Jersey Shore man admits to running multimillion-dollar fraud scheme

     Public domain image.

    Public domain image.

    Federal prosecutors say the owner and president of a former payroll processing company has admitted running a multimillion-dollar fraud scheme through the firm.

    John Scholtz pleaded guilty Monday to wire fraud and transacting in criminal proceeds. The 68-year-old Sea Isle City man faces up to 30 years in prison when he’s sentenced July 6. He will also be ordered to pay restitution and forfeit certain property at sentencing.

    Scholtz ran Innovative Payroll Services LLC. His clients included municipalities, educational institutions and small- to medium-sized, privately held companies.

    Clients would routinely deposit funds to pay for payroll taxes into an IPS bank account. Scholtz admitted that from February 2012 to January 2016, he withdrew or had staffers withdrew funds from that account.

    That caused many IPS clients to enter delinquent status with the IRS and setate and local taxing authorities. As clients’ tax deposit funds came in, IPS used such funds to pay other clients’ taxes owed for prior pay periods, as well as penalties and interest.

    At least 103 IPS clients lost more than $8.4 million worth of federal, state and local tax deposits that IPS failed to make, as well as more than $578,000 in associated penalties and interest. 

    Scholtz used the funds to pay operating expenses and his personal expenses, including payments for homes, cars, boats, airplanes and credit cards.

    Last June, a federal judge allowed Scholtz to sell a 54-foot Sea Ray boat for $150,000 to support his repayment effort. 

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    The Associated Press contributed to this report. 

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