Tax Evasion Lands Beach House Owner in Hot Water

Kenneth J. O'Brien

Kenneth J. O’Brien, 47, of Portsmouth, Rhode Island, owner of K&D Investments Inc., d/b/a The Beach House, a bar, restaurant, and nightclub in Portsmouth, has pleaded guilty to three counts of tax evasion. O’Brien admitted to failing to report nearly $1 million in income from his business and to keeping two sets of business bookkeeping records.

According to court documents, in July 2011, an IRS review discovered that The Beach House was listed for sale, and O’Brien was maintaining two sets of bookkeeping records. The true record of the business’s income was kept for internal use, while a fictional set was created for third-party disclosures. During a meeting with an undercover agent, O’Brien explained that he skimmed cash from the business, stating, "… I steal five to ten thousand a month. On a slow month five, on a good month ten."

O’Brien failed to disclose $929,095 in income from the business and failed to pay $171,990 in taxes, plus interest and penalties, between 2007 and 2010. He is scheduled to be sentenced on September 2, 2014. Tax evasion is punishable by up to 5 years in federal prison and a fine of up to $100,000.

The case is being prosecuted by Assistant U.S. Attorney Richard W. Rose, with the assistance of Assistant U.S. Attorney Terrence P. Donnelly. O’Brien’s guilty plea marks a significant blow to the notorious Beach House, which has long been a fixture in Portsmouth’s nightlife scene.

O’Brien’s downfall began in 2011, when an IRS review uncovered the discrepancies in the business’s bookkeeping records. The subsequent investigation revealed a pattern of tax evasion that spanned several years. O’Brien’s guilty plea is a testament to the IRS’s commitment to rooting out tax evasion and ensuring that those who cheat the system are held accountable.

The prosecution of O’Brien is a victory for the people of Rhode Island, who demand that their leaders and business owners operate with integrity and transparency. As the case moves forward, the public can be assured that the IRS will continue to pursue those who engage in tax evasion and other financial crimes.

Kenneth J. O’Brien is scheduled to be sentenced on September 2, 2014. The public is invited to attend the sentencing hearing, which will be held at the U.S. District Court in Providence. For more information, please contact the U.S. Attorney’s Office at 401-709-5357 or USARI.Media@usdoj.gov.

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