Two former executives of Chatsworth-based With Design in Mind International Inc. will serve time in prison after getting what a prosecutor called an unusually stiff penalty for white-collar crimes.
Steven Zuloff of Bel Air and Barry Benjamin of Woodland Hills were each sentenced to a year in prison and three years of supervised release by U. S. District Court Judge Stephen Wilson in Los Angeles on Monday, a prosecutor said. The judge also ordered the two men to jointly pay restitution of $160,000 to With Design in Mind, which has since changed its name to Janex Inc. and moved its headquarters to Woodland Hills.
Last September, Zuloff and Benjamin pleaded guilty to two counts of tax evasion and one count of securities fraud in federal court in connection to allegations that they illegally diverted money from the firm.
The sentence they received Monday exceeded the penalty recommended by government prosecutors. "The judge said the case was motivated by greed and the sentence was necessary to prevent others" from committing similar crimes, said Assistant U. S. Atty. Peter Spivack.
Zuloff is the former president and Benjamin is the former treasurer of With Design in Mind, a company that specialized in novelty gifts. The pair were ousted by the company's board of directors in 1992 after an internal investigation concluded that they had embezzled funds. The firm has since hired a new chief and shifted to making children's products.
According to government prosecutors, the pair siphoned funds from the company for their personal use, and failed to list this income on tax returns. Zuloff was charged with evading payment of approximately $69,938 in taxes and Benjamin with evading payment of about $37,336. Attorneys for the pair said they were disappointed with the stiff penalty. "The sentence is excessive and greatly exceeds the seriousness of the conduct," said Stephen Sadowsky, Zuloff's attorney.
Added Richard Steingard, attorney for Barry Benjamin: "These are two very, very decent men. Incarceration is totally unnecessary." The defense is considering options for appeal, Steingard said.
The price of shares in With Design in Mind crashed after the embezzlement allegations came to light; some shareholders lost thousands of dollars.
Michael Manahan, chief financial officer at Janex who worked under Zuloff and Benjamin before their ousters, said the sentence "brings closure finally to something that started a long time ago."
"I would have liked to see their faces at the sentencing," he added.