Former University of Louisville Dean Guilty in Fraud Case

Robert Felner, former University of Louisville dean of education, pleaded guilty on January 8, 2010 to nine federal charges, including income tax evasion, and agreed to serve 63 months in prison in connection with defruading the University of Louisville and another university of $2.3 million.

As part of the plea agreement, Felner will pay restitution of $510,000 to UofL, $1.64 million to the University of Rhode Island and $88,750 to the Rock Island County Council on Addiction in Illinois. Additionally, he agreed to forfeit property to the federal government that he owns in Florida and Illinois, as well as bank accounts of undisclosed values.
Scott C. Cox, one of Felner's attorneys, said Friday that his client decided to accept the plea agreement “because he wants to put this behind him.” Cox said he doesn't like any of his clients “going to prison for one day,” but he said Felner faced a significant risk of getting a tougher sentence had the case gone to trial.
The agreement comes close to ending a case that began in spring 2008, when the University of Louisville reported suspected fraud to federal officials. The investigation involved multiple federal agencies, including the U.S. Secret Service, the U.S. Postal Inspection Service and the Internal Revenue Service.
Following Friday's hearing, UofL spokesman Mark Hebert said, “Mr. Felner's guilty plea will prompt few tears on the University of Louisville campus.”
“An extraordinarily talented man has violated the trust of UofL administrators, faculty and staff and, perhaps most importantly, taxpayers. It's time for Mr. Felner to be held accountable for his criminal acts and we're glad that's happening,” he said. “This will close the book on Mr. Felner as far as we're concerned.”
At the University of Rhode Island, where Felner worked before his arrival at UofL in 2003 and which lost the most money in the fraud scheme, officials said they were “cautiously optimistic.”
“We're very much satisfied if this is indeed the disposition of the case, and hopefully there will be restitution to URI,” said Robert Weygand, vice president for administration and finance.
During Friday's hearing, Felner, 59, limited his comments to one-word answers when asked by the judge about his understanding of the proceedings, the plea agreement and his pleas to each of the nine charges. The 10th charge in the indictment is a forfeiture charge, which relates to properties Felner owns in Illinois, Florida and Kentucky.
Through his attorney, Felner declined to comment to The Courier-Journal.
The Felner investigation created a scandal at UofL, where officials initially credited Felner for turning around the College of Education and Human Development by improving teaching preparation and dramatically expanding its involvement in local public schools.
As the investigation proceeded, however, faculty members spoke out against Felner's leadership, saying he was vindictive, manipulative and threatening and drove away talented people. Some of the faculty who had run-ins with Felner attended Friday's hearing, including Thomas Simmons, an education professor.
“I think it's sad,” Simmons said afterward. “The way he treated people at the college was just totally inappropriate.”
Hebert said UofL acknowledges mistakes were made, and noted the university has taken several steps to fix problems identified by the investigation, including a revamping of its grievance process, review of faculty governance procedures and creation of an Ombuds Office to address faculty concerns and complaints. “The university has owned up to its mistakes and we're ready to move on,” he said.
$2.3 million reported taken
According to federal prosecutors, Felner and Schroeder siphoned $2.3 million from grants and contracts that should have gone to UofL and the University of Rhode Island, keeping the money for themselves.
Federal investigators say that between 2001 to 2008, Felner solicited survey business from school districts across the United States. The money from those contracts was supposed to go to the National Center on Public Education and Social Policy, which Felner founded at the University of Rhode Island.
Instead, Felner and Schroeder allegedly diverted about $1million from the Atlanta school district, $326,000 from Buffalo, N.Y., and $375,000 from Santa Monica, Calif., into another center that Schroeder founded in Illinois — and, eventually, into three bank accounts he and Felner controlled.
The surveys were done by the Rhode Island center, but the money never got there, according to the indictment.
The indictment also accuses Felner and Schroeder of sending about $100,000 in grant money from UofL to the Rhode Island center to pay for printing costs of the surveys done for the school districts. The money allegedly taken from UofL involves $450,000 out of a $694,000 federal earmark grant, and $126,000 from other funding sources at the university.
The federal grant from UofL was supposed to support local research on the federal No Child Left Behind Act, but the $450,000 ended up in a bank account in Louisville controlled by Felner and Schroeder, according to prosecutors. Felner ultimately used the money in the account to pay personal expenses and make investments, they said.