TERRE HAUTE, Ind. (WTHI) - Court documents online show the Vigo County School Corporation has filed a civil lawsuit in Vigo Superior Court 2 over a kickback scheme involving two former school employees.
News 10 first learned of a possible lawsuit Thursday. The newsroom recieved a copy of the school board meeting agenda for Monday, April 9. A topic on the agenda was dicussion of filing a lawsuit against Frank Shahadey, Paula Shahadey, Franklin Fennell, Michael Pick, and M & P Properties Group, LLC.
It stated school corporation legal counsel, Jonathan Mayes, has recommended the school corporation seek legal recourse. It states that recourse includes, but is not limited to "Filing a civil lawsuit against Frank Shahadey, Paula Shahadey, Franklin Fennell, Michael Pick, and M & P Properties Group, LLC to recover damages caused by the conspiracy that was outlined in the federal indictments against Frank Shahadey and Franklin Fennell."
On Friday, News 10 uncovered online records showing a Civil Tort complaint was filed on Februrary 22, 2018 by the Vigo County School Corporation. There's a Diclosure Notice within those records that was filed on Friday. It states the Superior Court 2 Judge, Lakshmi Reddy, was at a dinner table with Paula Shahadey recently.
"There was no mention of this case nor was the undersigned Judge aware that Ms. Shahadey was a litigant in a case pending before this Court. No ex parte communications occurred. The Court does not believe that this will affect or influence the Undersigned Judge’s decisions in any future matters," Reddy wrote in the document. "If either party believes that this social encounter has been prejudicial and that it will impact future decisions, they should file a Motion for Change of Judge and the Court will grant the request made by either party. lf neither party files a Motion for Change of Judge on this basis, a change of judge cannot be granted at a later time unless the request complies with Rule 76 of the Indiana Rules of Trial Procedure."
The school corporation hopes to recoup money lost in the scheme through this lawsuit.
Fennell and Shahadey were part of a kickback scheme involving the school corporation, in which they took tens of thousands of dollars from the school corporation. That scheme involved overestimated invoices from Pick's business.
In October of 2017 a federal judge sentenced Shahadey to 16 months in prison and two years of supervised released. At the time of sentencing, he had already served 11 months. In court, Shahadey stated the kickback scheme was Fennell's idea.
In December of 2017, federal jury found Fennell, former Facilities Director of the Vigo County School Corporation, guilty on 12 charges he was facing. Those charges break down to nine counts of wire fraud, two counts of lying to federal investigators, and one count of stealing government funds.
A judge is set to sentence Fennell on April 19th in Indianapolis. He faces 33 to 37 months in prison.