The former business manager for singer Alanis Morissette and other entertainers is expected to receive federal prison time Wednesday when he is sentenced for embezzling more than $7 million from his clients.
Jonathan Todd Schwartz, 47, of Playa Vista, pleaded guilty in February to federal wire and tax fraud charges for failing to disclose the embezzled funds to the Internal Revenue Service.
Schwartz faces a prison term of between four and six years, according to his plea agreement. However, the actual amount of time he will serve, if any, will be determined by the judge in Los Angeles federal court Wednesday afternoon.
Prosecutors are recommending a sentence of five years and three months, while the defense is asking U.S. District Judge Dolly Gee to hand Schwartz a year each of prison and home detention, plus 2,000 hours of community service.
As a result of the scheme, Schwartz acknowledges that he owes the IRS more than $1.7 million in federal income taxes.
Morissette is expected to make a victim impact statement to the court before Gee imposes sentence.
Schwartz was a member of GSO Business Management LLC, a Sherman Oaks- based business management firm that provides financial guidance to clients, including managing bank accounts, providing accounts payable services, and preparing short- and long-term budgets.
Both Morissette and his former employer have sued Schwartz, although he has settled with the star.
In a mea culpa penned for The Hollywood Reporter last month, Schwartz claimed he was a sports gambling addict whose judgment was clouded by drugs at the time of the embezzlement scheme. He acknowledged that between May 2010 and January 2014, he withdrew about $5 million belonging to Morissette without her knowledge or authorization.
Schwartz further admitted that he falsely labeled the unauthorized cash withdrawals as “sundry/personal expenses” on the accounting records maintained for the singer-songwriter.
When confronted about the missing funds, Schwartz stated that the money was an investment in illegal marijuana “grow” businesses, a statement he now admits was a lie.
In the plea agreement, Schwartz also admitted that he embezzled more than $1 million from another client — who is not identified in the document — and concealed the embezzlement by falsely coding the unauthorized cash withdrawals as money used for the client’s home renovations.
Schwartz further admitted that he embezzled $737,500 from yet another as- yet-unidentified client and forged that client’s signature on at least two cash receipts.
“Mr. Schwartz was hired to protect his clients’ money by managing it professionally, but instead misappropriated millions to enrich himself,” Deirdre Fike, the assistant director in charge of the FBI’s Los Angeles field office, said at the time of the guilty plea.
“This case should serve as a warning that there are serious consequences for those who abuse their positions of trust to embezzle funds,” she said.
While he pleaded guilty to filing a false tax return for the year 2012, Schwartz admitted that he did not report any of the roughly $7 million he obtained through his embezzlement scheme to the IRS.
