San Jose: Hotel property management company owner gets 6 months in jail for embezzling client funds

SAN JOSE — The owner of a San Jose-based hotel property management company will serve six months in jail for embezzling tens of thousands of dollars in client funds, prosecutors said.

Henry Flynn, 57, the owner and CEO of Kubo, pleaded guilty to grand theft in November 2022.

Kubo provided management services to hotels throughout California, including in Lake Tahoe and the Bay Area, the Santa Clara County District Attorney’s Office said in a news release Thursday.

Records from 2015-2018 showed Kubo overestimated the workers’ compensation insurance needs of some clients, resulting in premium overpayments of tens of thousands of dollars per year, prosecutors said. But when the insurance providers refunded the overpayments, Flynn pocketed the checks and deposited some of them into his personal accounts.

Concerns about potential criminal conduct by Flynn and Kubo were reported in 2018.

Flynn, in addition to serving six months in Santa Clara County jail, will be placed on probation for three years, prosecutors said. During that time, he will be prohibited from owning or operating a business that handles the bookkeeping, accounting or financial matters of others. He must also notify his clients of his conviction.

Flynn has paid over $195,000 in restitution, prosecutors said.

This isn’t Flynn’s first brush with the law. In 2008, he was convicted of grand theft for embezzling from his then-employer Vasona Management, prosecutors said.

“Trust, but verify,” District Attorney Jeff Rosen said in a statement. “We have a steady stream of small business victims duped by predatory criminals who may have been discouraged or caught by a more robust system of financial checks and balances.”

Prosecutors said some of those checks and balances include running background checks and vetting people who handle finances, requiring two signatures on checks over a set amount, and hiring a CPA firm to do a sampling of transactions at regular intervals.