The title of this post comes from the headline of the article a reader sent to me from The Columbus Dispatch.
According to the paper, Richard Schultz “operates several companies that offer debt counseling and other financial services.
But for at least the next three years, Internal Revenue Service agents will be overseeing the debt that Schultz owes — to the tax agency.
On Tuesday, Schultz, 67, of Westerville, pleaded guilty for the second time to willfully failing to turn over $687,000 in income, Social Security and Medicare taxes he collected from his employees. There’s also his employer’s contribution, $450,000, which he didn’t pay.”
The article went on to say, “The judge recalled that Schultz was convicted in 2002 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. He was sentenced to 30 months in prison 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 said.”
According to Assistant U.S. Attorney Dan Brown, Schultz still owns several companies that will help him pay the restitution and fines. “Those companies are still making money,” Brown said.
According to court documents, those companies include AmerAssist A/R Solutions, AmerAssist Service Company, Commercial Debt Counseling Corporation, Polaris Service Company, AmerAssist Turnaround Management Corporation, and Paymaster Services. – Source
But the Schultz story reads like a movie script. According to the Business Observer of Florida in 2004, “Schultz, a highly successful businessman from Columbus, Ohio, was never accused of bilking investors of tens or hundreds of millions of dollars, like executives of Tyco, Enron, WorldCom and the like.
Instead, he distinguished himself by enlisting a bevy of lawyers to aid him in a series of scams to hide millions of dollars of his own money from a court judgment. He then turned state’s evidence against members of his legal team, leading to their indictment and what even prosecutors acknowledge was a “very good deal” for himself.
So far, one attorney has pleaded guilty and been sentenced to federal prison for helping Schultz hide $9 million from creditors and the federal government. Three others and an accountant have pleaded guilty and are awaiting sentencing. A fifth attorney is awaiting trial in January. A sixth, Warren Wilson III of Palm Harbor, committed suicide the day after he was indicted. [The day after being indicted, the 50-year-old attorney sat by a tree overlooking Tampa Bay and committed suicide by shooting himself in the head with a 9-mm Smith & Wesson.]
A government source said the federal grand jury in Columbus continues to investigate and more indictments are possible this year, though whether other lawyers are under investigation isn’t known. The Schultz case is part of the federal government’s increased efforts, in light of recent corporate scandals, to go after the “gatekeepers,” the lawyers and accountants who advise executives.
“I think the message is clear,” said Gregory G. Lockhart, U.S. attorney for the Southern District of Ohio, where the case is being prosecuted. “There is a line between being an advocate for your client and giving advice for legitimate business purposes and you becoming aware of the fraudulent nature of the transaction, then crossing the line from being a counselor to being a conspirator.” – Source