Former Hennessey CFO pleads guilty to embezzlement, repays $610,000

James Cram pled guilty to embezzling $1.14 million from his former employer. Photo courtesy of the Redondo Police Department

James Cram pled guilty on Tuesday to embezzling $1.14 million from his former employer. Photo courtesy of the Redondo Police Department

“Live and learn,” Paul Hennessey said Tuesday afternoon, shortly after his former chief financial officer pled guilty to having embezzled $1.14 million from Hennessey’s restaurants and tavern business.

“I have 800 employees and trust each one 1,000 percent. Then, the one person I trusted with the money was taking it,” Hennessey said.

James Cram, 54, pled guilty in Torrance Superior Court on Tuesday to one count of grand theft embezzlement and one count of filing a false tax return, according Los Angeles County Deputy District Attorney John Harlan, who prosecuted the case.

Prior to accepting Cram’s guilty plea, Cram paid Hennessey $610,000 in restitution. If Cram repays the $536,742 balance of what he took within the next 12 months, he will be released from jail next November and put on three years probation. If he fails to repay the balance, he will be sentenced to five years, Harlan said. He must also pay $201,464 in taxes to the California Franchise Tax Board.

Harlan declined to state the sources of the money Cram used to make the partial restitution and Cram’s attorney Edward Robinson did not return calls prior to press time.

But sources familiar with the case said the $610,000 payment made this week came from the estate of Cram’s father, who recently died. The source added that Cram hoped to pay the balance with proceeds from the sale of his Palos Verdes homes.

According to Hennessey, Cram made unauthorized transfers from Hennessey’s Las Vegas restaurants’ lines of credit to the Hennessey parent company, and from there, transferred funds to Hennessey’s personal accounts. Withdrawals from the personal account were made with forged checks that Cram made payable to himself or his own creditors. Cram was employed by Hennessey from 2006 until his resignation in 2010. He said Cram attempted to mask the withdrawals by making the amounts close to Hennessey’s mortgage payments.

“It was clever but stupid, because he was bound to get caught,” Hennessey said.

Hennessey said that during the period the money was being taken from him, his attention was diverted by the opening of four Hennessey’s restaurants in Las Vegas. After the restaurants were open he said, “I was looking at my lines of credit and realized something was fishy. I called in auditors and they found the problem in about 15 minutes.”

Years ago, he said, he had been warned by fellow club owner Mike Lacey, after a bookkeeper embezzled money from Lacey’s Comedy and Magic Club, to personally examine his company’s bank statements.

“But I thought to myself, it will never happen to me,” Hennessey said.

Hennessey praised prosecutor Harlan for obtaining the guilty plea and recovering the embezzled funds.

“He told me his first goal was to recover the money. It took a year, and I was getting impatient, but Harlan made sure everything was lined up properly,” Hennessey said.

Harlan, in turn praised Redondo Beach Police Detective David Arnold.

“Detective Arnold did an outstanding job of putting case together,” Harland said.

Lt. Joe Hoffman, the head of the RBPD detective bureau also credited Arnold’s work with the successful prosecution.

“He really worked very hard and put in long hours on this case to put all the pieces together, sorting through it all and obtaining the search warrants for several financial institutions that we needed to file 19 counts. It would have been easy to stop at a lower number, but because he was so thorough we were able to get 19 felony charges – that shows how detailed Dave Arnold was.”

Hennessey started his first restaurant in Hermosa Beach in 1976 and now has more than a dozen Hennessey’s, H.T. Grill’s, and Mickey Finn’s, mostly in the South Bay (including three restaurants in Redondo Beach), but also in Orange County and Las Vegas. The company reports its annual revenues are more than $30 million.

Additional reporting .

Comments:

comments so far. Comments posted to EasyReaderNews.com may be reprinted in the Easy Reader print edition, which is published each Thursday.