A Madison man has admitted to defrauding investors in two companies and diverting funds for his personal gain.
Brian Hughes, 57, entered a guilty plea Tuesday before U.S. District Court Judge Janet Bond Arterton in New Haven to multiple offenses, including wire fraud, illegal monetary transactions and tax evasion.
According to a plea agreement document, Hughes has agreed to pay $2,991,880 in restitution, money which is owed to investors and the Internal Revenue Service.
Hughes was arrested in January of 2021. He is currently free in lieu of $250,000 bond pending his sentencing, which has not been scheduled.
Federal sentencing guidelines show Hughes faces 46 to 57 months of imprisonment and a fine of up to $200,000, court documents show, though a judge may deviate from the guidelines.
In March 2015, Hughes founded Handcrafted Brands LLC, based in Branford, for the purpose of raising money to purchase Salute American Vodka, court documents show. Hughes then obtained money from dozens of investors for the purchase and development of Salute.
According to the U.S. Attorney’s office, Hughes used investment money for personal expenses unrelated to Salute, such as for his taxes and credit card expenses.
Handcrafted Brands did purchase Salute in June 2016 for $450,000, documents show.
Prosecutors said Hughes continued to solicit funds from investors, but used hundreds of thousands of dollars of those investments for expenses unrelated to Salute.
Hughes also solicited investments purportedly on behalf of an alcoholic beverage company identified in court documents only as “Company-1,” even though he had no official relationship with that company and wasn’t authorized to raise money on its behalf. According to the government, Hughes spent those funds on personal expenses, to pay earlier investors, and on business related to Salute.
Hughes also underreported his income to the IRS for the 2015 to 2018 tax years, resulting in a tax loss to the government of $470,880, federal prosecutors said.
Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com.
