Court: Couple steals $2.2 million
Published 9:00 pm Tuesday, August 4, 2009
A Suffolk couple convicted of embezzling more than $2 million from a Virginia Beach developer was sentenced in federal court late Monday.
Karen A. Hiles, 47, was sentenced to 95 months in prison, and her husband, 59-year-old James G. Hiles, was sentenced to 30 months in prison by U.S. District Court Judge Robert Doumar. They also were ordered to pay restitution of nearly $2.2 million.
In May, Karen Hiles pleaded guilty to conspiracy, possession and uttering of counterfeit securities, wire fraud, mail fraud and aggravated identity theft. Her husband pleaded guilty to conspiracy.
Deanna Warren, a spokesperson for U.S. Attorney Dana J. Boente, who prosecuted the case, said on Tuesday prosecutors were satisfied with the resolution of the case.
Warren said there will be another hearing on a $2.25 million forfeiture order issued by the court earlier this year. Problems arose with the forfeiture after a bank objected to the inclusion of a property at 5031 Carolina Road, she said.
“At this point, they’re still working on forfeiture proceedings,” she said.
The couple admitted to a conspiracy through which they stole more than $2 million from ASR LLC, Karen Hiles’ Virginia Beach employer, during a five-year period from 2002 through 2007.
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.
Hiles had been employed part time as an administrative assistant by the firm, owned by Alan Resh of Virginia Beach, and she was to have earned about $19,000 per year.
The indictment stated the woman had forged numerous business checks and wire transfer requests during the time that she was employed there.
The couple opened the Fat Boys restaurant in Chuckatuck in July 2002. During the years that followed, the restaurant was the beneficiary of tens of thousands of dollars in stolen funds, according to court documents.
In fact, the indictment stated, Karen Hiles told her employer in June 2007 the restaurant was doing so well that she and her husband planned to open another one.
Fat Boys finally was sold in 2008 after experiencing “serious financial problems, including non-payment of state and local taxes,” court documents stated.
But the couple used Resh’s money for plenty of other things, as well.
Though James Hiles reported income ranging from nothing to just $26,000 during the period from 2003 to 2006 — and Karen Hiles’ highest annual income was reported at $41,500 in 2006 — the couple was living lavishly during the period of the conspiracy.
In 2005, they purchased a Lexus IS350 and two Toyota FJ Cruisers. Then, in 2007, they bought a 2005 Hummer H2. In February 2006, they received a loan on a 42-foot fishing boat, the Matador, by making a $27,000 deposit and false claims about James Hiles’ income.
During the period in which they were defrauding Resh, the couple traveled to Alaska, Charleston, S.C., Vail, Colo., San Francisco, New York, Paris, Prague, Czechoslovakia, Costa Rica and Milan, Italy among other destinations, according to court documents.
And they were generous with the funds, as well, fraudulently writing checks to family members and friends.
The scheme began to unravel in 2007, when Resh and his wife received notification from the Virginia Department of Taxation that a tax-payment check he had directed Karen Hiles to write had been returned unpaid by the bank. Ensuing discussions turned up a fraudulent agreement that Karen Hiles had made with the state in her employer’s name.