Madison Man Admits Defrauding Investors
For Immediate Release
U.S. Attorney's Office, District of Connecticut
Leonard C Boyle, United States Attorney for the District of Connecticut, announced that BRIAN HUGHES, 57, of Madison, pleaded guilty today before U.S. District Judge Janet Bond Arterton in New Haven to multiple offenses stemming from a scheme to defraud investors of two companies.
According to court documents and statements made in court, in March 2015, Hughes founded Handcrafted Brands, LLC (“HCB”), for the purpose of raising money to purchase Salute American Vodka, (“Salute”) an alcoholic beverage company. Hughes subsequently solicited and received funds from dozens of investors ostensibly for the purchase and subsequent development of Salute. Hughes used the first investment he received, in the amount $150,000, to pay his taxes and his American Express credit card expenses. Although HCB purchased Salute in June 2016 for $450,000, Hughes continued to solicit investments from investors and used hundreds of thousands dollars in invested funds for expenses unrelated to Salute. He also used funds to pay off an earlier investor under the guise of a return on a prior investment made by the earlier investor, which is commonly known as a “lulling” payment.
Hughes also solicited investments purportedly on behalf of another company, which is identified in court documents as “Company-1.” In fact, Hughes had no official relationship with Company-1 and could not raise capital on its behalf. Hughes spent the money he received for this investment on personal expenses, to pay earlier investors, and on business related to Salute.
Finally, Hughes evaded the assessment of his tax obligations for the 2015 through 2018 tax years by substantially underreporting his income to the IRS, resulting in a tax loss of $470,880.
Hughes pleaded guilty to one count of wire fraud, which carries a maximum term of imprisonment of 20 years, one count of making an illegal monetary transaction, which carries a maximum term of imprisonment of 10 years, and one count of tax evasion, which carries a maximum term of imprisonment of five years. A sentencing date is not scheduled.
Hughes has agreed to pay full restitution to the IRS and to all investors in both HCB and Company-1 in the total amount of $2,991,880.
Hughes was arrested on January 14, 2021. He is released on a $250,000 bond pending sentencing, which is not scheduled.
This matter is being investigated by the Federal Bureau of Investigation and Internal Revenue Service – Criminal Investigation Division, and is being prosecuted by Assistant U.S. Attorney John T. Pierpont, Jr.
Updated February 15, 2022
Securities, Commodities, & Investment Fraud