Timothy M. O’Shea, Acting United States Attorney for the Western District of Wisconsin, has announced that Fredericka DeCoteau, 63, of Cloquet, Minn., and Edith Schmuck, 77, of Rice Lake, Wis., have been sentenced in federal court in Madison, Wis., for theft of federal program funds.

U.S. District Judge William M. Conley sentenced DeCoteau to two years in prison, and Schmuck to one year and one day in prison. Judge Conley also ordered the defendants to jointly pay restitution of $777,283. Both defendants were ordered to report to the Bureau of Prisons on Dec. 29 to begin their sentences.

DeCoteau and Schmuck pleaded guilty to one count of theft of federal funds on July 15 and June 24, 2021, respectively. They worked at Ain Dah Ing (ADI) which has operated as a non-profit halfway house in Spooner, Wis., since 1971. DeCoteau worked as the executive director at ADI from 2002 to 2017. Schmuck worked as the bookkeeper from 1990 to 2017. They were fired after the thefts were discovered.

ADI offered mental health and alcohol and substance abuse services to Native Americans from Michigan, Minnesota and Wisconsin tribes. ADI’s services included a 90-day program at its 15-bed community-based residential facility in Spooner. ADI’s funding came from a federal commercial contract with the U.S. Department of Health and Human Services, Public Health Service, Indian Health Services Division.

Both DeCoteau and Schmuck pleaded guilty to embezzling a total of $777,283 from ADI by paying themselves unauthorized bonuses via payroll checks that were signed using a rubber signature stamp of the ADI treasurer. The embezzlement lasted from 2007 to 2017.

At the sentencing, Judge Conley noted that DeCoteau and Schmuck stole over 67 percent of the total funds intended for programming at ADI, and that they gambled away most of this money at local Indian casinos. Conley explained that the defendants violated the trust of the ADI Board of Directors and took advantage of vulnerable people with addictions. In imposing sentence, Judge Conley made clear to both defendants that the gravity of the offense, coupled with the long-term nature of the embezzlement, mandated that they serve prison time despite their claims of being addicted to gambling.

The charges against DeCoteau and Schmuck were the result of an investigation conducted by the U.S. Department of Health and Human Services, Office of Inspector General and the Spooner Police Department. Assistant U.S. Attorney Daniel Graber handled the prosecution.

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