Six years in prison and $8.65 million in restitution was the harsh reckoning for former music industry business manager Jonathan Schwartz, who received his sentence Wednesday in Federal Court in Los Angeles for embezzling millions from clients including Alanis Morissette. Schwartz will report for his prison sentence on July 11.
Victims including Morissette and Schwartz’s former business partner Bernard Gudvi testified in favor of the harshest sentence possible, and were rewarded beyond expectations as Judge Dolly Gee exceeded the 63-month sentence requested by federal prosecutors. “In the past I’ve criticized the sentencing guidelines as draconian, but this is a rare instance in which I feel they’re not harsh enough,” Gee said before revealing Scwhartz’s fate.
It was in stark contrast to the one year and one day Schwartz’s team requested. Schwartz, 47, pled guilty in January to two federal counts: wire fraud and falsifying federal tax returns. In preemptively pleading guilty he waived the right to a grand jury, thus saving the government “a costly trial,” a factor Gee said she considered.
Morissette testified how for six years prior to being caught in early 2016 Schwartz systematically stole from her, filching in increments of anywhere from $10,000 to $120,000 at a time. She said he sought to cover his tracks by portraying the singer to close associates as a fiscally irresponsible freespender, building recording studios and buying houses against his advice. “I’d go on tours he recommended and they would lose money, but he’d still urge me to spend! Spend! Spend! He was creating an alibi from the start.” He even told people he withdrew money from her account so she could invest in an illegal marijuana operation, Morissette said.
Schwartz not only wreaked havoc on her family financially, but also took a psychological toll. “He not only stole $5 million in cash from me, he stole a dream,” Morissette said, detailing how Schwartz would cry when she questioned him too pointedly about her finances, “taking advantage of my empathic nature.” Morissette said he’d made it difficult for her to trust again. With lost interest, she said the $4.8 million he took came to more like $7.3 million.
Indeed, Gudvi said after a lifetime of hard work to build his Sherman Oaks-based GSO financial management firm, Schwartz not only damaged his firm but drew a cloud of disrepute over the entire management community, an argument Gee seemed to give credence.
Although attorney Nathan Hochman valiantly attempted to portray Schwartz as a gambling and substance addict whose judgment was overwhelmed by his dependence – a picture supported by a tearful Schwartz, who spoke in his own defense – Gee concluded it was “greed” and a desire to live beyond his means that motivated his actions. Citing the “sheer audaciousness” of the crime and the fact that he would not have been sorry had he not been caught, Gee said there was a need to send a strong signal to others who might contemplate such misbehavior.
Gudvi and Morissette both spoke of Schwartz’s infidelities to his wife, and lavish tropical vacations with a mistress and 19 pairs of Prada shoes as evidence that he was doing more than gambling, describing his behavior as “calculating and predatory.” In all, an independent GSO investigation revealed six victims from whom he stole $1.7 million in addition to Morissette, and the firm and its insurer made restitution with all of them.
Now Judge Gee says Schwartz must reimburse all involved: GSO, the federal government for taxes owed, and the insurance companies.
A tearful Schwartz said he was “humiliated” to stand an admitted criminal before those whose trust he violated and accepted full responsibility. Indeed, the courtroom of approximately 100 onlookers contained almost as many Schwartz supporters as detractors. US attorney Ranee Katzenstein, who was seated at the prosecutor’s table with an FBI agent at her side, pointed out that members of Schwartz’s family including his ex-wife had written letters in support of the victims.
Schwartz’s mother, who had been estranged before his problems, showed up to support him, as did his rabbi, Schlomo Bistritzky.
The hearing concluded with Katzenstein arguing that Schwartz’s $25,000 bond be revoked in favor of a $100,000 bond, but the judge didn’t seem to agree that he was a flight risk, instead calling for a $25,000 secured bond.
Onlookers could be heard grumbling that Schwartz was still enjoying a lavish lifestyle in nearby Agoura Hills, but that is soon to come to an end. Hochman requested Schwartz serve his time in a minimum security prison in Oregon, which the judge agreed to recommend. Once released, Schwartz will also serve 3 years on probation.