Monterey Attorney Sentenced To Two Years In Prison For Embezzling From Trust That Owned Premises Of San Francisco’s Elite Cafe Restaurant | USAO-NDCA
SAN FRANCISCO – John Arthur Hudson was sentenced to two years in prison in federal court yesterday and sentenced to pay $ 828,521.52 in compensation for his wire fraud convictions based on fraudulent loans he received that were backed by real estate that were held in a trust that he manages, announced Deputy US Attorney Stephanie M. Hinds and the special adviser in charge of the Federal Bureau of Investigation Craig Fair. The verdict was given by the Honorable James Donato, United States District Judge.
Hudson, 71, an attorney whose practice was based in the Monterey County area, pleaded guilty to two wire fraud cases on October 28, 2020. According to the complaint indicting him, Hudson was appointed trustee of a trust in 2011.The trust owned a commercial property on Fillmore Street in San Francisco and received rental income from its tenant, The Elite Cafe, a New Orleans-inspired restaurant.
Under the settlement agreement, Hudson committed fraud by obtaining loans secured by the property of the trust in a program that began in April 2011 or around April 2011 and lasted through June 2018. As the trust’s trustee, Hudson pledged the Fillmore property as security for loans and hid the loans from the trust’s two beneficiaries, to whom he owed fiduciary duties. He also lied to lenders, arguing that the proceeds from the loan would be used to improve the Fillmore property. After receiving the loan proceeds, Hudson did not invest the funds in improving the Fillmore property, but instead used the funds for personal benefits including paying his own mortgage, writing checks payable to himself and the Paying credit card bills for non-trust expenses and other personal expenses.
The settlement agreement also revealed the steps Hudson was taking to hide his fraud. Hudson, for example, hid the existence of the loans in documents and notices about the trust by forging the balance of the funds. He hid information from the two trust beneficiaries about a personal injury lawsuit against the trust because the lawsuit names a lender as a co-defendant in the lawsuit. Hudson also received records reflecting improvements to the Fillmore property but was paid for by their tenant and then made those records available to a lender, misrepresenting to the lender that he had used the lender’s funds to convert to pay for these improvements to the Fillmore property.
Hudson personally received at least $ 693,000 through embezzlement from his victims, according to his agreement.
In addition to the sentence, US District Judge Donato Hudson sentenced him to redress of $ 828,521.52 and sentenced him to a three-year supervised release. Hudson remains out of custody and will serve his sentence on September 13, 2021.
The case is being prosecuted by the US Attorney’s Special Prosecutions Section for the Northern District of California. The indictment is the result of an investigation by the Federal Criminal Police Office.