Former Frisch's Employee Pleads Guilty in Scheme to Embezzle Nearly $4M

CINCINNATI – Michael Hudson, 53, of Cincinnati, Ohio pleaded guilty in U.S. District Court today to 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. 

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Guy A. Ficco, Acting 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 plea entered into today before 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.

For the fraud count, Hudson faces a maximum of 20 years in prison and a $250,000 fine or two times the loss.  For the tax count, Hudson faces a maximum of 3 years in prison and a $100,000 fine.

“No matter what the source of income, all income is taxable,” said Guy A. Ficco, Acting Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.  “The prosecution of individuals who intentionally conceal income and evade taxes is a vital element of the IRS’s enforcement strategy.”

U.S. Attorney Stewart commended the investigation by IRS-Criminal Investigation and the FBI, as well as Assistant United States Attorney Timothy S. Mangan, who is prosecuting the case.