CINCINNATI -- A former assistant treasurer for Frisch’s Restaurants Inc. has reached a plea agreement to resolve federal charges that he embezzled $3.9 million from the company, court records show.
Michael Hudson is due in U.S. District Court Dec. 7 to address charges of wire fraud and filing a false tax return. Last week in Hamilton County Common Pleas Court, Hudson agreed to sell 13 investment properties to partially address a $3.9 million judgment against Hudson and two real estate companies he controlled.
Hudson resigned from Frisch’s last December after a new employee spotted discrepancies in records that Hudson used to track payroll direct deposits. That led to an internal investigation and a January lawsuit alleging that Hudson “created and transmitted to US Bank a fictitious separate payroll file transferring to himself additional amounts.”
Initially, Frisch’s estimated the amount of the theft at $3.3 million. But a deeper investigation revealed an additional $600,000 was stolen. The publicly-traded company was forced the modify its past financial statements because of the theft.
It reduced pretax earnings by $60,000 in the 2014 fiscal year, $350,000 in 2013 and $1.4 million in years prior. The company spent $1.7 million on outside law firms and auditors because of the case.
In September, Frisch’s was sold to an Atlanta-based private-equity investor for $175 million.
WCPO reported in May that Hudson was a real estate speculator who owned more than $600,000 in local properties, including investments in Price Hill, Delhi, College Hill and Evanston. Hudson’s former business partner, Wade Pyles, told WCPO that Hudson “spent money like it was going out of style,” but never revealed where he was getting the cash.
Legal claims were dismissed last week against Pyles and Hudson’s wife and son.