United States Attorney James T. Jacks
Northern District of Texas

TUESDAY, DECEMBER 15, 2009
http://www.usdoj.gov/usao/txn/

LUBBOCK MAN SENTENCED TO 18 MONTHS IN FEDERAL PRISON
FOR EMBEZZLING FROM HEALTH CLUBS
IN TEXAS AND OKLAHOMA

Former Wife is Currently Serving 41-Month Sentence for Role in Same Crime

LUBBOCK, Texas — Chad W. Read, 42, of Lubbock, was sentenced on Friday by U.S. District Judge Sam R. Cummings to 18 months in prison and ordered to pay $15,000 in restitution to Reaction Fitness Clubs, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Read pleaded guilty in August 2009 to one count of money laundering stemming from his embezzlement of funds from the fitness clubs. Judge Cummings ordered that he surrender to the Bureau of Prisons by January 15, 2010.

Read’s ex-wife, Emily J. Read, a/k/a Emily Joe Khalili Read, was sentenced in September 2009, to 41 months in prison and ordered to pay more than $670,000 in restitution, following her guilty pleas to one count of money laundering and one count of uttering counterfeit obligations of the U.S., for embezzling from the fitness clubs. She is currently serving that sentence at the Federal Medical Center (FMC) Carswell in Fort Worth, Texas.

Chad Read admitted in plea papers that from June 2004 to December 2006, he and his then wife, Emily Read, embezzled money from a group of health fitness clubs. Emily worked as a bookkeeper for a fitness health club in Lubbock and for related clubs in Corpus Christi, Texas, and in Lawton and Tulsa, Oklahoma. The club names and their ownership interests changed from time to time, however, they were generally referred to as the Reaction Fitness Clubs. Chad Read assisted her in laundering more than $110,000 of the illegally obtained funds. Emily Read also passed counterfeit notes to a variety of retail stores in the Lubbock and Highland Park, Texas, areas.

One way they admitted embezzling the money was by having Emily write a large number of checks from the Reaction Fitness Clubs bank accounts. Sometimes she would cash the checks and sometimes she deposited the funds into their personal bank accounts.

Chad and Emily Read paid for their personal credit card accounts from the Reaction Fitness Clubs bank accounts and purchased many personal items using the money they received from those

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accounts to purchase such items as designer clothing, home furnishings, and airline tickets, all for their personal use.

One way the Reads disguised the source of the criminally obtained funds was by claiming the funds came from trust fund proceeds that Emily Read had allegedly received from her father. The Reads widely spread the story that their wealth came from a trust fund that her father had left to her, when in fact, their “wealth” was the result of their crime.

The Reads moved to Lubbock from California in 2001 and lived a very modest lifestyle until Emily began working for the Reaction Fitness Clubs. Soon thereafter, they began embezzling money from the clubs. In fact, Read and Emily went from living with Emily’s mother to owning a series of large homes and a condo in Dallas. They purchased a $450,000 home and then upgraded to a $1.2 million home that they lavishly furnished. Chad Read purchased expensive cars and a recreational vehicle, eventually upgrading to a more expensive recreational vehicle. They shopped at expensive designer stores in Dallas and in Beverly Hills, California, and Emily Read spent thousands of dollars on Jimmy Choo shoes.

Chad Read agreed that the loss in his case is $110,817.74 and agreed to make restitution of that amount. Since he has already made payments to reduce that restitution amount, his owed restitution is $15,000, as ordered by the Court.

The cases were investigated by the Internal Revenue Service - Criminal Investigation and the U.S. Secret Service. Assistant U.S. Attorney Paulina Jacobo of the Lubbock Division of the U.S. Attorney’s Office, Northern District of Texas, was in charge of the prosecution.

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