BRIDGEPORT—After years of being the subject of criticism by citizens and the press for doings that could in no way be considered anything but illegal, time and the law finally caught up with Bridgeport mayor Max Schauf: on Thursday, November 8, a federal grand jury indicted him in a multiple-count true bill outlining much of what the feds believe Schauf has done over at least the past four years.
Those who know how Schauf operates know that it stretches back much farther than that, however; and while the feds have a long reach, it may just have been that the paperwork from July 2008 to March 2011, which they referenced in the indictment, was all they could locate when they came to examine Schauf’s doings, this occurring about a year ago.
Those who were aware of the inspection of documents both at city hall and at Schauf’s Bridgeport business (kept in a shell corporation so that it appeared to be his girlfriend Bev Preusz’ business, Red Hill Veteran’s Club) late last year and early this year by agents from the state’s Department of Revenue and Illinois State Police (called in by the Illinois Liquor Control Commission, who found irregularities going on in nearly all of Schauf’s booze businesses, including “unstickered” gambling machines, meaning Schauf hadn’t paid the state registration fee to use them, a red flag if ever there was one) know that a close eye was being kept on Schauf by agencies reaching all the way up to Springfield and Chicago.
That it reached into the federal level, however, was almost more than Schauf-victims could have hoped for.
And there are plenty of those.
Unrelated fire
A fire erupting at the Red Hill club on the morning of Schauf being taken into custody by federal marshals and agents from Illinois State Police prompted initial speculation that his arrest was on the basis of the fire, as there have been plenty of fires surrounding Schauf in the past several years, none of which he has been questioned about.
The fire at the club broke out at about 2:30 a.m., roughly twelve hours after Schauf had been seen on the roof of the building, ostensibly doing repairs.
The building was determined a total loss in the early morning hours after the fire consumed everything inside the facility and created a dangerous structural situation for passersby in the street it faced (East Olive), as well as First Bridgeport Banking Center on the corner, sitting adjacent to the club building.
But that wasn’t why federal and state agents arrived at Schauf’s home at about 6 a.m. on the morning of Nov. 8.
Instead, they took him in on a warrant issued after the Nov. 6 indictment was unsealed and available to the public, the latter part of that occurring later that afternoon.
A press release issued by the U.S. Attorney for the Southern District of Illinois, Stephen R. Wigginton, accompanied the availability of the indictment. The presser indicated that Schauf, 56, and a Vincennes man, Paul R. Kramer, 62 (who is not the mayor of Vincennes, as some media mistakenly had it), were arraigned on the morning of the 8th in Benton in indictments that Schauf “engaged in a scheme to defraud the City of Bridgeport by submitting false and fraudulent invoices, contracts, and bills for services and equipment, all from which he took a portion of money for his personal use.
“Paul Kramer is alleged to have made false statements to agents investigating the scheme.”
Stinging indictment
The indictment is more stinging than many media outlets have bothered to report, something that developed as a practice over the years and emboldened Schauf to conduct himself in the manner he became accustomed to without pesky media (with the keen exception of Disclosure) looking over his shoulder and examining his every corrupt move.
The indictment outlines that as a sitting mayor, Schauf is forbidden from being “in any manner financially interested directly in his own name or indirectly in the name of any other person, association, trust or corporation, in any contract or the performance of any work in the making or letting of which such officer may be called upon to act or vote.
“No such officer may represent, either as agent or otherwise, any person, association, trust or corporation, with respect to any application or bid for any contract or work in regard to which such officer may be called upon to vote. Nor may any such officer take or receive, or offer to take or receive, either directly or indirectly, any money or other thing of value as a gift or bribe or means of influencing his vote or action in his official character.”
This preface is important in that this is state law (Illinois Compiled Statutes 50 ILCS 105/3(a) in part), and sets the scene for just how serious these little “schemes” Schauf was alleged to have been conducting really were.
Description of the ‘scheme’
The feds described the alleged “schemes” in this way:
From in or around July 2008 and continuing in or around March 2011, Schauf devised a scheme to defraud Bridgeport as well as its residents by submitting false and fraudulent invoices, contracts and bills for services and equipment.
As part of the scheme, he would contact and agree with various businesses or individuals to provide equipment and/or services for the city. Many of these businesses and service providers were friends and/or relatives of Schauf’s.
As a central part of the scheme, federal paperwork shows, Schauf would submit invoices or contracts, or cause invoices and contracts to be submitted, to the city. Each of these would claim reimbursement or payment for equipment and/or services provided by businesses or individuals to the city. These invoices and contracts were often fraudulent in that they were prepared by Schauf or at his direction, sometimes without the knowledge of the business or individual who performed the work or service, or supplied the equipment.
They were designed in whole or part to mislead the city, its employees, elected officials and citizens of the true costs to the extent there were costs at all, federal paperwork reveals. These contracts and invoices, whether prepared in agreement with another or by Schauf individually, allowed Schauf, as mayor, to profit from the city’s overpayment for these equipment and services.
Schauf would then take any checks written for payment of services provided to the city, and would cash them, deposit them into his personal account, or use them as third-party payment on personal accounts of credit.
As part of the scheme and in furtherance of it, the paperwork shows, Schauf would pay the businesses or individuals that performed certain services for the city in an amount less than that which was invoiced to the city.
This prevented the city and its leaders, as well as individual businesses and payees, from knowing that the amount billed to the city exceeded the amount paid.
Furthermore, the paperwork shows, as an elected officer of the city, Schauf failed to disclose his financial interests in the business dealings of the city, upon which he could or did act in his official capacity.
Charged with three counts of Mail Fraud
The specific counts of the indictments are:
On or about August 14, 2009, Schauf, in executing the above-described scheme, mailed a City of Bridgeport check (No. 2027) to Chase Card Services.
While it’s not outlined in the indictment, the likelihood that this was Schauf’s personal Chase credit card is a good one.
Doing this constitutes Mail Fraud, which took the action out of the realm of state charges and into the realm of federal, as it passed through the U.S. Mail, even though the payment was made to a location in Palatine, Ill.
A second count of Mail Fraud came on or about March 31, 2010, when Schauf mailed a City of Bridgeport check (No. 11040) to AT&T Processing Center in Des Moines, Iowa, violating the same U.S. Code as the previous mailing.
A third and final Mail Fraud count came in on June 7, 2010, when Schauf mailed a City of Bridgeport check (No. 2114) to State Farm Bank in Columbus, Georgia.
Again, while the indictment doesn’t specify that these were Schauf’s personal accounts, the inference is there.
Fourth count brings in JP
Schauf’s fourth and final count on the indictment identifies his daughter Sheila’s babydaddy, JP Stevenson, as a named person in the scheme, albeit not charged.
In this Obstruction of Justice count, the documents show that Schauf “attempted to corruptly persuade an individual, ‘JP,’ by giving him directions on how to falsely answer and mislead agents of the FBI regarding fraudulent invoices submitted to the city of Bridgeport, with the intent to hinder, delay and prevent the communication to a law enforcement officer of the U.S. of information relating to the commission or possible commission of a federal offense.”
The offense was listed as “the investigation being conducted by the FBI into violations of mail fraud and fraud involving federal funds.”
Many residents of Bridgeport don’t understand that some grants are issued under federal programs; those funds are mixed into the city’s income when they are received, which is why a mayor or anyone else messing with city funds is subject to federal charges for doing so.
In this case, the city received substantial amounts of grant funds from federal entities for the new water plant which was under construction during the time frame listed in the indictment.
Kramer’s indictment
Under the same indictment, Paul Kramer, who is an associate of Schauf’s in Vincennes where Schauf owns yet another alcohol-serving establishment, is charged with Giving False Statements to Federal Officers.
This, the indictment alleges, occurred on or around August 5, 2011, by telephone from Vincennes, Ind. To an agent of the FBI, who was at the time in the Southern District of Illinois, “continuing and having an effect on a criminal investigation of Schauf in Lawrence County and elsewhere in the Southern District of Illinois.”
The paperwork shows that Kramer made statements he knew were materially false, fictitious and fraudulent, and representations in the matter, by telling Special Agents of the FBI during a phone interview in Vincennes that an invoice faxed by him to agents regarding the rental of a Case 580SM backhoe to Bridgeport was prepared by him (Kramer), by a person by the name of “C.S.” and that it was not prepared or given to him by Schauf.
What made these statements false were that Kramer knew he had obtained the invoice from Schauf.
Kramer is charged under a second count of False Statements to Federal Officers when on or around Aug. 12, 2011, in Vincennes, he told agents that he owned a backhoe that had been rented to Bridgeport.
Forfeiture: assets and liabilities
Interestingly, the feds have taken the additional step of Forfeiture Allegation.
At the end of the indictment, it lists “As a result of the scheme and violations described in Counts 1 through 3 of the indictment, Schauf shall forfeit to the U.S. any property, real or personal, which constitutes or is derived from proceeds traceable to the described scheme and violations.”
This might simply mean that any of the payments Schauf allegedly made to his credit cards or accounts out of money belonging to the city of Bridgeport would have to be paid back…or, it could mean that any gain Schauf made by making said alleged payments, regardless of the amount of the gain, should be paid back, all of it out of Schauf’s own pocket (“property, real or personal.”)
If somehow Schauf was able to fund a business for himself or one of his kids, such as his son Mark Schauf’s TCB Excavating or his daughter Alisha’s restaurant, “Blondie’s,” both in Bridgeport, through utilizing these funds, those businesses and any profit he realized from them would be forfeited to the government, just like former Gallatin County sheriff Raymond Martin’s house was when all was said and done after his dope/weapons/intimidation case in 2009-2011.
In fact, if any funds went to his home or property, that, too, can be called up in forfeiture.
Max’ impeccable resumé
The indictment was filed under seal on Nov. 6; however, there are unsubstantiated rumors that Schauf may have had a contact on or through the federal grand jury that tipped him off about it, which might have been what resulted in the fire on the 8th.
Federal grand jury pools can be taken from a very wide area and aren’t limited to within the county in which the federal courthouse sits (Franklin), so this is a possibility, given the reach Schauf has had in recent years, after his corrupt exploits were consistently overlooked by local media.
Overlooked by all except Disclosure were, in very small part:
Threats Schauf made to Bridgeport vendors carrying Disclosure in mid-2003;
Changing local ordinances that disallowed outside companies to collect trash in 2005, in order to have only city-operated trash collection; this resulted in a federal civil lawsuit in 2006, which Bridgeport lost;
Allowing his son, not a licensed contractor, to clean up trashed properties within city limits;
Using city property to construct water mains in 2009, during which the property was destroyed;
Harassing liquor store owner Jamie Brunson over employees in his store in 2009, and precluding him from being issued a city liquor license in 2010, which the liquor control commission had to step in and intervene, to the point that Brunson filed a civil lawsuit against the city earlier this year;
Creating problems with bids on the water treatment plant in 2010, causing delays and expense for the citizens of Bridgeport;
Targeting former city cop David Dooley, to the point that he unjustly fired Dooley in late 2010 and caused yet another civil suit to be filed earlier this year;
Manipulating issuances of different classes of liquor licenses in 2011 in order to keep one available for “Bev Preusz’” Red Hill club, even after the state was threatening it with shutdown for the “unstickered” machines irregularities as well as corporate paperwork fudging;
Multiple Open Meetings and Freedom of Information Act violations that were reported to outgoing state’s attorney Lisa Wade with nothing ever being done about it, these dating from 2004 to the present time.
The issue of the bond
Upon Schauf’s transport to Benton on the arraignment, he was detained long enough to be able to post an odd sort of bond to secure his release.
The bond was listed as an “unsecured bond,” worth $50,000; this differs from the other types of bond that can be posted on federal cases, including an “own recognizance bond” (where a person merely gives his word that he will appear, and if he does not, the amount is automatically assessed against him), or a “secured bond,” in which either cash or other property (a lien, mortgage or loan) is submitted to the court.
An “unsecured bond” is something in between: Schauf apparently had to show that he owned property or cash of the value commensurate with the bond, but didn’t have to sign it over to the federal court.
Reports that Schauf was going around scrounging up enough proof (liens, titles, deeds, equipment/vehicle registration) of property he owned on this day were made to Disclosure.
While this is an unusual type of bond, it actually serves another purpose: it proves to the federal court system what items of value Schauf is in possession of, all in advance of any disclosure of assets and liabilities, and kind of gives the feds a heads-up as to what they might be able to get from Schauf pending the outcome of the case.
Schauf was initially appointed federal public defender Melissa Day—also appointed to Raymond Martin’s 2009 case initially, until she saw the evidence against him, at which time she bailed—but a Missouri attorney, J. Martin Hadican, has entered an appearance as of Schauf’s release.
Who knew? A LOT of people, apparently
The arrest and charges were greeted by people in Bridgeport with complete skepticism on the day it was made public.
Unbelievably, many residents contacted Disclosure advising them that none of it was true; first, that the arrest had never happened, and second, that the charges Disclosure listed on the website against Schauf were false, despite the fact that Disclosure posted a link to the actual indictment.
When Disclosure went to get photos to accompany this article, on the afternoon the indictment was released, the hostility at city hall was palpable, with one of the city workers (tentatively identified as Vickie Shoulders), bursting out of the building and griping at publisher Jack Howser for taking photos of customers (which was not occurring; only photos of stationary objects were being taken, such as the photo of the sign on the front page of this article).
Howser burst in to city hall, asking to see police chief Scott Murray, and subsequently questioning Murray as to whether there was a problem he was aware of by Howser taking photos of a taxpayer-funded building.
There was not.
But the attitude is entirely indicative of the type of misguided support the minority of Bridgeport has of Schauf.
A limited number of misguided voters
In the last election (2009) of Schauf to the mayor’s office, with a pathetic 38 percent voter turnout within city limits, Schauf took a whopping 252 votes among a field of three; now-county board chairman Bill Gray took 184 votes, and former city council member George Zellars took 54 in the mayoral race.
As was noted in the follow-up article to the election that year, when it takes only 19.4 percent of a city’s population to elect a mayor, you know there are problems.
In a city the size of Bridgeport, pop. 1,874, 252 misguided people can quickly create the level of chaos that Schauf has done since his first election in 2001.
Schauf continues to serve as mayor, since he cannot be removed merely by indictment; instead, like Raymond Martin, he can only be removed after a felony conviction has been attained.
Given that the next election is in March 2013, and with the pace of federal cases, this one will still be dragging through the court system when the next election is well past.
Schauf had already signaled his intent to not run for a fourth term, and had reportedly tapped his pick for his replacement, councilman TJ McClellan, to run.
Now, however, with the level of complete hubris Schauf displays, it would surprise no one if he did run again, just because he can.
He wouldn’t be the first mayor in the corrupt state of Illinois to run for office while under indictment.
Hopefully, with everything that’s going on around Schauf, enough of the 19.4 percent will think twice before filling in that spot on the ballot.
Latest stupid move
In the latest news about the entire incident, the Saturday following Schauf’s arrest and charges, he was out at 4 p.m., Nov. 10, with city equipment, knocking down the front façade of the “veteran’s club.”
In the ensuing debacle that followed, Schauf’s people (including his son, the errant Mark) managed to damage a car belonging to a Mr. Lancaster that was parked across the street at an event; this damage came from falling pieces of the building.
“Fire line” tape had been put up around the building. Curious to see if the building had been released as a fire scene, Disclosure attempted to call first Bridgeport’s fire department, but that number was routed to Lawrence County dispatch.
There, Disclosure was told that Schauf had told them he’d been ordered to knock down the façade, as per his insurer (even though it’s not “his” building).
Dispatch also advised that they’d already been out to “take care of” Mr. Lancaster’s car.
Debris from the building had been transported out to Schauf’s country property to be disposed of.
A report of this was supposedly made to Occupational Safety and Health (OSHA) officials, as the building reportedly contained asbestos; and it was learned that Schauf had not been cleared to do any demolition of any sort to the building; he had reportedly lied to the sheriff’s department in order to do work on the building, although why is unknown at this time.
What will be done about this faux pas remains to be seen.