Indicted North Hollywood businessman Gerald L. Schulman, who was sued for securities fraud last month by investors seeking to recover $200 million spent on real estate tax shelters they allege were fraudulent, is the target of a similar lawsuit filed in New York by investors also seeking to recover $200 million.
The class-action lawsuit was filed Oct. 30 in U.S. District Court in New York City on behalf of an estimated 5,000 investors who claim to have bought real estate limited partnerships organized and promoted by Schulman. The suit, filed against Schulman and nine individuals and firms, seeks unspecified punitive damages, in addition to the return of the money they invested.
Separately, Los Angeles County records reveal that investors in one Schulman limited partnership included writer-director Woody Allen, his frequent collaborator and "Annie Hall" co-author Marshall Brickman; Allen's producer, Charles Joffe; and his manager, Jack Rollins.
Invested in Partnership
Allen, star and director of such movies as "Annie Hall" and "Hannah and Her Sisters" invested $49,500 to receive 3.09% of the profits, the records show. Robert Satin, an accountant representing the four, confirmed they invested in the partnership, but would not comment further.
Allen and his associates have lost money in other tax shelter deals. In the early 1980s, the four were part of a group of investors who put $445 million into phony tax deductions sold by Edward A. Markowitz, a former part owner of the Washington Capitals professional hockey team. Markowitz pleaded guilty in 1985 to selling the phony shelters.
Schulman is scheduled to go on trial Dec. 1 on federal tax fraud charges stemming from the partnership programs.
He was indicted by a federal grand jury on the charges, stemming from 91 of the partnerships he promoted. The charges were dismissed in June, 1986, by District Judge Mariana R. Pfaelzer. They were reinstated in May by the 9th U. S. Circuit Court of Appeals, although it upheld the dismissal of two perjury counts.
477 Investors Sue
Schulman was sued two weeks ago in U.S. District Court in Newark, N.J., by 477 investors, including major league baseball stars Rick Sutcliffe, Shane Rawley and Frank Tanana, in an attempt to recover money they invested with him. That lawsuit seeks $500 million in punitive damages.
Investors, who claim they have lost or will lose some $200 million in tax deductions disallowed by the Internal Revenue Service, allege that Schulman told people the investments were tax-deductible because the money was used to pay interest on a short-term loan even though investors were buying interests in post office and public utility buildings.
Instead, they allege, Schulman created the illusion that interest payments were being made through a complex series of check swaps in bank accounts in Panama and the Netherlands.
Schulman's attorney, Bruce I. Hochman, could not be reached for comment Monday, but has said previously that the money ultimately went toward the purchase of buildings and that Schulman has committed no crime.
Last month in a separate lawsuit filed in U.S. District Court, the Los Angeles office of Peat Marwick & Main was sued by brothers Sheldon, Warren and Leo Becker, who allege the accounting firm recommended they invest $670,500 in the Schulman partnerships.