Skip to content Skip to left sidebar Skip to right sidebar Skip to footer

Former JRT house manager pleads guilty to felony fraud

Michael F. Schmidt, former house manager of the Jonesborough Repertory Theatre, was expected to plead guilty during a Sept. 22 hearing to a federal wire charge in a scheme that defrauded 30 victims of more than $743,000.
According to the plea agreement filed Sept. 4 in U.S. District Court, Schmidt devised a scheme to defraud in order to obtain money under false and fraudulent pretenses beginning in May 2006 and continuing through on or about May 2013.
The defendant admits that he fraudulently obtained money from 30 victims under the false pretense that the money would be invested in his company, The Toner Depot, and that the victims would receive profits on their investment in his company.
During the course of the scheme, Schmidt utilized electronic mail hosted by Google Inc., with data centers located across the United States but outside the State of Tennessee, to send false and fraudulent wire communications to the victims, which included solicitations for investments, promissory notes, purchase orders and extensive spreadsheets purportedly detailing Schmidt’s business activities, accounts and profits due to be paid to the victims.
The plea agreement states Schmidt admits that he told the victim investors they would be investing in his company to help him fulfill large purchase orders that he had received from a number of companies across the region.
Further, he admits that he falsely and fraudulently told the victim investors that after his company received payment for the products purchased, they would receive a profit on their investment.
In reality, the defendant admits that he devised this scheme to defraud in order to obtain money to pay bills that he had incurred as a result of bad internet investing and other investment schemes.
He also admits that he solicited investments from his friends who trusted him and that he falsified statements and documents in order to convince the victims that the business deals and investments they were making in his company were legitimate.
According to the plea agreement, Schmidt admits he paid back approximately $340,000 of principal investments and purported profits to the victims. Additionally, he admits he is responsible for and agrees to pay restitution back to the victims in the total amount of $289,000.
The maximum penalty to which the defendant will be exposed by virtue of his guilty plea is a term of imprisonment of not more than 20 years; a fine of not more than $250,000; a term of supervised release of not more than three years; restitution; and a mandatory assessment of $100.
The original complaint alleging fraud/false pretenses/swindle was filed with the Jonesborough Police Department in November 2013. Town Administrator Bob Browning said immediately after, Schmidt’s authority to incur costs on behalf of the JRT was removed as a preventive measure.
According to Browning, a review of the theater’s finances found no discrepancies. “His relationship with investors was separate from the town and the JRT,” he said.
Schmidt later resigned his position as house manager.