Ex-Hopkins official gets 1 1/2-year term

Administrator failed to pay taxes on money in billing-fraud scheme

`Motivated by greed'

Judge orders payment of $4,000 fine, 2 years of supervised release

November 13, 1999|By Eric Siegel | Eric Siegel,SUN STAFF

A former Johns Hopkins University administrator was sentenced yesterday to 18 months in federal prison for income tax evasion after failing to pay taxes on university money he received in a billing fraud and kickback scheme.

U.S. District Judge Benson E. Legg also sentenced Robert J. Schuerholz, 64, of Manor Glen Road in Baldwinto two years of supervised release and a $4,000 fine.

Schuerholz, Hopkins' former executive director of facilities and management, pleaded guilty in May to a single count of tax evasion for 1995, when he understated his income by $113,470 and failed to pay $31,772 in taxes.

But Schuerholz acknowledged at the time to failing to report $348,900 in income between 1992 and 1995.

Schuerholz received the money from a scheme in which a contracting firm owned by a cousin overbilled Hopkins for work Schuerholz approved, then wrote checks to shell companies set up by Schuerholz. He withdrew the money for personal expenses and investments.

In all, Schuerholz avoided paying $97,692 in federal income taxes he owed on the money.

Schuerholz was fired by Hopkins in 1997, when allegations of the kickback scheme surfaced in a civil lawsuit filed by a now-defunct contractor.

The sentence was the lowest possible under complex federal guidelines that called for a prison term of 18 to 24 months.

Legg rejected arguments by Schuerholz's lawyer, James P. Ulwick, to depart from the guidelines and give Schuerholz a lighter sentence.

Ulwick argued that Schuerholz deserved a lighter sentence because of his charity work, health problems and payment to the Internal Revenue Service for what he estimated he owed in back taxes, interest and penalties -- $140,000.

"It is unusual to have someone with Mr. Schuerholz's background sitting in the defendant's chair," Ulwick said. "It's a shame that he is."

Assistant U.S. Attorney Carmina S. Hughes countered that Schuerholz had made no effort to repay Hopkins, which she said was a victim of the scheme with the IRS, and said a prison term was needed to deter potential tax offenders.

"His crime was motivated by greed," Hughes said. "The public doesn't think Mr. Schuerholz should get off scot-free."

Now that the criminal case is complete, Hughes said, the IRS will calculate how much money Schuerholz owed.

In imposing the $4,000 fine, Legg said, "Mr. Schuerholz has plenty of money to pay a fine."

Ulwick agreed the fine was "appropriate," but said Hopkins has made demands for restitution that "exceed Schuerholz's net worth."

Schuerholz's net worth was not disclosed.

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