John Scholtz was charged with wire fraud, fraud against a local government receiving federal funds and money laundering
TRENTON -- A federal judge has ruled that John Scholtz, the former payroll company executive accused of defrauding clients out of millions of dollars, can sell his boat for $150,000 as part of efforts to repay those who lost money in the scheme.
U.S. District Judge Freda Wolfson last month authorized the sale of Scholtz's 1999 54-foot Sea Ray boat to a buyer, court documents show.
Scholtz, the former owner and president of Innovative Payroll Services, was charged in March with wire fraud, fraud against a local government receiving federal funds and money laundering.
Federal prosecutors identified more than 50 clients who collectively suffered losses of more than $5.6 million. The City of Trenton was hit the hardest. Between Aug. 15 and Jan. 15, IPS failed to pay $4,697,528 in payroll taxes to the Internal Revenue Service and the state that had been withheld from employees' paychecks.
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Authorities allege that Scholtz withdrew funds from a company trust account for his personal use, including a deposit on a $1.8 million house in Florida, credit card payments, investments and payments for cars, boats and airplanes.
The initial federal complaint charged that in one instance on Sept. 23, Trenton deposited $921,235 into the IPS account. On the same day, at the request of Scholtz, about $175,275 was transferred to an operating account, then a wire account. The following day, the money was wired to a yacht and ship services company in Florida.
It's not clear if the boat for sale was part of that transaction and Scholtz's public defender did not immediately respond to a request for comment.
The sale follows a February order issued by Wolfson to preserve assets that could be used to help satisfy any future judgments.
"Any proceeds from this sale shall be deposited in an account ... to pay outstanding withholdings, interest and penalties; administrative, civil and/or criminal forfeiture; and any other monetary penalty or restitution obligation which may be imposed against John Scholtz and his assets," the June 8 order reads.
In another court proceeding on June 9, U.S. Magistrate Judge Douglas Arpert granted a continuance to allow both sides more time to "discuss the evidence and possible plea negotiations." They now have until Sept. 15.
Cristina Rojas may be reached at crojas@njadvancemedia.com. Follow her on Twitter @CristinaRojasTT. Find NJ.com on Facebook.