Feds Say Sports Equipment Company Execs Defrauded School Districts, Including Long Branch

Two former executives of a Pennsylvania company that reconditioned football equipment for many New Jersey school districts, including Long Branch, 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.

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.

Former Long Branch High School Athletic Director Charles Ferrara Jr. pled guilty on November 22, 2010 to participating in the conspiracy. Ferrara and admitted, among other things, that he received items from Circle for his personal use and directed Circle to fraudulently bill the cost of those items back to their respective schools.

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.

The indictment states that athletic officials at Long Branch High School accepted gifts and other goods from Circle in April 2002, July 2004 and March 2005. The gifts include laptops, digital cameras, flatscreen TVs and DVD players, totaling $13,757.

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.