Former Frisch’s Employee Sentenced in Scheme
CINCINNATI – Michael Hudson, 53, of Cincinnati, Ohio was sentenced in U.S. District Court today on one count of wire fraud and one count of filing a false federal income tax return with the Internal Revenue Service (IRS) relative to a scheme to defraud Frisch’s Restaurants, Inc. (“Frisch’s”) by embezzling funds in excess of his authorized pay and compensation.
Hudson was sentenced to 60 months in prison, three years of supervised release, and was ordered to pay restitution to Frisch’s in the amount of $3,099,305.49, to Travelers Insurance in the amount of $505,000 and to the IRS in the amount of $969,697.81.
Benjamin C. Glassman, Acting United States Attorney for the Southern District of Ohio, Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office, and Angela L. Byers, Special Agent in Charge, Federal Bureau of Investigation (FBI), Cincinnati Field Division, announced the sentence handed down by U.S. District Judge Michael R. Barrett.
According to court documents, between 1992 and 2014 Hudson was employed at Frisch’s and between 2004 and December 2014 Hudson was the assistant treasurer for Frisch’s. While serving as assistant treasurer, Hudson made unauthorized wire or ACH transfers of funds from the Frisch’s bank accounts for his own benefit. For example, on one occasion, Hudson transferred money from Frisch’s bank account to a bank account in the name of WPMH Properties, LLC, which was a business owned and controlled by Hudson.
In total, between 2008 and 2014 Hudson embezzled $3,905,930.11 from Frisch’s as a result of this fraud scheme.
In addition, Hudson filed a false 2009 income tax return with the IRS. Specifically, Hudson embezzled $323,936.19 from Frisch’s in 2009, but failed to report it as income on his 2009 income tax return.
Also, for the 2010 through 2013 income tax years, Hudson failed to file an income tax return with the IRS in an effort to evade the payment of income taxes related to the embezzlement scheme.
The total amount of income taxes due and owing for the 2009 through 2013 income tax years was $969,697.81.
"The role of IRS Criminal Investigation becomes even more important in embezzlement and fraud cases due to the complex financial transactions that can take time to unravel," said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office. "The federal tax laws are normally violated in these cases which can add to additional jail time. As we often see, the victims are not only the taxpayers, but also the individuals and entities who suffer the financial harm."
Acting U.S. Attorney Glassman commended the investigation by IRS-Criminal Investigation and the FBI, as well as Assistant United States Attorney Timothy S. Mangan, who prosecuted the case.