Peninsula man gets federal prison for tax fraud

Defendant offered a tearful apology

SAN FRANCISCO >> A federal judge handed down a yearlong federal prison term for a South San Francisco man convicted of tax fraud for concealing around $400,000 he made during a scheme he and a fellow prisoner hatched while he was serving time for a previous fraud conviction.

Robert Stein, also known as Mikhail Solovey and Michael Swarovski, 56, pleaded guilty last year and agreed to provide information about the scheme to prosecutors, which the assistant U.S. attorney commended him for at his Friday morning sentencing. Stein’s partner in the prison fraud scheme died before prosecutors could charge them in that case, so he avoided potentially more serious charges.

At Friday’s hearing, U.S. District Judge Susan Illston said she was sympathetic to Stein’s story — his son was in a serious car wreck and he lost his mother while in prison — but said his history of fraud was so vast it warranted incarceration.

“I cannot overlook the seriousness of everything that brings Mr. Stein to this court,” Illston said.

Prosecutors say Stein and his cohort, a man known in court records only by his initials, SZ, misled investors to the tune of $2,336,681. Stein received $416,564 of this and failed to report it to the IRS, authorities said.

Stein apologized in court, becoming emotional as he talked of his family, and praising the prosecutor, assistant U.S. Attorney Benjamin Kinglsey, for being a “great example of how a prosecutor should represent law and justice.”

Stein’s attorney, Ted Cassman, said his client’s “fatal flaw” was believing that everything would work out in the end. He also suggested the fraud was committed for altruistic reasons, at least in Stein’s mind.

“Everything he does is well-intended. It’s for other people,” Cassman said. “I think his fatal flaw is his enthusiasm, his exuberant optimism … that causes him to believe he can do everything for everybody.”

Kingsley, who requested the yearlong sentence, said Stein’s acceptance of responsibility was “genuine and heartfelt.” But he added he was unsure of his motives for confessing and pleading guilty.

“I don’t know if Mr. Stein is a totally reformed person … versus being a savvy man who understands how the system works and has done the right thing now because he knows the risk if he doesn’t do those things,” Kingsley said.

Stein has until April 26 to report to federal prison. Illston recommended he be housed in a facility relatively close to the Bay Area.