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UNITED STATES v. SCHWARTZ

May 17, 1994

UNITED STATES OF AMERICA
v.
STEVEN SCHWARTZ



The opinion of the court was delivered by: BY THE COURT; MARVIN KATZ

 AND NOW, this 17th day of May, 1994, following a hearing, the court makes the following findings of fact and conclusions of law.

 1. This court's judgment and commitment order of May 26, 1989 directed:

 
On Count 3 defendant is committed to the custody of the Attorney General or his duly authorized representative for imprisonment for a term of EIGHTEEN MONTHS.
 
On Count 2 defendant shall pay a fine to the United States of $ 10,000.00 (TEN THOUSAND DOLLARS). Sentence of imprisonment is suspended and defendant is placed on probation for a term of five years on the special conditions that he pay the fine, restitution to Philadelphia Nation Bank of $ 94,085.25 (NINETY-FOUR THOUSAND, EIGHTY-FIVE DOLLARS AND TWENTY-FIVE CENTS), the special assessment of $ 100.00 (ONE HUNDRED DOLLARS) on such terms as the probation office determines he is able and that the defendant shall make no direct contact with any witness or the family, associates or friends of any witness. *fn1"

 2. On March 15, 1994, upon petition from the United States Probation Office (the "Probation Office"), the court ordered a probation revocation hearing pursuant to Fed. R. Crim. P. 31.1 to determine whether Mr. Schwartz' conduct with regard to his financial condition and his efforts to satisfy his fine and restitution obligations violated his probation. A hearing was held April 6, 1994. At that hearing Mr. Schwartz elected to proceed pro se and the court appointed the Defender Association of Philadelphia, Federal Court Division, to act as stand-by counsel for Mr. Schwartz. After entertaining the parties' opening statements the court continued the hearing to May 17, 1994 to provide the defendant and the government the opportunity to refine their respective positions in order to foster (a) clear communication between Mr. Schwartz and the Probation Office, and (b) efficient presentation at the hearing scheduled for May 17, 1994. After the April 6, 1994 hearing, Mr. Schwartz retained Gavin Lentz, Esq. as counsel. Mr. Lentz entered his appearance on May 10, 1994 and represented Mr. Schwartz at the May 17, 1994 hearing.

 3. On April 7, 1994 the Probation Office dispatched a letter to Mr. Schwartz detailing the Probation Office's position with regard to Mr. Schwartz' ability to pay his fine and restitution obligations. That letter stated in pertinent part:

 
2. On or about June 11, 1993, you received notification from Prudential that you were to receive a civil judgment in the amount of $ 99,530.60. On or about June 28, 1993, Check No. 359090, in the amount of $ 99,530.60 was forwarded to you. On or about July 1, 1993, you endorsed said check. While you claim that Ms. Dorsey "liened" against this settlement in the amount of $ 60,000, this "lien" was an actual stipulation entered and signed by you and Ms. Dorsey [on] or about June 11, 1993. This "lien" in effect would be secondary to the judgment entered against you at your sentencing on May 26, 1989. In addition, you failed to notify the United States Probation Office on or about June 11, 1993, of your knowledge that you were to receive these funds. Your notification of July 22, 1993, was approximately 21 days after you endorsed and received the Prudential check and more than 30 days past the date in which you were notified of this settlement. This information was retrieved from the documentation that you drafted in the Prothonotary's office in the Montgomery County Courthouse.
 
3. On or about August 4, 1993, in the civil action of Schwartz et al v. Spatacco et al an agreement was reached in which you were a party to receiving $ 45,000.000 no later than August 10, 1993. Your signature, as well as, that of your mother's appear[s] on the order of the court in the Civil Division of the Philadelphia Court of Common Pleas, and is found under Dockets 90-10-4853, and 9008-0292. In addition, you failed to report this additional income on your monthly report.
 
As stated previously, we have determined that you have the ability to pay your fine and restitution in full based on this new financial information.

 The letter also instructed Mr. Schwartz to pay his fine and restitution obligations in full no later than 4:30 PM, Monday, May 2, 1994. Mr. Schwartz did not comply with this instruction.

 4. Currently, there is an outstanding balance due and owing for restitution in excess of $ 61,000 and a fine due and owing to the United States in the amount of $ 10,000.

 5. On or about June 28th 1993, Steven Schwartz received a check for $ 99,530.60 from Prudential Securities. Govt. Ex. 4. That check was endorsed by Mr. Schwartz and deposited in a bank account in the joint names of his mother, Ms. Ilene Schwartz, and his girlfriend, Ms. Peggy Dorsey (the "Meridian Joint Account"). Govt. Ex. 4. Mr. Schwartz is thirty-seven years old, lives with his mother and is "employed" by her. Mr. Schwartz' and his mother's finances and lives are intertwined. Mr. Schwartz had control over his mother's brokerage account into which some of the funds from the Prudential securities arbitration were diverted. Govt. Exs. 15c, 15d and 15e. Mr. Schwartz contrived with his mother and Ms. Dorsey to conceal his funds from the Prudential Securities arbitration award in the Meridian Joint Account in order to evade payment of his fine and restitution obligations. See United States v. McGill, 964 F.2d 222, 230 (3d Cir. 1992) (affirmative acts of evasion of payment of taxes include: placing assets in the name of others; dealing in currency; causing receipts to be paid through and in the name of others; and causing debts to be paid through and in the name of others).

 6. On or about June 11th 1993, Mr. Schwartz and Ms. Dorsey, contrived a scheme to evade payment of the fine and restitution by stipulating to the entry of judgment in favor of Ms. Dorsey and against Mr. Schwartz in the amount of $ 60,000 in the Montgomery ...


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