Man Sentenced to 30 Months in Federal Prison for Defrauding Investors of 2 Companies, Evading Taxes
For Immediate Release
U.S. Attorney's Office, District of Connecticut
Vanessa Roberts Avery, United States Attorney for the District of Connecticut, announced that BRIAN HUGHES, 58, formerly of Madison, was sentenced today by U.S. District Judge Janet Bond Arterton in New Haven to 30 months of imprisonment, followed by three years of supervised release, for defrauding investors of two companies, and for tax evasion.
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 was arrested on January 14, 2021. On February 15, 2022, he pleaded guilty to one count of wire fraud, one count of making an illegal monetary transaction, and one count of tax evasion.
Judge Arterton ordered Hughes to pay full restitution to investors in both HCB and Company-1, and to the IRS, in the total amount of $2,991,880.
Hughes, who is released on a $250,000 bond and living in New Canaan, is required to report to prison on September 6.
This matter was investigated by the Federal Bureau of Investigation and the Internal Revenue Service - Criminal Investigation Division. The case was prosecuted by Assistant U.S. Attorney John T. Pierpont, Jr.
Updated March 6, 2023
Securities, Commodities, & Investment Fraud