Federal Jury Finds Three Defendants Guilty in $300 Million Nationwide Telemarketing Fraud Scheme Targeting the Elderly
MINNEAPOLIS – A federal jury found a Kenyon woman guilty of embezzling more than $700,000 from the owners of several Denny’s restaurant franchises around the Twin Cities and from a family-owned construction company in Rochester, announced Acting U.S. Attorney Charles J. Kovats.
Following a five-day jury trial before U.S. District Court Chief Judge John R. Tunheim, Kimberly Sue Peterson-Janovec, 59, of Kenyon, was convicted on 24 counts of fraud, aggravated identity theft, and tax crimes. Notably, Peterson-Janovec has a prior federal fraud conviction from 1998, when she embezzled more than $950,000 from another former employer.
Acting U.S. Attorney Charles J. Kovats stated, “Over the course of several years, Ms. Peterson-Janovec deliberately abused her professional position to steal hundreds of thousands of dollars from her employers. With this guilty verdict, Ms. Peterson-Janovec has been held accountable for her actions. I applaud the prosecutors and investigators for skillfully unraveling this years-long fraud scheme and achieving a successful outcome.”
“Internal Revenue Service Criminal Investigation (IRS-CI) is relentless in unraveling the fraudulent actions of those, such as Kimberly Peterson-Janovec, who scheme to defraud their employers and those who trust them,” said Special Agent in Charge Justin Campbell of IRS-CI’s Chicago Field Office. “This guilty verdict is a reminder that there are real, life-changing consequences for this type of dishonest and criminal behavior.”
“This guilty verdict reaffirms the critical role the U.S. Postal Inspection Service plays in protecting American consumers and businesses from fraudulent schemes,” said Inspector in Charge Ruth Mendonça. “Postal Inspectors proudly ensure the sanctity of the U.S. Mail to prevent criminals from perpetuating crimes that impact the financial well-being of our citizens.”
According to the evidence presented at trial, in 2014, Peterson-Janovec became the Director of Operations for MI5, Inc., a Denny’s franchisee that owned and operated eight Denny’s franchises in Minnesota and Wisconsin. In this role, Peterson-Janovec had extensive managerial oversight for all eight restaurants, including payroll, cash deposits, vendor and contractor billing, marketing, and coordinating reimbursements from Denny’s Corporate.
According to the evidence presented at trial, from April 2014 through July 2019, Peterson-Janovec used her position to embezzle funds from MI5 and Denny’s Corporate by generating and submitting false requests for vendor payments and then diverting those payments for her own use and benefit. Peterson-Janovec also manipulated the company’s payroll system to issue herself unauthorized compensation using the names of employees who no longer worked for the company. As part of the scheme, Peterson-Janovec falsified records, created fake email accounts, and generated fake email traffic in which she impersonated employees of various purported vendors. In total, Peterson-Janovec received approximately $336,000 in bogus vendor payments and approximately $20,000 in fraudulently issued payroll submissions using the identities of other people.
According to the evidence presented at trial, in July 2019, MI5, Inc., discovered aspects of Peterson-Janovec’s fraud and terminated her employment. After her termination, in early 2020, Peterson-Janovec lied about her work experience to get another bookkeeping job with a family-owned construction company in Rochester, identified as Company 3. Peterson-Janovec started as its bookkeeper, earned Company 3’s trust, and eventually was promoted to its general manager. Peterson-Janovec used her position to devise and execute a similar fraud scheme on Company 3. She used her access to Company 3’s QuickBooks to issue herself numerous payments, and she did so in a manner that made the payments appear as if they were going to Company 3 vendors. This netted Peterson-Janovec another $350,000 in as little at 18 months.
In total, Peterson-Janovec stole more than $700,000 from her employers, which she used to finance her lifestyle and hobbies, including a substantial down payment on her personal residence. Peterson-Janovec also committed tax crimes during every year of her fraud scheme, which led to over $160,000 in unpaid taxes.
Peterson-Janovec was found guilty on 13 counts of wire fraud, two counts of mail fraud, three counts of aggravated identity theft, three counts of making and subscribing a false tax return, and three counts of failure to file individual tax returns. A sentencing date has yet to be scheduled.
This case was the result of an investigation conducted by the United States Postal Inspection Service, the Burnsville Police Department, and the Criminal Investigation Division of the IRS.
This case was tried by Assistant U.S. Attorneys Jordan L. Sing and Kimberly A. Svendsen.