Here’s where to find FOX59 on Comcast’s Xfinity

Vigo County deputy, school transportation director arrested as part of federal investigation

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

TERRE HAUTE, Ind. — Federal investigators in Vigo County arrested two people in connection with an FBI investigation.

According to WTHI, Vigo County Deputy Frank Shahadey and Vigo County School Corporation Transportation Director Frank Fennell were taken into custody early Wednesday morning. Shahadey has served as the sheriff’s department liaison to the school district; Fennell is a special deputy with the department.

Wendy Osborne from the Federal Bureau of Investigation said the arrests were of an “investigative nature” and wouldn’t disclose if they were connected to a raid at the school district in June, according to the Tribune Star.

On June 8, federal investigators arrived at school buildings to serve search and seizure warrants. Financial records were taken from the school district’s administrative offices, transportation center and information technology center as part of the operation.

Court documents related to the arrests, which were unsealed Wednesday evening, reveal that the FBI believes Fennell and Shahadey concocted a scheme with one of the school corporation’s vendors to commit “theft or bribery concerning programs receiving federal funds.”

During an interview with investigators, an individual with the vendor in question said, beginning in early 2014 and continuing until or about October 2016, they  submitted inflated or false estimates and invoices for work at VCSC locations to Fennell. Fennell then awarded the work contract on VCSC’s behalf to the vendor. When the work was completed, Fennell submitted the inflated invoices to the VCSC business office. The business office then mailed payment taken from VCSC funds to the vendor. According to investigators, when the vendor received the payment, they deposited the check, withdrew cash and provided payments to Fennell and Shahadey.

According to records from the vendor, they performed 58 jobs for the school corporation between Jan 2014 and June 2016. There were few jobs in which kickbacks were not reportedly made and when they were made, they were never less than $500 for both Fennell and Shahadey.

During multiple interviews with investigators, Fennell denied receiving gifts and cash from any vendors.

According to WTHI, an FBI raid woke up Shahadey’s neighbors before 6 a.m. Wednesday. A neighbor told the TV station that officials in tactical gear entered an apartment and put people in handcuffs.

Vigo County Sheriff Greg Ewing said the FBI notified him about the arrests just moments before they happened. Shahadey has been placed on paid administrative leave.