John Arthur Hudson, Wire Fraud, California 2020

A Monterey attorney has been sentenced to two years in prison for embezzling from a trust that owned the premises of San Francisco’s Elite Cafe Restaurant, announced Acting United States Attorney Stephanie M. Hinds and Federal Bureau of Investigation Special Agent in Charge Craig Fair.

John Arthur Hudson, 71, pleaded guilty to two counts of wire fraud on October 28, 2020, in federal court. Hudson was appointed to be trustee of a trust in 2011, which 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.

According to the plea agreement, Hudson committed fraud by obtaining loans secured by the trust’s property in a scheme that began in or about April 2011 and continued through June 2018. As trustee of the trust, Hudson pledged the Fillmore property as security for loans and concealed the loans from the trust’s two beneficiaries, to whom he owed fiduciary duties.

Hudson also lied to the lenders by representing the loan proceeds would be used to improve the Fillmore property. Once he obtained the loan proceeds, Hudson did not put the funds towards improving the Fillmore property but instead used the funds to benefit himself personally, including paying his own mortgage, issuing checks payable to himself, paying credit card bills for expenses unconnected to the trust, and paying other personal expenses.

The plea agreement further revealed the steps Hudson took to conceal his fraud. For example, Hudson hid the existence of the loans in documents and communications regarding the trust by falsifying the balance of the trust’s funds. He concealed information regarding a personal injury lawsuit against the trust from the two trust beneficiaries, as the lawsuit named a lender as a co-defendant in the action.

Hudson personally obtained at least $693,000 by embezzling from his victims, according to his plea agreement. In addition to the prison term, United States District Judge James Donato ordered Hudson to pay $828,521.52 in restitution and sentenced him to a three-year period of supervised release.

Hudson will begin serving his prison term on September 13, 2021. The case is being prosecuted by the Special Prosecutions Section of the U.S. Attorney’s Office for the Northern District of California. The prosecution is a result of an investigation by the Federal Bureau of Investigation.

Defendant: John Arthur Hudson

Criminal Charges: Two counts of wire fraud

City and State: San Francisco, California

Exact Date: October 28, 2020

Sentence: Two years in prison

Dollar Amounts: $828,521.52 in restitution, at least $693,000 embezzled from victims

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