CLEVELAND, Ohio — A Conneaut businessman pleaded guilty Monday to laundering money for a major drug dealer and setting fire to a closed restaurant for $1.1 million in insurance money, agreeing to serve more than four years in prison.
Ruben Schwartz, 52, pleaded guilty in federal court in Cleveland to 24 charges in a conspiracy to set fire to the Golden Anchor restaurant in February 2021 and launder Mark Mahoney’s cash through property sales, and accepted a 50-month prison sentence.
The agreement includes Schwartz paying $1.1 million in restitution to an unnamed insurance company and disgorging three properties owned by Schwartz or his companies, R&E Properties and Schwartz Construction.
Schwartz remains in federal custody for now, but Assistant U.S. Attorney Elliot Morrison said during the hearing that federal prosecutors would not oppose a request by Schwartz’s defense team to have him released on bail until the verdict.
During the hearing, Schwartz wiped tears from his eyes as he pleaded guilty to conspiracy to commit arson, wire fraud, mail fraud and money laundering conspiracy.
U.S. District Judge Donald Nugent has set the sentence for November 19. If Judge Nugent finds the plea agreement fair, he must sentence Schwartz to four years and two months in prison. If he rejects the plea agreement, Schwartz can withdraw from the agreement and stand trial.
Schwartz’s lawyer, Leonard Ambrose, declined to comment after the hearing.
As part of his plea agreement, Schwartz admitted to conspiring with others to burn down the former Golden Anchor building on Harbor Street several months after purchasing it for $130,000 and taking out $1.3 million in insurance for it.
Prosecutors said he burned the building down after he realized his original renovation plans would ultimately not be profitable.
Prosecutors said Schwartz made minor repairs to the building to make it look like he was making legitimate renovations, then had others use Torpedo space heaters to burn it down.
The arsonist, who has not been charged in the case and is not named in court documents, set the fire while Schwartz was out of town to avoid arousing suspicion, according to court records.
Records show that Schwartz lied to insurance adjusters about the cause of the fire and falsified documents to make it look like he spent more on renovating the building than he actually did. The insurance company paid him $1.1 million.
Prosecutors say the defendants used the money to begin opening a new drive-thru business called Port District Beverages.
Schwartz also used funds from a separate money laundering operation for the drive-thru.
In the scheme, Schwartz sold two properties to Mahoney, a former recycling plant manager and current cocaine dealer, according to court documents.
Prosecutors said Mahoney bought the building that housed Krispy Biscuits on Park Avenue and another building that housed a thrift store from Schwartz for $110,000 in 2021. The pair said Mahoney actually paid $360,000 for them, according to official documents.
Mahoney was later arrested for his alleged involvement in a cocaine pipeline that stretched from Mexico to Cleveland. Federal agents searched his home, seizing $2.4 million in cash and accusing him of distributing about 1,350 pounds of cocaine in northeast Ohio over a three-year period.
Mahoney was sentenced to 14 years in prison in November for drug trafficking and money laundering with Schwartz.
Adam Ferrise covers federal courts for cleveland.com and The Plain Dealer. His coverage can be found here.
