Restaurateurs Gholam “Tony” Kowkabi, 63, and Karen Kowkabi, 64, of Vienna, pleaded guilty Monday to federal tax charges and stealing COVID relief funds. They used the money on a waterfront condominium, to open a McLean restaurant, for personal investments, and for college tuition.
The couple failed to pay more than $1.35 million in taxes from their restaurants in the DC area. Gholam Kowkabi also pleaded guilty to stealing more than $738,000 from COVID emergency small business relief funds his Georgetown restaurant, Ristorante Piccolo, received. The Kowkabis also own DC’s Catch 15 and Tuscana West and Divan Restaurant in McLean.
Federal prosecutors said they opened the Persian-Mediterranean eatery, Divan Restaurant on Old Chain Bridge Road, with $78,500 of the $1.6 million Gholam Kowkabi received in COVID relief funds.
Gholam Kowkabi also will pay $738,657.18 in restitution to the Small Business Administration for COVID relief funds that were misused. Additionally, he agreed to a money judgment of $738,657.18 and to forfeit an Ocean City, Maryland, waterfront condominium and two joint ventures involving Versailles Custom Homes that were funded with the money.
“This defendant robbed a program intended to help fellow restauranteurs and other small business owners who were struggling to stay afloat amid the devastating economic impacts of the COVID-19 pandemic,” said U.S. Attorney Graves, in a news release. “He also created an elaborate scheme to hide assets and play a shell game with the IRS so he could avoid paying the more than one million dollars in taxes that he and his business owed. Our office will continue to vigorously prosecute such frauds.”
Federal prosecutors said that from 1998 to 2018, the couple “amassed an unpaid tax balance of $1,351,038.51, including federal income and employment taxes and Trust Fund Recovery Penalties.” Gholam Kowkabi admitted concealing the assets, buying property, falsifying business records, and hiding personal purchases using business bank accounts. Karen Kowkabi admitted she also failed to pay the taxes.
From the COVID Paycheck Protection Program loans, an Economic Injury Disaster Loan, and a Restaurant Revitalization Fund grant, Gholam Kowkabi bought an Ocean City bayside condo on South Heron Drive for $503,809 under the business name of Eramcy, court records show. He also spent $78,535 for the construction of Divan, put $237,077 into joint ventures to build homes, paid $11,388 on his home mortgage, spent $14,392 on vacations, bought $20,562 in home improvements, and paid $62,417 in legal expenses. He also paid $5,509 in tuition, spent $37,093 with TD Ameritrade, took out $54,914 in cash withdrawals, and spent $1,068 on restaurants and $848 on miscellaneous items.
The specific charges to which Gholam Kowkabi pleaded guilty in the U.S. District Court for the District of Columbia are one count of tax evasion and two counts of wire fraud. Tax evasion can land someone in prison for five years and impose financial penalties, while wire fraud has a statutory penalty of 20 years and financial penalties. Sentencing guidelines estimate a range of 57 to 71 months.
Karen Kowkabi pleaded guilty to five counts of willfully failing to pay taxes. Each count carries a statutory penalty of one year and financial penalties.
Sentencing hearings for the two will be held December 1.
Feature image, Fabio Balbi/stock.adobe.com
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