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ARTS AND CRAFTS MAGNATE SENTENCED TO

WASHINGTON, D.C. - The multi-millionaire owner of Pearl Arts, a nationwide arts and crafts chain with more than 20 stores around the country, was sentenced to three years in prison for tax fraud today. Robert Perlmutter, of Weston, Florida, also was sentenced to serve two years of supervised release and ordered to pay a fine of $75,000 by U.S. District Judge Daniel T.K. Hurley in West Palm Beach, Florida. Perlmutter, whose art stores are located in South Florida, New York, New Jersey, Chicago, Philadelphia, Phoenix, Atlanta and the Washington, D.C. suburbs, among other areas, pled guilty on May 26 to conspiring to impede the collection of federal income and employment taxes. Under the terms of the plea agreement, Perlmutter agreed to pay more than $6 million in taxes, penalties and interest to the Internal Revenue Service.

Perlmutter was indicted in April 1999, for his role in a 15-year conspiracy that involved skimming millions of dollars from his Pearl Arts store in Long Island, New York and shipping the money to South Florida.

According to his guilty plea, during a 15-year period, Perlmutter enlisted the help of Allan Jacobowitz, his former son-in-law and the manager of the Long Island store, to divert approximately $2,000 to $10,000 in cash per day. Perlmutter then used the cash to build a lavish 22,000 square foot mansion with 12 bedrooms, 19 bathrooms, and a 140' by 70' outdoor

swimming pool with three waterfalls. To receive "discounts" from the general contractor, subcontractors and suppliers who constructed his home, Perlmutter paid many of them in cash that was not reported to the IRS. The general contractor and a number of the subcontractors already have pled guilty to tax violations.

The government's investigation began in March 1996 when three UPS boxes being sent from New York to Florida-each containing around $25,000 in cash-were discovered after one of the boxes opened during shipment. Following the cash discovery, Perlmutter contacted Jacobowitz and his accountant, Emil Grossman-both of whom have pled guilty to tax violations-to discuss how they could conceal the tax scheme from government investigators. Among other things, he instructed them to destroy cash ledgers.

Pearl Arts bills itself as the "world's largest discount center" for arts, crafts, and graphics, maintains its corporate headquarters in Fort Lauderdale, Florida. Perlmutter told the court at his guilty plea hearing that his business generated more than $70 million in sales last year. The case was prosecuted by Thomas E. Zehnle, a trial attorney with the Department of Justice, Tax Division, and Jeffrey N. Kaplan, an Assistant U.S. attorney in the Southern District of Florida and was investigated by special agent Donnell Young of the Internal Revenue Service, Criminal Investigation Division.

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