Former Fat Boys owners face 73 counts of embezzlement

Published 10:50 pm Monday, January 26, 2009

A Suffolk couple that operated the former Fat Boys restaurant in Chuckatuck faces federal charges for allegedly embezzling more than $2 million from a Virginia Beach developer between 2002 and 2007.

The United States Attorney General’s office in Norfolk announced late Monday a 73-count indictment against Karen A. Hiles, 47, and James G. Hiles, 59. They face conspiracy, uttering, mail fraud, wire fraud, bank fraud and aggravated identity theft charges.

According to the indictment, Karen Hiles worked part-time as a bookkeeper for a developer of residential and commercial properties in Virginia Beach, earning about $19,000 a year.

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The government charges that — acting with her husband — Hiles forged business checks and wire transfers totaling more than $2 million during a five-year period beginning in 2002. The couple deposited the stolen money into various bank accounts and used it for personal travel expenses, for vehicle purchases and for the operation of Fat Boys, the indictment alleges.

If convicted, each could face a maximum sentence of five years in prison for conspiracy, 10 years for each of 50 counts of uttering and 20 years for each of 13 counts of mail and wire fraud, according to a press release from the U.S. Attorney’s office. Karen Hiles also faces 30 years for one count of bank fraud and a mandatory two years for each of eight counts of identity theft.

The couple also faces a forfeiture count for $2.3 million in assets.

The U.S. Secret Service and the Virginia Beach Police Department investigated the case. Robert J. Seidel Jr. will be the government’s lead prosecutor.

The couple was arrested Monday, and Magistrate Judge James E. Bradberry issued a temporary detention order. A detention hearing is set for 2:30 p.m. Thursday. The judge also unsealed the indictment, which had been returned by a federal grand jury and sealed on Wednesday, according to court records.

Fat Boys restaurant opened in 2002 after the closing of the Village Diner in Chuckatuck, according to an account in the News-Herald at the time.

Karen and James Hiles had moved to the community from Virginia Beach two years previously and said they looked forward to providing a simple menu of fresh food, getting people “in and out for about $6.”

James Hiles told a reporter he was a retired pipefitting supervisor from Newport News Shipbuilding and had noticed the void left in Chuckatuck by the closing of the Village Diner.

The couple also had hoped to open a bait and tackle shop in the adjoining space.

Fat Boys is now closed, and a new restaurant, Chuckatuck Village Tavern, opened in the location last summer.