Manhattan Restauranteur Pleads Guilty to Tax Evasion Scheme

The owner of a former New York City restaurant pleaded guilty to tax evasion today, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division, U.S. Attorney Geoffrey S. Berman for the Southern District of New York, and Chief of Internal Revenue Service- Criminal Investigation (IRS-CI) Jonathan D. Larsen.

“The defendant funded his lavish lifestyle by failing to pay legally obligated taxes thus causing harm to all Americans,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman. “We remain committed to prosecuting tax criminals who refuse to pay their fair share.”

“As he admitted in court, restaurateur Adel Kellel cooked his books for years, skimming money from his restaurant and salting it away in personal accounts or using it for personal expenses,” said U.S. Attorney Geoffrey S. Berman for the Southern District of New York. “His scheme was a recipe for making millions in unreported income, but now he will have to pay for his gluttony.”

“When Mr. Kellel chose to hide millions of dollars from the IRS, he unfairly shifted the tax burden to honest American taxpayers,” said IRS-CI Chief Jonathan D. Larsen. “As we start the tax filing season, this is a stark reminder of the serious consequences of tax evasion, including potential imprisonment. IRS-CI will continue to be relentless in our mission to root out tax fraud.”

According to the Information and statements made in court, in 2011, Adel Kellel was the President and a minority owner of K&H Restaurant Inc. (K&H), which operated Raffles Bistro (Raffles), a restaurant located at a New York City-based hotel. From 2012 through 2015, Kellel was the sole owner of K&H. K&H’s gross receipts consisted primarily of: (1) credit card payments by Raffles customers; (2) cash payments by Raffles customers; and (3) check payments by the hotel for services that Raffles provided to hotel guests and patrons, including room service, banquets, and catering. 

From 2011 through 2015, Kellel concealed a substantial portion of K&H’s gross receipts by not fully reporting the cash received from Raffles’ customers. Kellel further hid the gross receipts by depositing cash into personal bank accounts, by spending funds directly on personal expenses, and by diverting checks paid by the hotel to K&H into non-business bank accounts that Kellel hid from his accountants. During this time, Kellel diverted more than 150 hotel checks, totaling more than $2 million, to more than a dozen bank accounts. 

Kellel used the diverted income for personal expenses, including: overseas transfers; condominium fees; rent for a high-end Manhattan apartment; college tuition payments from his children; shopping at luxury retailers, such as Hugo Boss and Saks Fifth Avenue; payments for luxury cars manufactured by Mercedes, Porsche, and Maserati; and to pay for domestic and international travel. 

By fraudulently concealing from his accountants the cash and a portion of the hotel checks received by Raffles, Kellel caused K&H’s corporate tax returns, and Kellel’s own tax returns from 2011 through 2015 to be materially false. Kellel admitted that his conduct caused a tax loss of at least $771,195 to the Internal Revenue Service (IRS) and the New York State Department of Taxation and Finance (NYSDTF).

U.S. District Judge Paul G. Gardephe set sentencing for April 23, 2020. At sentencing, Kellel faces a maximum sentence of five years in prison. He also faces a term of supervised release and monetary penalties. As part of his plea agreement, Kellel agreed to pay restitution of $613,478 to the IRS, and to pay restitution of $157,717 to NYSDTF.

Principal Deputy Assistant Attorney General Zuckerman, U.S. Attorney Berman, and IRS-CI Chief Larsen praised the efforts of IRS-CI, who conducted the investigation, and Assistant Chief Jorge Almonte of the Tax Division and Assistant U.S. Attorney Olga I. Zverovich, who are in charge of the prosecution.

Go to Source
Author: January 24, 2020

Advertisements

Comments