The pretrial memo for Robert Felner’s accused co-conspirator (or whatever we’re calling him these days) hit the courts on the 19th and we’re finally getting around to talking about it.

Here are some excerpts:

Counts 1 through 3 of the Superseding Indictment allege that Schroeder and Felner used a sham entity, the National Center on Public Education and Prevention (NCPEp), to execute a scheme to defraud and to conspire to do the same. Count 1 charges that they executed a scheme using NCPEp to defraud the National Center on Public Education and Social Policy, a division of URI, (NCPE-URI), the Rock Island County Council on Addiction (RICCA), and the University of Louisville (UofL). Count 2 charges they conspired to use NCPEp to launder the proceeds of the fraud charged in Count 1. Count 3 charges that they conspired to defraud the Internal Revenue Service through, among other means, the use of NCPEp.

-SNIP-

In all instances, NCPEp was invoicing the three school districts, RICCA, and UofL for work it did not complete. The only distinction was that Schroeder, on behalf of the NCPEp, personally invoiced RICCA. The money from all three victims was laundered through NCPEp bank accounts controlled by Schroeder and/or Felner. RICCA was not aware of Schroeder’s involvement with NCPEp. Similarly, NCPE-URI and UofL were not aware of Felner’s involvement with NCPEp.

From its inception NCPEp was deliberately created as a subterfuge and from 2001 through 2008 NCPEp did no work. Instead, NCPEp was used exclusively to launder money stolen froM URI, RICCA, and UofL. Schroeder’s fingerprints were all over NCPEp from the beginning in 2001 through the execution of a federal search warrant in 2008. For example, on June 5, 2001, Schroeder submitted an application on behalf of the NCPEp for an employer identification number. Despite this, NCPEp never filed a tax return, even though more than $2,000,000 passed through NCPEp bank accounts from 2001 through 2008. On October 17, 2001, NCPEp was incorporated in the State of Illinois. Schroeder signed as the incorporator of this “General-Not-For-Profit” corporation. In or about May 2001, Schroeder created an Executive Consulting Agreement with NCPEp to pay himself $3,000 a month, initially covering the period from May 1, 2001, through April 30, 2002. On July 24, 2001, Schroeder, as executive director of NCPEp, signed a Royalty Agreement with Robert Felner for $97,000. On March 1, 2006, the State of Illinois involuntarily dissolved NCPEp for failure to file annual reports. However, from that date until June 2008 Schroeder and Felner continued to actively use NCPEp bank accounts to deposit checks from the three school districts, RICCA, and UofL.

Evidence will be presented at trial that NCPEp never performed work for RICCA or UofL and that it was used to divert funds intended for NCPE-URI. In addition, evidence will be presented that Schroeder continuously received approximately $3,000 per month from an NCPEp bank account during this period for an “executive director fee.” In a May 27, 2008, email from Felner to Schroeder, Felner acknowledged that he was aware that Schroeder received his executive director fee for the last five years and he requested that Schroeder file some documents with the I.R.S. or the payments will stop. Evidence will be presented that Schroeder assisted Felner to defraud NCPE-URI and UofL and that Felner assisted Schroeder to defraud RICCA. It appears each assisted the other in committing a fraud and their payment was the other’s assistance. Central to their scheme to defraud at all times, however, was Schroeder and Felner’s continuous use of the bogus entity NCPEp to legitimize the fraud and to launder the proceeds of the fraud.

On July 17, 2001, NCPEp opened a bank account at American Bank & Trust (“NCPEp-AB&T”) in Rock Island, Illinois. Schroeder was the sole signatory on the account. On June 28, 2002, Schroeder signed a new account form and opened a new account for NCPEp at Citizens Bank (“NCPEp-Citizens”) in Rhode Island. On the next day, Robert Felner signed the new account form. Included in the new account form was a notarized NCPEp resolution showing Robert Felner as the Board Chair of NCPEp. The resolution was signed by Schroeder. On February 12, 2004, Robert Felner opened a business bank account in the name of NCPEp at Branch Banking and Trust (“NCPEp-BB&T Business”) in Louisville, Kentucky. Felner was listed as the sole signatory on the account. The account application stated NCPEp was established on June 1, 1995, and that Felner was a “certifying officer” of the corporation. On or about November 22, 2004, Felner opened an investment account at Branch Banking and Trusth in the name of NCPEp (“NCPEp-BB&T Investment”). Felner opened the account as the executive director and as an officer of NCPEp. This account was linked to NCPEp-BB&T Business account and was used solely as a personal investment account by Felner.

An analysis of the NCPEp account records reveals that $2,250,097 was deposited into NCPEp bank accounts from 2001 through 2008. The sole sources of the deposits were funds from the three school districts, RICCA, and UofL. Approximately $296,935, all from the NCPEp-AB&T account, was disbursed for the benefit of Schroeder. The majority of these disbursements were recorded as “executive director fees.” Approximately $2,000,000, from all NCPEp accounts, was disbursed for the benefit of Felner. An analysis of the NCPEp bank accounts revealed nominal possible expenses, approximately $15,000, being paid from 2001 through 2008 for possible operating expenses. Instead, the investigation determined that the NCPEp bank accounts were used to deposit, distribute, and launder the proceeds stolen from NCPEp-URI, RICCA, and UofL.

-SNIP-

In addition, to the money Schroeder and Felner fraudulently obtained from RICCA, Schroeder was also on the payroll at both the URI and later UofL. Evidence will be presented that Felner placed Schroeder on the payroll at URI and UofL while he Felner was working at both institutions. Schroeder, however, produced no work at either URI or UofL. More particularly, evidence will also be presented that from 1997-2001 Felner caused Schroeder to be paid approximately $53,550 from URI and that Schroeder performed no services in exchange for these payments. In addition, evidence will be presented that Felner caused UofL to make payments totaling $84,658 from 2005 through 2008. Again evidence will be presented that Schroeder performed no work for UofL.

The document goes on and on and you’re welcome to read it by clicking here (Warning: PDF Link).

While Schroeder is obviously innocent until proven (proved?) guilty, it sounds like the government has quite a case on its hands. Regular readers of this website have seen quite a bit of it over the past few years, I’m sure.

Beyond the pretrial memo, the jury questionnaire had a few interesting questions:

38. Prior to my informing you of the parties, and the charges here, have you heard, read, or seen anything about this case, about allegations relating to former professor Robert Felner at the University of Louisville, or Thomas Schroeder? If so, what did you hear, read, or what were you told?

39. Also, if yes, please tell us the name of all sources from which you have heard or read about Mr. Felner, Mr. Schroeder or the University of Louisville (such as the newspaper, television news, radio, talking with friends, family or co-workers, internet news sources, blogs, etc.)?

40. Do you have an opinion about what you have read, seen or heard? If yes, what is your opinion? Have you formed an opinion about Mr. Schroeder’s guilt or innocence?

Sounds similar to the Felner questions, if my memory serves me correctly.