FINAL UPDATE: Franklin Fennell guilty on all counts

It took a federal jury only about three hours Wednesday to convict former administrator Franklin Fennell of all 12 charges he faced tied to a years-long kickback scheme the FBI says cost Vigo County School Corp. more than $100,000.

Jurors received the case from U.S. Chief District Judge Jane Magnus-Stinson at about 4:30 p.m. By about 7:30 p.m., they were back in the Indianapolis courtroom with their decision.

With the verdicts read, the judge polled the jurors, asking each if these were their verdicts. All said yes.

Fennell, 49, of Terre Haute, said nothing as the verdicts were read. He turned around and acknowledged friends and supporters in the courtroom gallery.

Prosecutors have said they believe Fennell is eligible for 30 to 37 months in prison under federal sentencing guidelines.

The date for Fennell's sentencing hearing won't be set until a pre-sentencing report is completed. He stands convicted of nine counts of wire fraud, one count of theft and two counts of lying to federal investigators.

The government asked that Fennell be taken into custody, but defense attorney Charles Hayes noted Fennell has appeared at all times required by the court. Magnus-Stinson ruled Fennell, who must wear an ankle monitor and who has surrendered his passport, can remain free for now.

"We are pleased with the verdict and very proud of our trial team," Josh Minkler, U.S. Attorney for the Southern District of Indiana, told the Tribune-Star after the trial. Assistant U.S. Attorneys Tiffany Preston and Nick Linder prosecuted the case.

"As for Mr. Fennell, public officials are supposed to serve the public, not the other way around," Minkler said."When greed becomes more important than serving the public, there are consequences, and my office will hold offenders accountable."

Key witnesses

Much of the government's case hung on the testimony of Mike Pick of Terre Haute, owner of M&P Properties.

Pick testified that he, at Fennell's direction, greatly inflated invoices for services such as tree-trimming and stump removal. At times, he testified, he billed the school corporation for work not performed.

Fennell, since fired, was the school corporation's director of facilities and transportation support and had the authority to approve invoices.

When paid by the school corporation, Pick said, he'd cash or deposit the checks and draw the over-payments in cash. He said that money then would be split between Fennell and Frank Shahadey, who was a Vigo County sheriff's deputy and the schools liaison officer. Pick testified he also sometimes got a cut.

Earlier this fall, Shahadey, 62, of Terre Haute, pleaded guilty to one count of wire fraud and one count of theft of government money. He was sentenced to 16 months. With time served, he is to be released at month’s end.

Prosecutors earlier this week said Pick, who cooperated with FBI agents, will be federally charged for his role in the scheme. They say they've made him no promises regarding charges against him or sentencing.

In his closing statement, Hayes argued the government had not established the connection between Fennell and the kickbacks. He also attacked Pick's credibility.

"This is a case about the bribes and lies of Mike Pick," he said.

Hayes said Pick's motive was to get cash for gambling, and he claimed Fennell was unaware of the fraudulent billing scheme.

But prosecutor Preston pointed to Fennell at the defense table and said, "That guy was the mastermind of the scheme and the only one who had the power to pull off the fake invoices."

The government alleged the over-billing and kickback scheme ran from April 2014 until the arrest of Fennell and Shahadey on Nov. 2, 2016.

Fennell was released after the November arrest, pending trial, but the government successfully fought for pre-trial detention for Shahadey, arguing he presented a potential danger to the public, including school corporation personnel.

It was Rick Long, then the school district's assistant facilities director, who blew the whistle on the scam, according to trial testimony.

Long, as early as 2014, questioned why work formerly done by school system employees was being done by Pick's company, and he questioned what appeared to be overly large invoice amounts.

In one instance, Long testified he knew an invoice about bridge and walkway work at Honey Creek Middle School was bogus, as he'd seen school employees, not M&P Properties, do the work.

Long said he first sent an unsigned letter to a fraud investigator with the state Board of Accounts in early 2016. But no investigation followed.

So, Long said, he sent a second, signed letter in May 2016 and included documentation. Long said he talked to the FBI soon afterward.

The agents' testimony

Testimony from FBI agents was also a big part of the government's case.

Special Agent Jake Overton said the FBI agents who raided the school corporation offices on June 8, 2016, were looking into more than one allegation of fraudulent behavior, and that at least one investigation continues. He did not elaborate on what those other matters might involve.

U.S. attorney's spokesman Tim Horty on Wednesday told the Tribune-Star the government has no comment about any additional or potential criminal charges since the investigative work is considered ongoing.

Under FBI questioning, Fennell several times denied accepting cash or gifts from vendors, Overton said.

FBI Special Agent Timothy Kempf testified that Fennell again lied to investigators in July 2016 when questioned in Indianapolis.

The agents also testified about July 2016 surveillance that involved investigators giving cash to Pick.That cash was then given by Pick to Frank Shahadey for delivery to Fennell.

Although Shahadey was seen going to Fennell's home, no exchange of cash was captured on video.

The federal investigators also testified they'd searched Fennell's home for gift cards and large amounts of cash, including the cash they'd provided, but came up only with a $200 restaurant gift card. The government says Shahadey had ordered Pick to purchase that gift card.

FBI Special Agent Joann Dowell outlined a complicated paper trail that matched invoices, purchase orders, bank transactions and estimates to show that Pick was the sole vendor allowed to work on tree and shrub projects

She also described how some of the kickback payments were used, saying some of the funds were connected to Fennell's purchase of a house and to a family vacation to Disney World.