Ex-Controller Pleads Not Guilty to Grand Theft in Embezzling Case

When the Fletcher Oil and Refinery Co. in Carson discovered that $12,422 had been misappropriated, the company fired its controller, Curtis E. Schroeder, but did not press criminal charges.

After all, more than $7,000 of the money had gone to USC, Schroeder’s alma mater, and he agreed to pay it all back, a company attorney said.

“At the time, it could be construed that he was just overzealous,” Fletcher Vice President Michael Leavitt said. “The biggest amounts went to USC--he wasn’t taking it for himself.”

But when the company discovered that another $598,709 was missing, it called in Los Angeles County sheriff’s detectives. Schroeder, 29, who had taken an accounting position in the USC Athletic Department, was charged with grand theft earlier this month.

Theft Charges Denied

Schroeder declined to comment except to deny the grand theft charge. He pleaded not guilty at his arraignment Aug. 7 after turning himself in to the Sheriff’s Department the day before.

Theodore Cohen, a lawyer defending Schroeder in the criminal case, said his client has been selling assets and has already repaid Fletcher Oil more than $300,000. He denied an investigator’s assertion that Schroeder spent most of the money on himself.

“I’m trying to find out why it happened. I don’t think there’s any dispute about what happened,” said Cohen, adding that Schroeder is undergoing psychiatric tests.

But in a response to the company’s lawsuit, another attorney for Schroeder, Scott J. Spolin, said Schroeder denies taking any money from Fletcher and says he does not owe the company any money. Spolin did not return phone calls.

The lawsuit, filed in June in Los Angeles Superior Court, seeks repayment of the $598,709 plus $1 million in punitive damages.

Sheriff’s Detective Nealette Rucker said Schroeder admitted embezzling the money and cooperated with investigators. The embezzlement “was a challenge to him. He got really bored at Fletcher and it was like a game,” she said.

Bad Marriage Blamed

“His statements were basically that he just went through a bad marriage and he was trying to prove that he could make a large amount of money on his own.”

Rucker said Schroeder told her his ex-wife’s parents had helped him financially while he was in college and had helped buy the couple a home.

According to Rucker, Fletcher Oil Co. attorney Einar Johnson and Deputy Dist. Atty. Robert Schuit, Schroeder allegedly set up bank accounts using the names of companies with which Fletcher did business. Schroeder allegedly wrote checks that were recorded as payments to Fletcher’s creditors, but were deposited in the accounts that he controlled, officials said.

When payments had to be approved by another company official, Schroeder allegedly falsified supporting documents, Johnson said. An internal audit eventually showed that too many payments were being made.

Schroeder also allegedly sold the company gasoline “lead rights” that never existed, Johnson said. Refiners need lead rights to make leaded gasoline, which is considered harmful to the environment.

“Had they been reported to the Environmental Protection Agency, there could have been some problems, but Schroeder managed to deep-six the documents,” he added.

Asked how the thefts went unnoticed for so long, Fletcher Vice President Leavitt said: “It’s a large sum of money, but large sums go through the company, so it’s hard to notice it.” The company does about $200 million in sales a year and has about 140 employees, he said.

Any Company’s Vulnerable

Schroeder was responsible for paying the bills and balancing the books. “That’s the problem in a situation like this,” Leavitt said. “He makes the controls and if you don’t have a responsible person in that position, then it opens it up to this kind of problem. Any company would be vulnerable in that situation.”

Schroeder had been considered a good employee until the initial discovery in May that $12,422 had been misappropriated, Leavitt added. He described Schroeder as smart, energetic and likable.

Company officials were surprised to learn later that so much more money had been taken, especially since Schroeder seemed sincerely sorry when he admitted--according to Johnson--that he had misappropriated the $12,422 by allegedly making unauthorized contributions to USC and allegedly falsifying vouchers to obtain reimbursement for unauthorized expenses such as car repairs, company officials said.

Johnson said Schroeder assured company officials that no more than $12,422 had been taken and said Schroeder repaid most of it before he left the company. About $7,000 of that money went to USC organizations and payment for fund-raising dinners, athletic tickets, USC-sponsored seminars and golf outings, according to company officials and court records. Schroeder allegedly enrolled and paid for Fletcher officials to attend seminars and dinners at USC, but the employees never knew about the events, Johnson said.

“This guy’s real ‘rah, rah USC,’ ” he said.

Unaware of Investigation

The university was unaware that Schroeder was under investigation or of the circumstances surrounding his forced resignation from Fletcher when he was hired at USC July 28, said university counsel Rich Hutchinson, who learned of the grand theft charge last week from a reporter.

Schroeder, who graduated from USC in 1979 with a bachelor’s degree in business, asked for and was given a leave of absence Aug. 18, citing personal, legal reasons, Hutchinson said.

USC does not give out information about donors except to publish a yearly “honor roll” of contributors of more than $50. Hutchinson said he does not believe the 1986-87 list has been published yet, but that Schroeder’s name was on the 1985-86 list.

After the initial theft discovery, Fletcher conducted an investigation and an assistant controller found in May that $598,709 had been stolen between July, 1986 and January, 1987, officials said. Fletcher’s insurance company has repaid the company $419,000 and is expected to pay the rest once Schroeder reimburses the insurer, Johnson said.

The Sheriff’s Department, the district attorney’s office and Johnson said that Schroeder spent most of the $598,709 on himself. Johnson said $130,000 has been found in a credit union and has been frozen by authorities.

“It appeared to us he was trying to run in higher circles and he allegedly was trying to buy his way--with Fletcher money--into these (USC) organizations,” Johnson said.

Detective Rucker said Schroeder told her he used the money to make investments, remodel his condominium and travel to France. But, she added, “It’s really not important what he did with the money.”

Cohen said his client was not living the high life. “I don’t think he bought anything,” he said. “I’ll tell you the truth, I think he gave money for scholarships” and to help his mother.

“It’s not like he tried to hide it. It’s not like somebody took the money and tried to cover his tracks,” Cohen said, adding that everything was done “haphazardly--almost like he had a wish to get caught.”

If convicted, Schroeder could face up to five years in prison and a $10,000 fine. He was released on his own recognizance and faces a preliminary hearing Oct. 29.