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March 7, 2023

Businessman gets prison term for defrauding investors

PHOTO | New Haven Biz U.S. District Court in New Haven
By Michelle Tuccitto Sullo

A businessman accused of diverting investors’ money for his personal use was sentenced Monday to 30 months in prison and must pay nearly $3 million in restitution.

U.S. District Court Judge Janet Bond Arterton imposed the sentence on Brian Hughes, 58, in a proceeding in New Haven.

Hughes, currently a New Canaan resident, lived in Madison at the time of his 2021 arrest.

Arterton ordered Hughes to pay full restitution to investors and to the Internal Revenue Service, for a total of $2,991,880. 

Hughes must report to the Federal Bureau of Prisons to begin serving his sentence Sept. 6. After he serves his sentence, Hughes will be on supervised release for three years.

In February 2022, Hughes pleaded guilty to one count each of wire fraud, making an illegal monetary transaction and tax evasion.

Assistant U.S. Attorney John Pierpont Jr. wrote in a pre-sentencing memorandum about Hughes, “For nearly four years, the defendant perpetrated a complex fraud that, from its inception, was a scam.”

“He defrauded 23 individuals of their hard-earned money with false promises about how their money would be used,” Pierpont added. “Twenty-three people invested more than $2.5 million. None would have done so if the defendant had not lied to them at the outset about what he planned to do with the money.”

Assistant Federal Defender Carly Levenson, who represents Hughes, told the court her client has a history of alcohol abuse.

In a defense memorandum to the court, Levenson acknowledged that Hughes “repeatedly used 

investor money for his personal expenses.”

“At the time, he justified his actions to himself, in part because he was putting so much of his own money into the business,” the memorandum states. “He also justified his actions by telling himself that if the business turned out to be as successful as he believed it would be, he would be able to repay his investors, and the commingling of funds along the way would not matter.”

In March 2015, Hughes founded the business Handcrafted Brands LLC to raise money to buy Salute American Vodka, court documents show. Dozens of investors gave Hughes money toward the purchase and development of Salute.

According to federal prosecutors, Hughes used money he received to pay his taxes and credit card expenses. While Handcrafted Brands did purchase Salute in 2016, Hughes continued to use some investor money for expenses unrelated to Salute, documents show.

Hughes also solicited investments purportedly on behalf of another company, identified in court documents as “Company-1.” According to the government, Hughes had no official relationship with that company and was not authorized to raise money on its behalf. Hughes spent money he received for personal expenses, to pay earlier investors and on Salute.

Prosecutors said Hughes also underreported his income to the IRS between 2015 and 2018, resulting in a tax loss of $470,880.

Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com.

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