Business owner gets second trip to prison
For those keeping score, it’s “the tax man”: 2, Richard D. Schultz: 0.
For the second time in 15 years, the Westerville resident will be going to prison, this time for 33 months, and paying a huge restitution, this time $1.64 million, for again cheating the Internal Revenue Service.
U.S. District Judge James L. Graham sentenced Schultz, 67, on Thursday. The judge had rejected the first plea deal negotiated between federal prosecutors and Schultz’s attorney on Oct. 20 because it called for only a year and a day in prison.
The extra one day would have made Schultz eligible for time off for good behavior. Defendants sentenced to a year in prison serve 365 days.
“It’s too lenient,” Graham said at the October hearing. He noted that the sentencing guidelines called for between 33 and 41 months in prison.
Schultz withdrew his guilty plea on Nov. 21 but two weeks later, after attorneys had reached a new agreement, he again pleaded guilty to willfully failing to turn over income, Social Security and Medicare taxes that he collected from his employees at his several debt-collection and consultant companies between April 2010 and January 2013. He also didn’t pay his employer contribution.
Graham allowed Schultz to voluntarily report to the prison he is assigned to by Jan. 30.
Schultz actually owes the IRS almost $3 million in restitution.
The IRS is still waiting for $1.26 million from a 2002 conviction that also cost Schultz 30 months in prison. In that case, Schultz lied about the amount when he sold his bill-collection business, National Revenue, in 1994 for $6.5 million. He actually was paid $11.3 million for it.
According to court records, Schultz and several codefendants made it seem as though his father was due half of the company stock based on how Schultz had set up the business in 1971. In what prosecutors called a sham lawsuit, Schultz’s father sued him and Schultz settled by “paying” his father $5 million. However, the money never left Richard Schultz’s control.
His co-defendants included lawyers who helped Schultz set up bogus businesses and deals that made it appear as though he had lost millions. They funneled the “lost” money through Canadian banks to offshore accounts in the Caribbean and Channel Islands off the coast of England.
The scam was uncovered during Schultz’s divorce, when his wife’s attorney suspected he had been hiding assets.
Schultz violated his supervised release from the 2002 case in 2005 and 2007 because he had not paid the $1.26 million. Each time cost him six months in prison.
Federal probation officials said Schultz did not report spending $4,000 at the Greenbrier luxury resort in West Virginia, and said he had paid dues to the New Albany Country Club.
Schultz cooperated with prosecutors in the 2002 case. Nine lawyers, accountants and businessmen from Columbus, Florida, Canada and England initially were implicated in the scheme.
Columbus lawyer Larry K. Carnahan was sent to prison for 27 months in June 2002 for helping Schultz hide $7.5 million from the IRS. He voluntarily gave up his law license and was fined $6,000. Schultz’s brother, Thomas D. Schultz of Columbus, was sentenced to two years in prison and fined $7,500 later that year for helping hide the money.
Jeremy A. Franks, a London attorney, pleaded guilty to the same offense and was sentenced in 2004 to five years on supervised release, 416 hours of community service and a $200,000 fine.
Attorney Warren A. Wilson III, who also was indicted in the case, killed himself on a Tampa Bay beach in 2002.