El Dorado County District Attorney Vern Pierson announced the sentencing of Michael Adams and Brenda Adams, the owners of Poor Reds in Diamond Springs, who failed to report $1,320,400 in taxes and committed insurance fraud.Poor Red’s opened in 1948 and is best known for its signature drink, the Golden Cadillac, a frothy blend of Galliano, half-and-half, white cream de cacao and ice.

Defendant Michael Adams was sentenced to 6 years 8 months in state prison, and ordered to pay $629,818 as restitution for the unpaid taxes and investigation costs. Defendant Brenda Adams was sentenced to a year in county jail, and also ordered to pay $629,818 as restitution for the unpaid taxes and investigation costs. The length of time from plea to sentencing was much longer than had been anticipated, but necessary in order to attempt to obtain transfer of ownership of Poor Reds. The sentence was the result of guilty pleas to 8 felony counts, including insurance fraud, tax evasion and an admission of an aggravated white collar crime enhancement.

This case was textbook example of multi-agency collaboration and joint investigation by the California Board of Equalizations (BOE), Employment Development Department (EDD) Franchise Tax Board (FTB), Department of Insurance (DOI), and investigators from the El Dorado County District Attorney’s Office. County of El Dorado