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Press Release

Kenyon Bookkeeper Sentenced to More Than 9 Years Prison for $881,000 Employer Embezzlement and Tax Fraud Scheme

For Immediate Release
U.S. Attorney's Office, District of Minnesota

MINNEAPOLIS – A Kenyon woman was sentenced to 111 months in prison, three years of supervised release, and $1,058,777.18 in restitution for embezzling more than $881,000 from the owners of several Denny’s restaurant franchises around the Twin Cities and from a family-owned construction company in Rochester, announced United States Attorney Andrew M. Luger.

According to court documents, in 2014, Kimberly Sue Peterson-Janovec, 59, 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 court documents, 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.  In addition, at sentencing, the Court held Peterson-Janovec responsible for stealing an additional $181,000 in cash deposits from MI5.

According to court documents, 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 $881,000 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 sentenced today in U.S. District Court before Chief Judge John R. Tunheim. In handing down the sentence, Judge Tunheim described Peterson-Janovec’s conduct as “brazen” and motivated by “greed,” and highlighted the need to protect the public from further criminal activity carried out by the defendant.

On February 22, 2022, Peterson-Janovec was convicted by a federal jury 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.

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.

Assistant U.S. Attorneys Jordan L. Sing and Kimberly A. Svendsen prosecuted the case.

Updated June 22, 2022

Financial Fraud