Former AC councilman gets prison term for income tax scam

Former Atlantic City Councilman John Schultz, a colorful businessman and philanthropist who once was accused in a scheme to blackmail a fellow councilman, was sentenced Monday to six months in prison and six months' house arrest in an income tax scam involving his Boardwalk rolling chair business.

Schultz, 74, tearfully apologized before he was sentenced by U.S. District Judge Joseph Rodriguez in Camden. He was also ordered to pay $31,100 in restitution and $3,000 in fines.

Defense attorney Edwin Jacobs urged the judge to consider imposing probation instead of sending Schultz to prison. Schultz could have faced up to five years in prison and a $250,000 fine.

"A just punishment is needed," the judge said.

At the sentencing hearing in Camden, Rodriguez acknowledged that Schultz had been active in charitable causes for years. Numerous letters were sent on his behalf seeking leniency, the judge said.

Schultz, the judge noted, has an extensive income and an 18,000-square-foot penthouse with a pool, theater and library and it "makes one wonder why there was a need to comment this offense … the word that crops up is greed."

Jacobs declined comment on whether the sentence will be appealed. Schultz also declined comment before reporting to the probation office to pay the fees imposed by the judge.

Schultz is well-known in Atlantic City where he served on Council for years and owns several popular bars. He is known for his elaborate fundraisers at his nine-story "palace" a block from the Boardwalk.

At his guilty plea to a one-count information, admitted he knew the rolling-chair business deliberately kept two sets of accounting books -- one to keep track of the money it actually 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.

Federal prosecutors described 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 the same conspiracy charge and is scheduled to be sentenced by Rodriguez on May 4., 2017. Mian, the bookkeeper for Royal Rolling Chairs, pleaded guilty to making false statements to federal investigators and was sentenced on April 4 to one year of probation.

Rodriguez also sentenced Schultz Monday to one year of supervised release – which includes the six months of home confinement. Schultz remained free Monday, pending a reporting date.

Schultz has been in legal trouble before. In 2009, when he was an Atlantic City councilman, he avoided conviction and jail for his part in a blackmail scheme. He was accused of helping the council president at the time orchestrate a blackmail against another councilman who was lured to a motel and secretly videotaped 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 remained 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.

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.