Photo via Wikimedia Commons.
Alanis Morissette was smiling in this performance, but she probably wasn’t too happy to learn she was ripped-off for $4.8 millin. Photo via Wikimedia Commons.

Alanis Morissette had to swallow a jagged little financial pill after she learned her former business manager admitted in court papers filed Wednesday in Los Angeles that he embezzled more than $6.5 million from his clients.

Of that amount, about $4.8 million came from Morissette. The ex-business manager faces years in prison as he worked to accept a plea deal with federal prosecutors.

“Money managers have fiduciary and moral responsibilities to their clients that begin with preserving client assets and not using that money to line their own pockets,” U.S. Attorney Eileen M. Decker said.

“This defendant violated this basic principle, and then engaged in further criminal conduct by attempting to hide his ill-gotten gains from the Internal Revenue Service. Despite those efforts, however, the defendant will now face serious consequences for victimizing his clients and American taxpayers,” she said.

Jonathan Todd Schwartz, 48, who lives in Playa Vista but was living in Agoura Hills at the time of the offenses, faces federal wire and tax fraud charges for failing to disclose the embezzled funds to the Internal Revenue Service, according to the U.S. Attorney’s Office.

Schwartz is expected to make his initial appearance in Los Angeles federal court Feb. 1. Once he pleads guilty to the charges that have been filed in this case, Schwartz will face a possible maximum penalty of 23 years in federal prison.

While the plea agreement contemplates a sentence of about four to six years, the actual sentence will be determined by the judge that hears the case, the U.S. Attorney’s Office noted.

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, prosecutors said.

As part of his plea agreement, Schwartz admitted that he took clients’ money for himself and falsified account records to conceal the embezzlement of client funds.

Schwartz acknowledged that between May 2010 and January 2014, he withdrew about $4.8 million belonging to Morissette without her knowledge or authorization, according to the document.

Schwartz further admitted that he falsely labeled the unauthorized cash withdrawals as “sundry/personal expenses” on the accounting records maintained for the Canadian-American alternative rock singer and songwriter. “Jagged Little Pill” was a giant hit album for Morissette in 1995.

When confronted about the missing funds, Schwartz stated that the money was an investment in illegal marijuana “grow” businesses, a statement Schwartz has now admitted was false.

In the plea agreement, Schwartz also admits 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,” said Deirdre Fike, the assistant director in charge of the FBI’s Los Angeles field office.

“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 has agreed to plead guilty to filing a false tax return for the year 2012, Schwartz admitted in the plea agreement that he did not report any of the roughly $6.5 million he obtained through his embezzlement scheme to the IRS.

As a result of the entire scheme, Schwartz acknowledges that he owes the IRS more than $1.7 million in federal income taxes.

“Schwartz was caught with his hand in the proverbial cookie jar,” said Anthony J. Orlando, IRS Criminal Investigation acting special agent in charge.

“No matter what the source of income, all income is taxable,” he said. “The IRS works regularly with our law enforcement partners in cases like these to prevent other financial professionals from duping their clients.”

While the plea agreement contemplates a sentence of about four to six years, the actual sentence will be determined by the judge that hears the case, the U.S. Attorney’s Office noted.

–City News Service 

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