Judge doesn’t trust tax cheat, throws out plea deal
The judge wasn’t going to be bamboozled by Richard D. Schultz. One year and a day in federal prison just wasn’t enough.
That’s the punishment prosecutors and the defense agreed to for the 67-yearold Westerville man, who was in court again Friday for cheating the tax man.
“It’s too lenient,” U.S. District Judge James L. Graham said at Schultz’s sentencing hearing, noting that Schultz likely would do about 10 months, though recommended sentencing guidelines called for
between 33 and 41 months.
Schultz, who is free on bond, pleaded guilty in February to collecting $687,000 for taxes from employees at his several debt-collection and consultant businesses, then keeping the money.
Besides serving the year and a day in prison, under the plea deal Schultz would have to pay the Internal Revenue Service $1.4 million. That would include the tax collected from employees, almost $451,000 in employer tax contributions that he didn’t make, and other restitution.
The prison sentence proposed in the agreement would allow Schultz to do the “right thing” and repay the IRS, Assistant U.S. Attorney Dan Brown told Graham.
The IRS signed off on the sentence.
But Graham recalled a 2002 case in which Schultz was convicted of lying about selling his bill-collection business, National Revenue, for only $6.5 million in 1994, when he actually made $11.3 million on the deal. The disparity was discovered after his wife’s divorce attorney figured he was hiding assets.
Schultz was sentenced to 30 months in prison in the 2002 case and ordered to pay the IRS $1.26 million. He was sentenced to another six months in prison in 2005 and again in 2007 when he still hadn’t paid the $1.26 million.
“He didn’t keep his promise then, so why should we trust him this time?” Graham asked the attorneys. Schultz stood quietly next to defense attorney Terrence Grady.
Grady said the proposed sentence would enable Schultz to get out of prison in time to pay what he owes. “He’s 67,” Grady said. “So he could cheat people for another 20 years?” Graham said. “This man is a crook, always has been a crook.”
The judge rejected the plea deal.
Grady said Schultz would withdraw his guilty plea. Graham said the case would be scheduled for trial.
Asked after Friday’s hearing if he’d continue negotiations with prosecutors, Grady said, “We’ve been negotiating since before February. I don’t know.”