COLUMBUS -- Richard Roy Kennedy, age 51, of Toronto, Canada, pled guilty in United States District Court today to conspiring to defraud the United States and others by committing wire fraud and tax fraud. Kennedy faces up to five years in prison and a $250,000 fine in addition to paying restitution to victims of the wire fraud scheme. A Grand Jury had previously indicted Kennedy in a 32-count indictment charging conspiracy, wire and mail fraud, international money laundering, tax fraud and obstruction of justice. In exchange for his guilty plea to the conspiracy charge, the government agreed to dismiss the 32-count indictment when Kennedy is sentenced.

Gregory G. Lockhart, United States Attorney for the Southern District of Ohio, announced the guilty plea in conjunction with Cromwell A. Handy, Special Agent in Charge, Internal Revenue Service Criminal Investigation Division, and Elissa A. Brown, Special Agent in Charge, United States Customs Service, Office of Investigations.

Before United States District Judge Algenon L. Marbley today, Kennedy admitted to voluntarily joining a conspiracy in 1994 with Richard D. Schultz, of Westerville, Ohio, and others to defraud Schultz's creditors and the U.S. Treasury by concealing millions of dollars of Schultz's money through false transactions and offshore bank accounts. Schultz was the President and CEO of National Revenue Corporation, a collections agency headquartered in Columbus, Ohio.

At the hearing, Kennedy admitted to conspiring with Richard Schultz and others to conceal the location, control, true nature and ownership of approximately $4,500,000 of Schultz's funds from the proceeds of the 1994 sale of NRC to Deluxe Corporation. Facts presented by Special Agent Dennis Hanzel, IRS Criminal Investigations, showed that Kennedy helped Schultz structure false and fraudulent transactions that would make it appear as if Schultz spent or lost money in business deals that went sour. However, the transactions disguised the transfer of millions of dollars through Canada to offshore bank accounts in the Cayman Islands and Guernsey of the Channel Islands. In June 2000, Kennedy lied about the transactions to government agents who were assisting in the grand jury investigation of Richard Schultz and others.

In connection with the plea agreement described at today's hearing, Kennedy has agreed to cooperate with the government in disclosing his participation in, and knowledge of, all violations of United States law.

To date, five others have been convicted of various federal charges in connection with Schultz's schemes. On September 13, 2002, United States District Judge Algenon L. Marbley sentenced Richard Schultz, 52, of Westerville to 30 months imprisonment, ordered Schultz to pay $1.26 million in restitution to the IRS, serve 416 hours of community service, and pay a $28,500 fine.

In August 2001, Thomas Schultz, age 45, of Powell, Ohio, pled guilty to conspiracy, failure to disclose foreign financial accounts and obstruction of justice. On September 13, 2002, he was sentenced to 24 months in prison, fined $7,500 and ordered to serve 416 hours of community service. Schultz was a Vice President at NRC from1994 to 1998 and assisted Richard Schultz in concealing millions of dollars in offshore bank accounts, including accounts in the Bahamas and Cayman Islands.

In June 2002, Larry Carnahan of Westerville, Ohio, was sentenced to 27 months in prison based on his plea to charges of conspiracy and tax fraud. Carnahan was a former partner in a Columbus law firm and the Schultz's business transactions lawyer.

Last September, Jeremy A. Franks, a London solicitor, appeared before United States District Judge Algenon L. Marbley and entered a plea of guilty to a conspiracy charge for his complicity in Schultz's scheme. Franks has yet to be sentenced.

Most recently, in November 2002, United States District Court Judge George C. Smith sentenced a Schultz associate, Leslie Brownell Combs II, of Bal Harbour, Florida, to six months in prison for signing a false tax return that concealed Combs' interest and authority over foreign financial accounts in the United Kingdom and Channel Islands.

Four individuals and four corporations remain under indictment for their role and participation in the Richard Schultz conspiracies. Ronald J. Bogart, an accountant from Toronto, Canada, Domenic L. Massari of Tampa, Florida, Frank J. McPeak of Clearwater, Florida, and Martin Elson, a lawyer from Cleveland, Ohio, were named in a Second Superseding Indictment returned by a Columbus Grand Jury in January 2003. An indictment is not evidence of guilt and each defendant is presumed innocent until convicted. The defendants are scheduled to be arraigned before Judge Marbley on March 14, 2003, and trial is expected to begin on July 14, 2003.

U.S. Attorney Lockhart commended Special Agents Dennis Hanzel and Richard Lewis of the IRS Criminal Investigation Division and Senior Special Agent Scott Best of the Customs Service who investigated the case. "This conviction is yet another in an ongoing prosecution focusing upon the "gatekeepers" of money laundering and fraud. By prosecuting these "gatekeepers", the Justice Department is attempting to close doors that are currently open to white collar criminals and other money launderers. Accountants, lawyers and businessmen or women who knowingly assist their clients in laundering money and perpetrating fraud can expect to be charged and prosecuted along with those clients." Lockhart said.

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