A grand jury indictment was handed up today charging state Assemblyman Bob Schroeder of Washington Township with pocketing more than $1.8 million from investors in a North Dakota business venture while writing more than $3.4 million in bad checks to other creditors.
Prosecutors with the state Division of Criminal Justice today obtained the three-count indictment charging Schroeder, 52, with issuing bad checks, theft by deception, and misconduct by a corporate official.
The charges are all second-degree offenses that carry potential penalties of up to five to 10 years in state prison and fines up to $150,000.
State Attorney General Jeffrey Chiesa said Schroeder built a “financial house of cards” and then lied and stole to “prop it up,” defrauding creditors who included
“This indictment, which would carry a substantial prison sentence upon conviction, demonstrates that nobody is above the law,” Chiesa added.
To secure this indictment, investigators “assembled extensive financial evidence and diligently pursued the complaints of the many individual lenders who, we allege, trusted Schroeder because of his public stature only to lose millions of dollars,” said DCJ Director Stephen J. Taylor.
State Police Superintendent Col. Rick Fuentes, whose detectives worked the case, said that Schroeder “betrayed the public trust.”
The indictment alleges that Schroeder wrote at least 47 bad checks totaling at least $3,431,150 to 12 people who loaned him funds for ventures involving his various businesses, and to two companies that provided him with goods or services — even though he knew the checks were written against accounts that didn’t have the sufficient funds to cover them.
It also accused him of stealing from at least five people, identified in the indictment only by their initials, whom he persuaded to loan him at least $1,887,000 for a purported venture involving another company he formed, Hercules Global Logistics, LLC, to supply permanent and temporary housing for an oil drilling project in North Dakota.
Schroeder used the money to pay personal expenses and other debts not associated with the project, state authorities allege.
All Points International Distributors sells tents, tarpaulins, building components, prefabricated and portable buildings, and other prefabricated structures. Historically, most of its business was with the U.S. military, with contracts providing for such items to be delivered to Afghanistan, Iraq, and other international locations.
Business began to decline after government contracts dropped off, however.
Schroeder, in turn, tried to sustain the company by seeking numerous short-term loans from individuals who were promised a high rate of return, the indictment alleges.
As he fell behind on those loan payments, between October 2009 and August 2012, he began kiting checks, it says.
Schroeder began soliciting investments for the North Dakota project this past January.
He established Hercules Global Logistics, which he said would supply permanent and temporary housing units – and offer catering, design and other services – to build and maintain a base camp for an oil-drilling project, according to the indictment.
Schroeder claimed he expected to complete the housing project — which he named the Washington Dakota Lodge, or Watford Lodge, by the end of this year.
Instead, he “diverted the funds for personal expenses and other debts,” the indictment alleges.
State Police in August issued Schroeder a complaint summons for passing bad checks. They also searched his home and a business facility at Prospect Place and Piermont Avenue in Hillsdale, which serves as headquarters for All Points and Hercules Global Logistics.
State authorities also obtained a court order to seize a number of bank accounts maintained and controlled by Schroeder in various business names. In addition to All Points and Hercules, Schroeder operates RS Consultants, LLC, a property management firm, and RGS Bergen, LLC, a company he set up for one of his investment properties. All four of his companies are also charged in the indictment.
Schroeder, the former Deputy Republican Whip of the Assembly, represents the 39th Legislative District, which includes portions of Bergen and Passaic counties. A former Washington Township councilman, he was elected to state office in 2010.
Deputy Attorneys General Veronica Allende and Perry Primavera presented the case to the state grand jury for the DCJ’s Corruption Bureau.
The investigation was conducted by Detective Brian Murphy, Detective Sgt. Lisa King, and Detectives Patrick Squitieri, Kenneth Lutz and Craig Pokrywa of the NJSP’s Official Corruption North Unit; Investigator Michael La Chapelle of the New Jersey Bureau of Securities; and Deputy Attorneys General Allende and Primavera, as well as Analyst Kathleen Ratliff, of the DCJ.
The indictment was handed up to Superior Court Judge Mary C. Jacobson in Mercer County. She assigned it to Somerset County, where Schroeder will be ordered to appear for arraignment at a later date.
A copy of the indictment can be found at: www.njpublicsafety.com.