Couple pleads guilty to embezzling $2 million

Published 3:26 pm Tuesday, May 5, 2009

A Suffolk couple pleaded guilty in federal court on Tuesday to charges related to the embezzlement of more than $2 million from an area real estate developer.

Karen A Hiles, 47, and James G. Hiles, 59, admitted to a conspiracy through which they stole more than $2 million from Karen Hiles’ Virginia Beach employer during a five-year period.

They then used the money for personal expenses, including travel, purchasing vehicles and operating the former Fat Boys Restaurant in Chuckatuck, according to the United States Attorney’s office.

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Karen Hiles also pleaded guilty to charges of possessing and uttering of counterfeit securities; wire, mail and bank fraud; and aggravated identity theft.

US District Senor Judge Robert G. Doumar had unsealed a 73-count indictment of the couple in January.

On Tuesday, Doumar set sentencing for the couple for Aug. 3. Karen Hiles faces up to 165 years in prison, a fine of $4 million and full restitution, according to prosecutors. James Hiles faces up to five years in prison, a fine of $250,000 and full restitution.

The defendants agreed to forfeit $2,252,955.85 in illegal proceeds, the US Attorney’s office stated in a press release.

According to the original indictments, 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.

The government charged that — acting with her husband — Hiles forged business checks and wire transfers between 2002 and 2007. The couple deposited the stolen money into various bank accounts and then used it for their personal expenses, court documents state.

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.