Tuesday, January 20, 2015

Former CFO of Ohio-Based Fast Food Concern Accused of Embezzling $3.3 Million

From ABC Ch. 6 on 1/20/2015:

A Midwest burger chain has accused one of its former workers of having sticky fingers after investigators discovered $3.3 million missing from the company's books.

Frisch's Restaurants Inc. claims Michael Hudson, a former assistant treasurer, forged payroll documents and created fake accounting entries to divert funds into his personal accounts over several years.

Frisch's is seeking restitution and has filed a lawsuit against Hudson, WCPO reported.

"While we were saddened to learn of these unlawful and fraudulent acts carried out against the Company by a trusted and long-time employee, we took swift action as soon as we discovered the fraud," said Craig Maier, Frisch's Chief Executive Officer, in a regulatory filing to investors. "As a precautionary measure, the Company is implementing an additional layer of checks and balances in our accounting systems to protect against this type of fraudulent behavior in the future."

Frisch’s told investors that the fraud is not likely to force a restatement of net income for the fiscal years 2012 through 2015.  It did not explain how the fraud was discovered.

"Our employees and shareholders can take pride in the Company's 67-year history of success and its well-deserved reputation for integrity and responsibility," Mr. Maier added. "We can assure them that we will devote as much of our human and financial resources as are necessary to conclude this episode promptly and efficiently.”


Read the whole story here.

Update (1/22/2015): Frisch's stock price dropped about 1% in the wake of the embezzlement scandal.

Update (3/17/2015): The magnitude of the Frisch embezzlement scheme is now estimated to be at least $3.9 million.  Read an update of the story here.

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