Matthew Schwartz, a Michigan lawyer and owner of the Legal Genius law firm, entered a guilty plea on charges of conspiring to defraud the IRS and stealing from an organization receiving federal funds on October 15th.
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Court documents show that from at least July of 2014 through April 2018 Schwartz worked with other conspirators to steal and illegally distribute Detroit Police Department traffic crash reports, many of which were marked as “unapproved” and were not publicly available.
According to the plea agreement, two co-conspirators received $5,000 to $7,500 each month in exchange for the delivery of the police reports to a company called the Accident Information Bureau. Schwartz is accused of buying the crash reports from the owner of the Accident Information Bureau and selling the reports to two people, both of which solicited crash victims for personal injury lawyers, chiropractors, healthcare professionals, and other businesses.
Schwartz initially lied telling IRS agents he received no compensation for the police reports deals, but he actually secured $7,500 to $10,000 each month by delivering the crash reports by email to the owner of USA Direct and the second person, along with 33% of the personal injury case referral fees, according to the agreement.
Schwartz took extreme precaution in hiding his activity from the IRS. It’s claimed that he disguised cuts payable by depositing business checks into his personal account, misrepresented payments as investments, and even went as far as filing a false and fraudulent Form 1040, claiming he ran a consulting business that proved to be fake. To reduce the paper trail, the owner of the Accident Information Bureau retrieved the cash payments for the reports, which totaled $10,000 per month, from a barbecue grill in Schwartz’s backyard, according to the plea agreement.
Schwartz is facing a maximum of five years for each count and a fine of $250,000 for each conspiracy offense. He also faces other monetary penalties, restitution and a period of supervised release. Schwartz’s agreement orders him to pay to the IRS and state taxing authorities the taxes, penalties, and interest he owes for the tax years 2014 through 2018, a number somewhere between $250,000 and $500,000.
A U.S District Court Judge scheduled Schwartz’s sentencing for Feb. 18, 2021. In the meantime, he will also have other matters to attend to as he is also accused of diverting Legal Genius investment funds into his personal bank account among other questionable client acquisition and business practices.
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