Fusco Couple Sentenced for Tax Evasion, Durango CO, 2023

Kenneth and Suzanne Fusco, former owners of Ken & Sue’s restaurant in Durango, Colorado, have been sentenced to six months of house arrest, 150 hours of community service, a $25,000 fine, over $160,000 in restitution, and five years of probation supervision for their roles in a felony tax evasion scheme. The convictions were the result of a lengthy investigation and prosecution led by the United States Attorney’s Office for the District of Colorado.

According to the plea agreement, public filings, and evidence presented at the sentencing hearing, the Fuscos operated Ken & Sue’s restaurant on Main Street in Durango for 22 years. However, when they put the restaurant up for sale in February 2020, an investigation was initiated, and the Fuscos were found to have overstated their business expenses to reduce their tax liability from 2014 to 2019.

During the course of the investigation, Suzanne Fusco stated, “we’re masters at,” and then Kenneth Fusco finished the sentence with the word “disguising.” The codefendants then proceeded to explain that they hid various personal expenses as business expenses to lessen their tax liability. Based on that information, the IRS executed a search warrant on the premises of the restaurant on August 26, 2020.

IRS Criminal Investigation special agents showed that the defendants intentionally categorized nearly a million dollars of their personal expenses as business expenses, resulting in underpaid taxes of over $160,000.

Senior Judge Robert E. Blackburn sentenced the defendants on February 7, 2023. The sentence will “justly restrict the defendants’ liberty for five years, require significant community service, and ensure full repayment to the American taxpayers,” said United States Attorney Cole Finegan.

“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,” said Andy Tsui, Special Agent in Charge, IRS-CI Denver Field Office. 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 conducted by the Internal Revenue Service, Criminal Investigation Division, in Durango, Colorado. Prosecution was handled by Assistant United States Attorneys Jeffrey K. Graves and Nicole C. Cassidy.