South Jersey man charged with $5.6M payroll theft
John Scholtz liked to buy fancy things: a $1.8 million waterfront mansion, a yacht, expensive cars, and airplanes, according to a criminal complaint filed in U.S. District Court on Wednesday.
John Scholtz liked to buy fancy things: a $1.8 million waterfront mansion, a yacht, expensive cars, and airplanes, according to a criminal complaint filed in U.S. District Court on Wednesday.
Scholtz, 67, of Winslow, has admitted he was able to purchase these items by taking millions of dollars from dozens of clients - including Trenton - that trusted his company to handle payroll services, his attorney said.
"He is accepting responsibility for his wrongdoing, and he is committed to making restitution," said his Center City attorney, Lisa Mathewson.
On Wednesday, Scholtz went before U.S. Magistrate Judge Douglas E. Arpert in Trenton for his first appearance on fraud and related charges outlined in a federal criminal complaint.
Scholtz, part-owner and former president of Innovative Payroll Services L.L.C. (IPS), based in West Berlin and with offices in Florida, was released on his own recognizance.
Authorities allege that since at least June 2015, Scholtz initiated a series of wire transfers to move $5.6 million from 50 clients, which in addition to Trenton included municipalities, educational institutions, and small and medium-size businesses.
Scholtz could not be reached for comment. Trenton's public information officer, Michael Walker, said Wednesday that the city does not comment on pending legal matters.
According to the IPS website, the company provided payroll services that eliminated "the risk of human error in preparing, calculating, filing and storing manual time cards."
Mathewson said the company is no longer operating. The attorney said Scholtz agreed this year to freeze all assets that could be liquidated for restitution.
According to the criminal complaint, clients put money for payroll taxes into an account controlled by IPS, which was to pay the taxes. Each payroll period, IPS - which employed about 10 people - gave clients a payroll summary, including taxes owed.
Trenton used IPS for payroll services from 2009 through January 2016.
Last June, Scholtz allegedly moved $380,000 that had been set aside for taxes into a personal account, and then to a third-party account to put a down payment on a $1.8 million mansion in Clearwater, Fla., that he bought with his wife, according to public records.
Before buying the home, Scholtz spent most of his time in New Jersey. In 2015, he started spending the majority of his time in Florida while maintaining frequent contact with those in the New Jersey office, according to the criminal complaint.
Scholtz withdrew or directed others to withdraw tax deposits "for his own personal use, including a deposit on a house, credit card payments, investments in other businesses, and payments for cars, boats, and airplanes," the complaint says.
The criminal complaint charges Scholtz with wire fraud, fraud against a local government receiving federal funds, and money laundering. Although Scholtz was permitted to remain free, bail was set at $500,000, which would have to be paid if Scholtz violates conditions of his release, which include travel restrictions.
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