Bagel Tycoon from Fishkill Headed to Prison
An entrepreneur from the Hudson Valley who made a fortune swindling prospective bagel store owners is headed to prison.
Joseph Smith may share the same name as the founder of the Mormon church, but prosecutors say he's anything but a saint. The former Fishkill resident was recently sentenced to three and a half years in prison and ordered to pay over $2 million in restitution after he was found guilty of fraud and tax evasion.
Smith was the owner of New York Bagel Enterprises Inc. where the Department of Justice says he committed wire fraud and tax evasion in a scheme to rip off prospective business partners. From 2014 to 2016 Smith sold more than 160 franchises of New York Bagel to operators in Pennsylvania and other states. In February, he pled guilty to defrauding these franchises by misrepresenting the terms of their deals.
The 57-year-old businessman guaranteed that his company would get financing for the new stores, which he later admitted was not true. He also did not reveal the actual costs involved in opening the bagel shops, surprising franchisees with charges of up to $44,000 after they had already opened.
Franchise operators demanded their money back, but Smith refused. Instead, prosecutors say he deposited more than $1 million into accounts, which he used to pay for personal travel, car payments and rent. In addition, Smith was found guilty of not filing corporate or individual income taxes for the money, failing to pay money owed to the IRS.
Smith has been sentenced to three years and six months in prison, three years of supervised release, and ordered to pay $2,100,450 in restitution to those he ripped off. FBI Special Agent Jacqueline Maguire said that Smith engaged in a "clear-cut case of fraud" and expressed satisfaction that the sentence would provide justice for his victims.
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