WASHINGTON TOWNSHIP, N.J. -- Former state Assemblyman Robert Schroeder of Washington Township will be sentenced to eight years in prision after admitting Friday that he pocketed nearly $1.9 million from investors in a North Dakota business venture while writing more than $3.4 million in bad checks to other creditors.
Schroeder, 56, pleaded guilty in state Superior Court in Somerville to a single charge of misconduct by a corporate official.
Under his plea deal, Schroeder agreed to pay full restitution of $5.3 million to his victims, and he will be permanently barred from public office and public employment in New Jersey.
Schroeder, the former Deputy Republican Whip of the Assembly, served two terms from 2010 to 2014 representing 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.
Four companies that were operated by Schroeder and were indicted with him in December 2012 also pleaded guilty on Friday to issuing bad checks.
They included All Points International Distributors, Inc., which sold tents and prefabricated buildings to the U.S. military; Hercules Global Logistics, LLC; RS Consultants, LLC; and RGS Bergen, LLC.
Each of the companies "will be jointly and severally liable" with Schroeder for paying full restitution of $5.3 million to the victims, state Attorney General Christopher S. Porrino said.
Sentencing for Schroeder and the corporate defendants was scheduled for December 22.
How much time Schroeder actually serves behind bars will depend on several factors.
“While serving as an elected official in our state legislature, Schroeder lied to lenders, misappropriated funds entrusted to him, and willfully passed dozens of bad checks, all of which cost his creditors over $5 million,” Porrino said. “Now he will go to prison, just like any other fraudster who engages in such devious and damaging misconduct.”
“Schroeder traded on his public stature to gain the trust of creditors, and by the time his victims learned their trust was misplaced, Schroeder had stolen their money,” added Elie Honig, director of the state Division of Criminal Justice. “We will aggressively prosecute this type of financial fraud -- whoever commits it.”
The state grand jury indictment that produced the guilty plea accused 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 2012 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.
Deputy Attorneys General Jeffrey J. Manis and Peter J. Baker, who handled the case, took the guilty plea for the Division of Criminal Justice Corruption Bureau.
They were assisted by Analyst Kathleen Ratliff, Deputy Attorney General Alexander Sakin, Detective Patrick Squitieri of the New Jersey State Police Official Corruption North Unit and Investigator Michael La Chapelle of the New Jersey Bureau of Securities, Porrino said.
The investigative team also included Sgt. Brian Murphy, Detective Sgt. 1st Class Lisa King, Sgt. Kenneth Lutz,and Detective Craig Pokrywa of the New Jersey State Police Official Corruption North Unit and former Deputy Attorney General Perry Primavera.
A copy of the indictment can be found at: www.njpublicsafety.com