Kurlander, said the case involved extenuating circumstances that would be brought out when the men are sentenced in July, but he declined to give details.
According to statements made in court by both men, Circle, which primarily reconditioned football helmets and shoulder pads, took advantage of schools' confusion over invoices and account statements to get paid twice for the same services. That scam reaped the company more than $800,000 between 1997 and 2003, Kurlander and Abeshaus admitted.
Kurlander admitted that the company sent bogus price quotes on other companies' letterhead to schools so that Circle could emerge as the low bidder and schools could satisfy a requirement to seek competitive bids. Circle made up the difference on some of its lowball price quotes by overcharging for other services, Kurlander said.
In New Jersey alone, 22 high schools and the school districts of Newark and Jersey City were affected along with Rutgers and Monmouth universities, according to the indictment.
The indictment also charged the company showered gifts such as video games, cameras, clothing, computers and NFL tickets on school officials and then recouped the expense by submitting fraudulent invoices.
Former Circle President David Drill and two New Jersey high school officials who previously pleaded guilty in connection to the scheme are awaiting sentencing.
According to the indictment, schools also were swindled in Pennsylvania, Delaware, New York, Maryland, Virginia, Tennessee, North Carolina, South Carolina, Georgia, Florida and Michigan.