CINCINNATI – A former Frisch's Restaurants exec embezzled more than the $3.9 million he pleaded guilty to and spent much of it on gambling at casinos, buying property and cars and renovating his house after his mother moved in with him, according to the U.S. Attorney's Office.
The government called the $3.9M figure "a conservative estimate" of what Michael Hudson stole during his 10 years as assistant treasurer (2004-2014).
Hudson admitted his theft started in 2004 but complete bank records are not available for 2004 to 2007, so there's no telling how much he stole in those four years, the feds said in their sentencing memorandum. For sentencing purposes, the feds declared that the total embezzled was less than $9.5 million.
Hudson, 53, of Cincinnati, was sentenced to five years in prison Thursday and ordered to pay a total of $4.6 million in restitution on one count of wire fraud and one count of filing a false federal income tax return. Hudson also was sentenced to three years of supervised release.
Frisch's previously said Hudson had taken $3.9 million. But Hudson took that much between 2008 and 2014, according to the U.S. Attorney's Office. Hudson embezzled $3,905,930.11 during that period by making unauthorized wire or ACH transfers from company bank accounts.
As evidence of Hudson's gambling, the government said Hudson withdrew $935,000 at casino ATMs between 2008 and 2014.
"This demonstrates, in part, the extent to which the stolen funds were wasted on gambling," the U.S. Attorney's Office said. "Bear in mind, this is a conservative estimate of the gambling funds ... It does not account for cash that may have been withdrawn from other accounts or at other times and then used for gambling."
When Hudson abruptly quit his job, Frisch's uncovered the scheme, contacted federal law enforcement and sued Hudson. The lawsuit claimed Hudson forged payroll records and diverted company funds to himself, his family and business associates. The proceeds were allegedly used in part to buy properties for two real estate companies that Hudson had an interest in.
On one occasion, Hudson transferred money to a bank account in the name of WPMH Properties, LLC, which he owned and controlled, the U.S. Attorney's Office said Thursday.
Hudson had denied the allegations in a court filing and asked for the suit to be dismissed. It was settled, according to court documents.
In addition, the feds determined that Hudson filed a false 2009 income tax return because he failed to report how much he embezzled from Frisch's that year - $323,936.19.
Also, Hudson failed to file an income tax return at all for the 2010 through 2013 income tax years in an effort to evade taxes related to his embezzlement scheme, according to the U.S. Attorney's Office.
The feds are demanding that he pay the total amount of income taxes due and owing for the 2009 through 2013 income tax years. But he has very little in assets, according to the government. His rental properties were sold and the proceeds turned over to Frisch's as part of the civil settlement.
Hudson has been ordered to pay restitution as follows: $3,099,305.49 to Frisch’s, $505,000 to Travelers Insurance (Frisch's insurer) and $969,697.81 to the IRS.