Niagara Gazette

Local News

January 11, 2011

Richard Muto will take federal plea

NIAGARA FALLS — A former Lewiston financial adviser is ready to plead guilty to federal income tax evasion and related charges.

Richard Muto, who already has served a state prison sentence for his role in an investment scam that cost some 200 Western New York investors more than $15 million, has agreed to a deal with federal prosecutors. Terms of the plea agreement have not yet been made public.

However, a speedy trial order filed by U.S. District Court Judge Richard Arcara after a mid-December status conference on the Muto case, indicates details of the deal are being finalized and sets a plea hearing for Jan. 24.

“At the status conference, counsel for the defendant represented to the court that the defendant intends to change his plea to guilty, and, thus, that a date for trial (is) unnecessary,” Arcara wrote.

Muto was first indicted by a federal grand jury in December 2005 on charges of attempting to obstruct the administration of the internal revenue laws and filing a false federal income tax return for 1998. He was scheduled to stand trial in August, but the trial was delayed because the one-time financial adviser underwent emergency back surgery.

Two of his fraud victims, Bob and Helen Schimschack, were pleased with the word of Muto’s intention to plead guilty to the federal charges.

“It’s been a long road,” Bob Schimschack said Tuesday. “The man really made the state look like fools, but the feds, they’ve really worked hard on this and they’ve done the best they can.”

Muto served four years in state prison on a two- to six-year sentence handed down after he pleaded guilty in New York State Supreme Court to charges of fourth-degree grand larceny and scheme to defraud. The plea was part of a deal with prosecutors from the New York Attorney General’s office.

“I just want to hear him say, ‘guilty,’ ” Helen Schimschack said.

From 1996 to late 2001, approximately 200 Western New Yorkers lost more than $15 million through the purchase of promissory notes, sold by Muto, in a company called Sweetwater Development Corp. Most of the victims were seniors who invested their life savings in the notes.

Federal prosecutors have accused Muto of being involved in a tax fraud scheme that cost the U.S. Treasury at least $1.9 million in taxes.

The federal indictment claims Muto promoted and sold schemes that “fraudulently reduced or eliminated clients’ federal income tax liabilities.” Prosecutors also charge that Muto personally used the scheme to fraudulently reduce his own income tax liability.

Each count of the indictment carries a maximum penalty of three years imprisonment and a $250,000 fine. In return for his plea, Muto is expected to receive less than the maximum sentence.

“We’re not getting anything out of this, what’s gone is gone, but I’d like to see him put away for three years,” Bob Schimschack said.

Muto is currently free after posting a $250,000 bail bond.

Contact reporter Rick Pfeiffer

at 282-2311, ext. 2252.

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