Woman who embezzled $880,000 from Denny's franchisee, Rochester company gets 9 years

A southern Minnesota woman has been sentenced to more than nine years in prison and ordered to pay restitution for embezzling more than $880,000 while working at several Denny's restaurants in the Twin Cities and Wisconsin and then for a Rochester construction company.

Kimberly Sue Peterson-Janovec, 59, of Kenyon was sentenced Wednesday in Minneapolis by U.S. District Chief Judge John Tunheim.

A jury convicted Peterson-Janovec four months ago of 13 counts of wire fraud, two counts of mail fraud, three counts of aggravated identity theft, three counts of making and subscribing a false tax return, and three counts of failure to file individual tax returns.

The sentence of nine years and three months also requires Peterson-Janovec to pay back to her victims more than $1 million and be under court supervision for three years once she leaves prison.

In 1998, she was convicted of a federal fraud charge and then sentenced to about 4½ years in prison for embezzling more than $950,000 from another former employer. She spent some of that money on cars, jewelry, clothing, real estate and two janitorial service franchises.

In her latest case, Peterson-Janovec used the money to finance her hobbies and make a down payment on a home. The indictment said she also spent the money on jewelry, concert tickets, apparel and in other ways.

Prosecutors say Peterson-Janovec also committed tax crimes throughout her fraud scheme, which led to more than $160,000 in unpaid taxes.

The prosecution branded Peterson-Janovec as a "recidivist fraudster [who] embodies the 'fool me once' maxim," according to a court filing.

After she was arrested and jailed, Peterson-Janovec made calls "to manipulate and intimidate witnesses," the prosecutors wrote. She leaned on witnesses to stop cooperating with authorities and "used government witnesses to access her financial accounts," the filing continued.

She also wrote "an upsetting letter to her father about the ongoing investigation," the prosecution said.

Her efforts "to manipulate her family had grave consequences," the filing noted. "Her elderly father's health has significantly deteriorated due to his tangential involvement in her criminal activity and [from] the stress she caused him from her outreach."

Eventually, the court limited Peterson-Janovec's communications from jail to her counsel.

In 2014, Peterson-Janovec became director of operations for MI5 Inc., a Denny's franchisee that owned and operated eight restaurants in Minnesota and Wisconsin. For the next five years, she embezzled money from MI5 and parent Denny's by submitting false requests for vendor payments and then diverting the money to herself.

She also issued to herself unauthorized compensation using the names of former employees.

MI5 detected the fraud in July 2019 and fired her. In early 2020, Peterson-Janovec lied about her work experience and found another job with the family-owned All Craft Exteriors construction company in Rochester.