General Counsel of Northeast Ohio Regional Sewer District Pleads Guilty to Bribery, Embezzlement, and Tax Charges

May 19, 2010 - Steven M. Dettelbach, United States Attorney for the Northern District of Ohio, C. Frank Figliuzzi, Special Agent in Charge of the Cleveland Division of the Federal Bureau of Investigation and Jose A. Gonzalez, Special Agent in Charge of the Internal Revenue Service, Cincinnati Field Office, announced today that William B. Schatz, age 64, of Moreland Hills, Ohio, pleaded guilty to one count of Bribery in Federally Funded Programs, one count of Theft and Embezzlement in Federally Funded Programs, and five counts of Filing False Tax Returns before the Honorable Dan A. Polster.

William B. Schatz was the General Counsel of the Northeast Ohio Regional Sewer District (NEORSD) from 1979 until his retirement in August 2007. During his tenure, the NEORSD had major sewage tunnel contracts including the Mill Creek Tunnel Contract, Phases 2 and 3. Schatz admitted that from in or about 2000, through on or about April 26, 2007, he corruptly solicited and accepted approximately $682,130.00, from a contractor, identified as Contractor No. 1, who was part of a Joint Venture working on the Mill Creek Tunnel Contracts. Schatz received the payments through an intermediary company, identified as Client Company No. 1.

Schatz also admitted that from in or about 2002, through on or about December 15, 2005, he embezzled, stole, and obtained by fraud, NEORSD property by, among other things, depositing checks made payable to NEORSD (including insurance premium returns and NEORSD tenant payments) totaling approximately $166,940.00 into accounts he controlled using a fraudulent deposit stamp he had obtained for this purpose.

Schatz further admitted that he failed to report income from his private law practice, as well as his bribery and embezzlement income, on his Form1040, U.S. Individual Income Tax Returns in the amount of $148,213.00 for the calendar year 2003; $219,678.00 for the calendar year 2004; $185,527 for the calendar year 2005; $179,929.00 for the calendar year 2006; and $88,975.00 for the calendar year 2007.

U.S. Attorney Dettelbach stated, “When anyone abuses their position and violates the public trust, it is a very serious matter. When an attorney who is entrusted to uphold the rule of law does so, it calls for vigorous action.”

“Today’s guilty plea highlights the strength of the federal government’s firm resolve to combat corruption in northern Ohio, and the consequences facing public officials who think they can conduct business as usual,” said Special Agent in Charge Figliuzzi.

Special Agent in Charge Gonzalez remarked that, "Honest and law abiding citizens are fed up with the likes of those in the position of public trust who use deceit and fraud to line their pockets with other people’s money as well as skirt their tax obligations."

The defendant’s sentence will be determined by the Court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.

This case is being prosecuted by Assistant United States Attorneys Justin J. Roberts and Daniel J. Riedl, following an investigation by the Cleveland offices of the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation Division.