Stew Leonard, sr

[Number Six]

https://www.nytimes.com/2023/04/27/busi ... -dead.html

One of the more colorful former tax evaders, died in the last few days.
https://www.supermarketnews.com/archive ... ves-prison

[Burnaby49]

I'd say that skimming over $17,000,000 from sales is a touch more than “a small business entrepreneurial mistake”.

[JohnPCapitalist]

I'd say that skimming over $17,000,000 from sales is a touch more than “a small business entrepreneurial mistake”.

I used to live one town over from Stew Leonard's original store, and I know someone who went to college with Stew Jr., who runs the place today (though she didn't know him that well). Stew's is an institution in those parts, with creative merchandising and lots of animatronic animals to keep the kiddies amused. For a long time (IIRC), it had one of the highest sales/square foot of almost any grocer in the world. They're a high-quality merchant, though one that doesn't explicitly cater to snob appeal like Whole Foods.

Stew Sr. had an oceanfront mansion in tony Westport, Connecticut with private dock, private beach, swimming pool, etc. Stew Sr. also hobnobbed with politicians and celebrities. There are still photos in the store lobby from when Ronald Reagan stopped by to give a speech and celebrate entrepreneurship when he was still in office.

Why anyone with that amount of money would feel the need to loot the corporate treasury for even more cash than they were earning legitimately from a landmark successful business is beyond me. It was especially remarkable that they were skimming off the top of the till via actual banknotes, which are hard to lug around and manage. Sophisticated fraudsters would be more likely to loot the company by routing phony purchase orders to shell companies and depositing the money offshore, etc. Cash management people are going to notice if, day after day, the stack of banknotes in the vault when they come in the next morning was going to be less than what was in there the night before when they left and locked the vault.

[Number Six]

I was speaking with a friend who has had a number of family members who've worked at Stew's. What got him was how they gamed the scales so that the customers were directly paying over actual weigh. Tax fraud also steals from fellow citizens though; and the fact so many people were in on the fraud, meant that they were all bearing the psychological burdens of prolonging the fraud. From what I heard, an accountant who was in on it was afraid that when the Feds found out he personally would be joining the hit parade, so he squealed. I'm a little surprised that no one reported the sacks of cash they were bringing down to the Virgin Islands to deposit.

https://www.nytimes.com/1993/10/22/nyre ... -case.html

"To the world at large, Stew Leonard was the smiling face on posters at his Connecticut dairy store, the man who made sure customers got what they wanted and who sometimes roamed the aisles in a cow costume, giving them warm hugs.

But court papers filed by the Government this week in Mr. Leonard's $17.1 million tax-fraud case show that he played another role behind the scenes. As mastermind of the scheme, he directed his top managers to bundle stacks of cash into $10,000 piles and place them in a safe hidden in his office fireplace. He then carted the money off to the Caribbean stashed in suitcases or camouflaged as baby gifts.

Mr. Leonard was sentenced on Wednesday to four years and four months in prison for his role in the fraud, which used an elaborate computer program to keep two sets of books, one listing Stew Leonard's Dairy's actual revenues and another, for the Internal Revenue Service, listing reduced revenues minus skimmed profits. Conspiracy and Betrayal

The court papers also described betrayal among the co-conspirators themselves, with an account that Frank H. Guthman, a former executive vice president and Mr. Leonard's brother-in-law, embezzled from the others involved.


The scheme, in which Mr. Leonard, Mr. Guthman and two other associates have pleaded guilty, was run by Mr. Leonard, whom the Government documents portrayed as greedy and calculating, rather than aw-shucks friendly.

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"The evidence was that he was the mastermind," said Michael Dreiblatt, chief of the I.R.S. criminal investigation division in Hartford, which rooted out the scheme. "And he benefited from it. One could just speculate as to what his motives were."

In a handwritten 1980 note seized by investigators, Mr. Leonard referred to Mr. Guthman's $66,150 store salary and a $5,000 "box of money" that, because it was tax-free, he described as being worth $10,000.

"I promised you you'd be over 100,000 some day," Mr. Leonard wrote. "Now I'm promising that you're sure to double what you now make."

He later complimented Mr. Guthman for "your ability to 'GET THE JOB DONE,' TO HELP MAKE OUR DREAMS BECOME REALITY." The note was signed, "Good Job! Stew."





Mr. Leonard, along with Mr. Guthman, his brother Stephen F. Guthman and another executive, Barry Belardinelli, pleaded guilty in July to one count of conspiracy.

Because Mr. Leonard is recovering from hip surgery, his lawyer, James F. Neal, requested that he begin his imprisonment on Nov. 29 at the Allenwood Federal Prison, a minimum-security center in Pennsylvania that is sometimes described as a virtual country club because of its white-collar inmates. Judge Peter C. Dorsey of Federal District Court said he would make such a recommendation to corrections officials. Scheme Details Revealed

The new details of the scheme were revealed in a 36-page Government document filed in conjunction with the sentencing. The document cast new light on the participation of Stewart Leonard Jr., the president of the family's Norwalk store, who received immunity from prosecution as part of the July plea agreement and who is expected to keep the store running in his father's absence.

While the documents described the younger Mr. Leonard as being informed of the scheme and altering sales figures to cover it up, his lawyer, Nathan Silverstein, said it was inappropriate for prosecutors to malign his client when no charges had been brought against him.

"It was the Government's view that in order to induce Stew Sr. to plead, they would not pursue any case against Stew Jr.," Mr. Silverstein said. "There are no proven allegations against Stew Jr., nor will there be, nor should there be."



The skimming of cash was accomplished by Mr. Belardinelli, the store's general manager, according to the documents. Stephen Guthman, the store's chief financial officer, told him how much money should be diverted in a given week, the documents said. Mr. Belardinelli, after converting the money into $50- and $100-dollar bills, carried the bundles to the elder Mr. Leonard's office.

Mr. Leonard, among others, then smuggled the money to his second home in St. Martin, named "Carpe Diem," the documents said. Tracking the Skimming

So the executives could make management decisions based on the store's actual profits, they prepared charts and graphs, including one that reflected the false sales figures from 1981 to 1988, the amounts that were skimmed and the accurate sales figures, prosecutors said.

The documents also indicate that the co-conspirators were not always honest with one another.

On the days when Mr. Belardinelli did not work, Frank Guthman performed his job and stole money for himself, on top of the payments he was receiving from the elder Mr. Leonard, prosecutors said.

Frank Guthman's lawyer, Jacob D. Zeldes, said it would be "inappropriate" for him to comment on the prosecutors' claim.

"But there was a bit of irony in the accusation. In his 1980 note to Mr. Guthman, Mr. Leonard said, "I'm as proud of you as you must be yourself." He added, "As you always say, 'Between the two of us, there's no problem that we couldn't solve.' "