Riverdale, Illinois school board president keeps post despite indictment

The president of the Riverdale, Ill., school board continues in that role despite a federal indictment that accuses him of multiple counts of fraud involving out-of-state school districts, two universities and his former employer, a local substance-abuse agency.

Tom Schroeder, of Port Byron, Ill., was "replaced" late last year as the director of the Rock Island County Council on Addictions, or RICCA, leaders from that agency said. Federal investigators in Kentucky identified former college dean Robert Felner as Schroeder's "co-conspirator" in a plot to embezzle $2.3 million by misdirecting grant and other money into bank accounts that could be accessed only by the two men.
Felner, the former dean at the University of Louisville and a longtime associate of Schroeder, pleaded guilty last month to nine counts of mail fraud, conspiracy to commit money laundering and conspiracy to impede and impair the IRS. His plea proceedings disclosed for the first time that RICCA was a
victim of the scam.
Schroeder pleaded not guilty to the charges outlined in an updated indictment filed earlier this month. He is scheduled to go to trial on Aug. 9 in Louisville, Ky. He could not be reached for comment, but his Louisville-based attorney confirmed the updated not-guilty plea.
Federal prosecutors say Schroeder and Felner created the National Center for Public Education and Prevention, or NCPEp, to divert money headed for the University of Louisville and the University of Rhode Island.
A university-based analysis center with a similar name performed contract work for public schools in Atlanta, Buffalo, N.Y., and Santa Monica, Calif., prosecutors allege. The money paid to the center was redirected to NCPEp and, ultimately, three bank accounts controlled by Schroeder and Felner.
One of the accounts was opened by Schroeder at a bank in Rock Island.
About $2.3 million was redirected to NCPEp, the indictments claim. Schroeder was listed as president of the company and was paid $3,000 a month as a "consultant." Prosecutors further claim that NCPEp was a bogus firm that did none of the school-district consultancy work it billed for.
The center continued to receive funding even after it was dissolved by the State of Illinois in 2006 for failing to file annual reports.
As part of Felner's plea deal, which includes a punishment of up to 63 months in prison, he admitted to embezzling $88,750 from RICCA, which is based in Moline.
Allegations against the two men first were disclosed in a 2008 federal indictment, which did not name RICCA as a victim. Schroeder remained at the head of RICCA until two months ago. As Felner headed toward a plea deal, members of the RICCA board became increasingly suspicious, said William Burrus, president of the RICCA board and principal at Moline High School.
"We like to believe people who are professing their innocence," he said Thursday. "You can only take that so far. We were just really disappointed, to say the least. Disappointed is a gross understatement."
Federal investigators at first assured board members that RICCA money was not involved in the case, Burrus said.
"Then - bam!" he said of Felner's plea. "We saw $89,000 had been swindled."
That is when things started to heat up at RICCA, Burrus said.
"The real scrutiny started in October," he said. "We are going through every reimbursement check, every travel expense. We're gathering everything we think is suspicious to cooperate with the federal prosecutor and the IRS."
For many months, Burrus said, any suspicions by the RICCA board were explained away by Schroeder. One repeated explanation for the condition of finances at the agency was "the perfect storm of distraction" with the delays RICCA experienced getting money it had coming from the state.
"The economic troubles for Illinois were used," he said. "At the time, the explanation was very satisfactory."
But the story began to fall apart, he said, following Felner's plea deal, a new indictment against Schroeder and the internal audits that were under way at RICCA - with the help of federal investigators.
"I think (the internal audit) really expanded their investigation," Burrus said of the new interest federal investigators have shown in RICCA. Burrus said he could not elaborate on what has been discovered, saying it could be used as evidence.
In addition to being sentenced to prison if convicted, Schroeder's $400,000 home on Eagle Point Court in Port Byron, Ill., could be seized by federal authorities.
Despite all his troubles, including allegations he defrauded school districts in at least three states, Schroeder continues to serve as president of the Riverdale School District. It serves Port Byron, Hillsdale, Cordova and Rapids City, Ill., and has 1,178 students.
Two of the three school board members who could be reached for comment on this story said they had nothing to say.
"It's not a school board matter," board member Todd Caves said of the charges against Schroeder. "I'm the junior member of the board, and you're not going to get a comment out of me."
Board member Sherry Creen had a similar response.
"I don't know anything about it," she said. "I haven't read one story. I don't want to be involved in that, so I'll have no comment."
Rick Kessler, also a board member, said Superintendent Ronald Jacobs assured the board that Schroeder had no financial dealings with the Riverdale School District or any other Quad-City school district, which was enough for them.
Jacobs was on vacation last week and was not available for comment.
Kessler knew of the indictment and heard Schroeder no longer worked for RICCA, but those issues are "irrelevant" to the school board, he said.
"When our members say they don't know what's going on, quite honestly, that's not a smoke screen," Kessler said. "We don't know."
And, he added, he doesn't want to know.
"This is a personal matter for him," he said of Schroeder. "I'm sure Tom will do the right thing."
Herb Schultz Jr., a Rock Island attorney, resigned his volunteer appointment on the RICCA board to represent Schroeder but is no longer involved in the case. Another former Quad-Citian, David Mejia, is practicing law in Louisville and is representing Schroeder.
Felner is not expected to testify at Schroeder's trial, Mejia said. Testifying was not a provision of Felner's plea.