Durango Restaurateurs Cooked the Books, Get House Arrest

DURANGO, CO – Kenneth and Suzanne Fusco, formerly of Ken & Sue’s restaurant in Durango, Colorado, are trading their aprons for ankle monitors. Both were sentenced to six months of house arrest on February 7, 2023, by Senior Judge Robert E. Blackburn, following a guilty plea to felony tax evasion charges. The couple will also perform 150 hours of community service each, pay a hefty $25,000 fine, and cough up over $160,000 in restitution to the U.S. Treasury. They’ll also be under federal supervision for five years.

The scheme, spanning from 2014 to 2019, involved deliberately inflating business expenses to shrink their tax bill. The investigation kicked off when the Fuscos attempted to sell Ken & Sue’s on Main Street in February 2020. What began as a simple business transaction quickly turned into a federal probe, revealing a pattern of deceptive accounting. The pair didn’t even try to hide their actions, with Suzanne Fusco stating, “we’re masters at,” and Kenneth finishing the thought with a chilling “disguising.”

According to court documents and testimony, the Fuscos weren’t just fudging numbers; they were actively funneling personal expenses through the restaurant, claiming them as legitimate business costs. IRS Criminal Investigation agents uncovered roughly $1 million in improperly categorized expenses, translating to over $160,000 in unpaid taxes. A search warrant executed on the restaurant premises on August 26, 2020, unearthed the evidence needed to build a solid case.

U.S. Attorney Cole Finegan didn’t mince words, stating, “This sentence will justly restrict the defendants’ liberty for five years, require significant community service, and ensure full repayment to the American taxpayers. This serious crime would not have been detected and prosecuted but for the great work of our partners at the IRS-CI.” The message is clear: attempting to cheat the system will have consequences.

Andy Tsui, Special Agent in Charge of the IRS-CI Denver Field Office, echoed that sentiment. “The U.S. tax system is critical to funding vital government services for our citizens and we protect the integrity of our system by ensuring everyone pays their fair share,” Tsui said. “Today’s sentencing demonstrates our commitment to identifying and investigating business owners who attempt to evade their tax obligations and serves as an example that violators will not go unpunished.”

The investigation was spearheaded by the IRS Criminal Investigation Division in Durango, Colorado. Assistant U.S. Attorneys Jeffrey K. Graves and Nicole C. Cassidy handled the prosecution. Case Number: 22-cr-00311. The Fuscos’ attempt to cook the books ultimately left them with a far more bitter taste than any dish served at Ken & Sue’s.