» Forfeiture prepared in restaurant fraud case:

Two indicted in tax, bank fraud scheme

Prosecutors in a federal bank fraud case file actions to forfeit at least $1.75 million, jewelry and precious metal bars seized from the family that operates El Beso and El Fuego restaurants.

At the same time a Franklin couple led their bank to believe their businesses were barely breaking even, they were using one of their restaurants to hide expensive jewelry, gold and silver ingots, and more than $1 million cash, according to court records.

A week after a grand jury indicted Paul Bouraxis, his wife, son and son-in-law in a giant tax and bank fraud scheme, federal prosecutors filed actions to forfeit at least $1.75 million, plus expensive jewelry, gemstones and precious metal bars seized in 2012 from El Beso, El Fuego, homes, offices, numerous bank safe deposit boxes and a luxury SUV.

An investigator’s affidavit in support of the forfeitures lays out in detail how they say Bouraxis built up a hidden net worth of millions during a time Associated Bank sold off its many loans to Bouraxis at a loss, moves the bank says it would not have made had it known Bouraxis’ true financial condition.

The affidavit from IRS Special Agent Zachary Stegenga says that separate sets of books seized along with the cash and valuables show that Bouraxis was not only skimming about $100,000 a month from cash restaurant receipts, he was also loaning money to other local businesses and individuals and not reporting the interest they paid.

More than $1 million of the cash came from a safe at El Beso, on S. 74th St. in Greenfield, and jewelry was found in a separate safe in the restaurant’s upstairs office. Bouraxis had the combination on a card in his wallet, according to Stegenga’s affidavit.

In addition, Bouraxis had about $2 million in Greek and other European bank accounts, assets not disclosed to his banker or on his U.S. tax returns, according to the affidavit.

Through the 1990s and 2000s, Associated Bank had loaned Bouraxis about $10 million for various business and real estate ventures. Around 2009, the bank became concerned about Bouraxis’ ability to make payments and agreed not to foreclose for several months, but in 2010 finally sold off the loans at a big loss.

All that time, investigators contend, Bouraxis was socking away cash from the restaurants and the loan repayments, spending some on jewelry like Rolex watches, and dozens of pieces of expensive jewelry, including a ring appraised at $39,000.

Though some of the jewelry matched sales receipts and appraisals also recovered during the 2012 search warrant executions, the affidavit does not mention a total estimated value for the noncash assets.

The defendants are scheduled to make their first court appearances July 14.