CAMDEN, N.J. (AP) — John Schultz once avoided prison in a sex blackmail case that involved a secretly recorded video, a Baptist minister and a hooker in a motel room.
But the former Atlantic City Councilman is headed to prison due in part to another secret recording: one made by a fellow co-owner of a Boardwalk rolling chair company that kept two sets of books to hide money from the Internal Revenue Service.
The 74-year-old Schultz was sentenced Monday to six months in prison followed by six months of house arrest for conspiring to defraud the IRS of nearly $120,000 over three years.
Schultz, who was granted pretrial intervention in the 2006 sex video case, admitted wrongdoing in the tax case in federal court in Camden.
“It’s my own fault,” Schultz said. “In being in business all these years, I should have known better.”
Schultz also was fined $3,000 and must pay $31,110 in restitution to the IRS as his portion of the tax loss to the government.
The case involved a business that operated rolling chairs, the ubiquitous wicker and fabric chairs mounted on wheeled platforms on which operators push tourists up and down the Boardwalk.
Last fall Schultz pleaded guilty to conspiring to defraud the United States in connection with a rolling chair business he and two others operated. The scheme involved removing cash from the business and keeping a phony set of books to show the IRS and a real set that documented how much money the business actually took in.
Schultz was one of several Atlantic City councilmen involved in a bizarre political payback scheme in 2006 in which a fellow Atlantic City councilman and Baptist minister, Eugene Robinson, was lured to a motel and filmed having sex with a prostitute in an attempt to force Robinson to resign. Robinson instead went to authorities.
Schultz was charged with conspiracy, accused of putting former Council President Craig Callaway, a fellow defendant, in touch with a video expert.
Over the objections of the state attorney general’s office, Schultz was admitted into a pretrial intervention program and the charge was expunged from his record.
The judge didn’t mention the previous case or Schultz’s pretrial intervention in calculating a sentence in the current case. But the judge did reveal that it was another secret recording that helped undo Schultz in the tax conspiracy matter.
The judge said a co-defendant, who is awaiting sentencing, cooperated with the FBI and IRS and secretly recorded Schultz, providing taped evidence that would have been used against him at trial had Schultz not pleaded guilty.
Schultz served on the City Council from 1994 to 2001 and from 2006 to 2009.
The judge also took note of dozens of letters of support sent to the court on Schultz’s behalf from supporters and beneficiaries of his charitable and humanitarian activities over the decades. Schultz founded the South Jersey AIDS Alliance, and his Schultz-Hill Foundation, with his partner Gary Hill, has provided money to numerous groups, agencies and individuals.
“Mr. Schultz was active in the 1980s, when one barely knew what AIDS was,” his attorney, Ed Jacobs, told the judge. “He did only good, even paying for funerals” of people who died from the disease.
The judge acknowledged Schultz’s good deeds but said Schultz pleaded guilty to a serious crime, and he expressed bewilderment that someone who lives in an 18,500-square-foot penthouse would cheat on his taxes.
The federal government calculated Schultz’s net worth at $2 million.
“One word that crops up is the word ‘greed,'” the judge said. “One wonders why there was a need for this offense.”
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