Plea deal didn't slow scam artist, court told

7/20/2005

James Michael Frantz pleaded guilty to defrauding the government months ago, but it was the fraud he's accused of committing since his conviction that prosecutors focused on at his sentencing yesterday.

U.S. District Judge James Carr ordered the former Findlay businessman to spend 51 months in prison and pay fines totaling $110,000 for tax evasion, health-care fraud, and bankruptcy fraud.

The sentence came after nearly six hours of testimony about Frantz's latest business venture - a service that promises to eliminate credit-card debt. After hearing from a Wood County woman who was forced to quit her job, cash in her retirement account, and file bankruptcy after enrolling in Frantz's program, Judge Carr said the business, Fresh Start Credit Debt Relief Service, was clearly "a sham and a snare."

"Chicanery, deceit - it's pervasive," Judge Carr said. "Of all the defendants that I've ever had before me in 11 years as a district court judge, you are the least worthy of being given credit for acceptance of responsibility."

Assistant U.S. Attorney Seth D. Uram told the court Frantz had been defrauding clients who enrolled in his Fresh Start service in the months after he entered into a plea agreement with prosecutors and subsequently pleaded guilty.

"This guy is crooked from top to bottom, and he cheats everything he touches," Mr. Uram said.

In November, Frantz pleaded guilty to a bill of information charging him with falsely billing Medicare, Medicaid, and private health insurers for $58,200 in equipment through his Findlay-based medical-equipment supply business, Medi-Care Orthopedic & Hospital Equipment. The firm, which had stores on Reynolds Road in Toledo and in Oregon, Findlay, Fremont, Bowling Green, and Sandusky, filed for Chapter 11 bankruptcy protection in 2002.

Frantz also pleaded guilty to evading $79,088 in federal income tax in 1998 by failing to report $282,458 in personal income for bills Medi-Care Orthopedic paid for his personal credit-card bills, condominium renovations, boat repairs and insurance, and country club and yacht club dues. He also admitted taking $14,736 from his company's bankruptcy estate to pay for renovations to his Fort Lauderdale, Fla., home.

Those charges were barely mentioned as prosecutors spent much of the day questioning Carilyn Hall, a special agent with the Internal Revenue Service who investigated the credit-card debt business, and LuAnn Knitz, a Bloomdale, Ohio, woman who turned to Frantz to try to get out from under $28,000 in credit-card debt.

She signed a contract agreeing to pay Frantz $3,495 to "legally" eliminate the debt. Admitting she didn't really understand how his program worked, she went ahead with his advice to stop paying on her credit-card bills. Eventually, she found herself in Bowling Green Municipal Court to answer to a credit company's charges she had defaulted.

Frantz had given her a script that told her to deny she owed anything and answer the judge's questions with prepared responses, but Mrs. Knitz said she knew it was wrong and broke down on the stand, telling the judge she'd signed up with Frantz's debt elimination program.

"The judge looked it up on his computer, and he said, 'Ma'm, I think you've been scammed.' The judge suggested I file bankruptcy," she said.

Frantz also took the stand, trying to explain how his debt elimination service works by playing off a loophole in the banking system. Though contending the system worked for him, Frantz told the court he had seven lawsuits pending against him and outstanding - though contested - credit-card balances in excess of $200,000.

He later apologized to the court and those he'd hurt, saying he'd spend the rest of his life trying to repair the damage.

"If I could go back and do it all over again, I know I'd choose a different path," he said.

Mr. Uram said prosecutors did not pursue criminal charges relating to Frantz's Fresh Start business because they did not learn of it until too late.

"The plea agreement says we cannot prosecute him for any crimes we know of," he said. "We first learned of Fresh Start right before he pleaded guilty, so my view was that I couldn't prosecute on it."

The plea agreement called for a sentence of 24 to 30 months, but Judge Carr found that Frantz had not taken responsibility for the crime and gave him the maximum sentence and fines.

"I hope that if this conviction is known publicly, it will tell people in similar situations not to cheat the government," the judge said.

Contact Jennifer Feehan at:

jfeehan@theblade.com

or 419-353-5972.