Southern Oregon Couple Sentenced to Federal Prison on Fraud and Tax Charges

MEDFORD, OR—Kenneth Johnson, 62, and Diana Arredondo, 56, both of Central Point, Oregon, were sentenced to federal prison based on an embezzlement and tax fraud scheme relating to the operation of a local hotel. Johnson was a partner in the Super 8 Hotel in Central Point, Oregon, since it opened in October 2005. He was in charge of the hotel’s daily operations and reported the hotel’s revenue to his partners in Montana. Johnson hired his girlfriend, Arredondo, as the assistant hotel manager. They operated the hotel from October 2005 through 2011. Johnson engaged in a scheme to defraud his hotel partners by providing them false information regarding the amount of cash collected by the hotel and diverting some of the funds for his and Arredondo’s use. Over a period of time, Johnson diverted a total of about $500,000 and shared some of the tainted funds with Arredondo. In addition, both defendants filed fraudulent income tax returns, failing to report the money embezzled from the hotel. Based on a plea agreement entered into with the government, Johnson pleaded guilty to tax fraud and wire fraud, and Aredondo pleaded guilty to tax fraud.

On Monday, March 31, 2014, Senior U.S. District Judge Owen M. Panner sentenced Johnson to 33 months in federal prison and Arredondo to 10 months in prison. Johnson was ordered to pay $561,101.05 in restitution, and Arredondo was ordered to pay $16,229.00 in restitution.

This case was investigated by the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation and was prosecuted by Assistant U.S. Attorney Judith Harper.