John Drivas, Tax Fraud, Massachusetts 2024

North Shore Restaurant Owner Pleads Guilty to Tax Fraud Schemes

BOSTON, Massachusetts - John Drivas, the former owner of three restaurants on the North Shore, pleaded guilty to tax fraud schemes involving federal employment taxes and state meals taxes. Drivas, 66, operated Red's Sandwich Shop in Salem, Red's Kitchen and Tavern in Peabody, and Red's Seabrook in Seabrook, New Hampshire.

Between January 2016 and October 2022, Drivas failed to report cash wages to the IRS and pay employment taxes on them, causing a loss of $439,341. He also collected over $1.5 million in state meals taxes from restaurant customers but failed to pay the required amounts to the Massachusetts Department of Revenue.

Drivas pleaded guilty to five counts of failure to collect and pay over employment taxes owed to the IRS and four counts of wire fraud for state meals taxes. He faces a maximum sentence of five years in prison and a fine of $250,000 or twice the gross gain or loss.

The sentencing is scheduled for December 5, 2024. Drivas was the sole shareholder of Red's Sandwich Shop until he sold it to an employee in September 2022. He was the 100% owner of Red's Kitchen and Tavern with his wife and the 52% owner of Red's Seabrook with his children.

Drivas' actions resulted in a loss of over $1.5 million in state meals taxes and $439,341 in employment taxes. He faces restitution and fines in addition to prison time.

The case was investigated by the Internal Revenue Service Criminal Investigation, Boston Field Office, and the Criminal Investigations Bureau of the Massachusetts Department of Revenue. Assistant United States Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit is prosecuting the case.

Drivas' guilty plea marks a significant blow to his business empire, which has been operating on the North Shore for years. The case serves as a reminder of the importance of tax compliance and the consequences of tax evasion.

Source: https://www.justice.gov/usao-ma/pr/owner-three-north-shore-restaurants-pleads-guilty-tax-fraud-schemes