A federal judge issued two restraining orders last month
TRENTON -- The city secured a state court order Tuesday requiring its former payroll company and those who allegedly embezzled millions from it to obtain court approval before moving any money.
The order follows two others approved by a federal judge last month.
On Feb. 23, U.S. District Judge Freda Wolfson granted restraining orders against Innovative Payroll Services and its former CEO John Scholtz to preserve assets that could be used to help pay damages ordered in any future judgement.
The city claims that John Scholtz, with the help of his two daughters, allegedly embezzled upwards of $3 million that was owed for state and federal payroll taxes.
The city sought to fill in gaps in the federal orders should they expire or become null and void.
Mercer County Superior Court Judge Paul Innes on Tuesday accepted an agreement that prevents IPS and Scholtz from distributing any monies from accounts that Trenton had deposited money into before Feb. 1 or other IPS bank accounts that held money from transactions not in the ordinary course of business without prior court approval.
The order also prevents IPS and Scholtz from selling or transferring any assets without court approval.
Karen Rosano and Sandi Devlin, Scholtz's two daughters whom the city named in its lawsuit as defendants, are also barred from selling or transferring any assets without court approval.
"Nothing in this order shall be construed so as to prevent the United States of America from lawfully seizing, restraining or liquidating assets of IPS, John Scholtz, Karen Rosano, Sandi Devlin and others for the purpose of preserving and maintaining the value of such assets for the benefit of victims," the order reads.
The defendants have until April 11 to answer or plead to the city's lawsuit, according to the order.
Cristina Rojas may be reached at crojas@njadvancemedia.com. Follow her on Twitter @CristinaRojasTT. Find The Times of Trenton on Facebook.