The people of Atlantic City know philanthropist John Schultz. He served on the City Council for years, he owned several popular bars, and he still throws elaborate fund-raisers at his nine-story "palace" a block from the Boardwalk.
On Thursday, Schultz, 74, appeared in U.S. District Court in Camden, where he admitted that he and his associates in a rolling-chair business on the Boardwalk deliberately hid profits to avoid paying $119,800 in taxes.
It's not the first time Schultz has been in trouble. He was charged in a blackmail scheme and was placed in pretrial intervention in 2009.
In federal court Thursday, Schultz admitted he knew the rolling-chair business deliberately kept two sets of accounting books - one to keep track of the money it earned, another that hid profits at Royal Rolling Chairs Inc. The company provides shaded rides in carts pushed by a worker. Some customers ride between casinos. Others enjoy the view of the Atlantic Ocean from the expansive Boardwalk.
Schultz's attorney, Edwin Jacobs, said Thursday that he hoped that by having his client plead guilty instead of going to trial, Judge Joseph H. Rodriguez would consider probation instead of sending Schultz to prison. Schultz, he noted, has been active in charitable causes for years.
"The background is simply that John got involved in a business venture several years ago, and the partners, himself included, were not very careful in recording tax receipts and including them in company and personal tax returns," Jacobs said. "He's admitted his wrongdoing."
Schultz has agreed to pay what he owes, including interest, Jacobs said.
Federal prosectors describe a structured scam, alleging the tax evasion unfolded between 2006 to 2010, when they say Schultz, two partners - William Boland and another not named - and the bookkeeper, Abdus Mian, deliberately failed to report revenues.
Boland previously pleaded guilty to conspiracy and Mian pleaded guilty to making false statements to federal investigators. Boland is scheduled for sentencing Oct. 25. Mian was sentenced April 4 to a year of probation.
Schultz, who is scheduled for sentencing Jan. 9, faces a potential five years in prison and $250,000 fine.
"He's hopefully going to start with a clean slate and go back to the charitable ventures he's been engineering for the last 20, 25 years," Jacobs said of what the judge could consider in weighing possible probation.
Jacobs said Schultz has "pretty much unwound" himself from the rolling-chairs company.
In 2009, with Jacobs as his attorney, Schultz - then an Atlantic City councilman - avoided jail and conviction for his part in a blackmail case. He was accused of helping the council president at the time orchestrate a blackmail against another councilman who was lured into a motel and secretly taped having sex with a prostitute. Schultz, who served as a councilman for more than a decade, was allowed to enter a pretrial intervention program.
In the years that followed, Schultz left politics, but he remains well-known among the city's elite for his various contributions to Atlantic City. He officiated at the marriage of Mayor Don Guardian to Louis Fatato in 2014.
Schultz was the owner of Studio Six, one of Atlantic City's original gay bars, and was a creator of the Miss'd America Pageant, the drag spoof on the pageant, which will be Saturday night at the Borgata.
Schultz and partner Gary Hill formed the Schultz-Hill Foundation in 2002 to promote and support arts, history, and education in South Jersey. They are known for their galas at the 1928 nine-story medical building they restored on Pacific Avenue. They live in the penthouse, which is the top three floors, each 6,000 square feet.
Schultz bought a third of the Royal company, but one of the partners left and started a rival company, A.C. Rolling Chairs.
The rolling-chair business in the resort dates to the 19th century and has fallen on tough times as casinos have lost business and some closed. The Boardwalk has also seen the advent of electric trams.
On Thursday, Royal's fleet was operating on the Boardwalk, some with customers, others waiting along the rails. Many of the operators are new immigrants from Ghana, Haiti, and Bangladesh who rent the chairs for $25 a week.
One operator, a 73-year-old man from Liberia, said the cost of a ride ranges from $5 for up to five blocks, to $20 for 22 to 32 blocks. The tram is $2.25.