By Brian Trompeter
A Vienna couple pleaded guilty in the U.S. District Court for the District of Columbia Aug. 14 for failing to pay more than $1.35 million in taxes related to their operation of several restaurants in the Washington, D.C., area.
Gholam “Tony” Kowkabi, 63, pleaded guilty to wire fraud and tax evasion. Wire fraud carries a statutory penalty of 20 years and financial penalties. Tax evasion carries a statutory penalty of five years and financial penalties.
Karen Kowkabi, 64, pleaded guilty to five counts of willfully failing to pay taxes. Failing to pay tax carries a statutory penalty of one year and financial penalties, federal officials said.
Gholam Kowkabi also pleaded guilty to stealing more than $738,000 from the emergency small-business-relief funds his Georgetown restaurant, Ristorante Piccolo, received during the pandemic, federal officials said.
“This defendant robbed a program intended to help fellow restaurateurs 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 Matthew Graves. “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 $1 million in taxes that he and his business owed.”
The Kowkabis have owned and operated Ristorante Piccolo since 1986 and have owned and operated restaurants Catch 15 and Tuscana West in Washington, D.C. From 1998 to 2018, the Kowkabis amassed an unpaid tax balance of $1,351,038.51, including federal income and employment taxes and trust-fund recovery penalties, federal officials said.
Gholam Kowkabi admitted to attempting to evade payment of those taxes by concealing assets and obscuring the large sums of money he took from the businesses by, among others, purchasing property in the name of a nominee entity and causing false entries in the businesses’ books and records to hide personal purchases using business bank accounts. Karen Kowkabi admitted she willfully failed to pay these taxes as well, federal officials said.
The couple have agreed to pay back the full amount to the IRS, federal officials said.
From May 13, 2020, to July 27, 2021, Gholam Kowkabi obtained more than more than $1.6 million in COVID-19 relief funds, including $474,000 from first draw and second draw Paycheck Protection Program (PPP) loans, an Economic Injury Disaster Loan (EIDL) for $499,900 and a Restaurant Revitalization Fund (RRF) grant for $631,823.28, federal officials said.
In these applications and loan agreements, Gholam Kowkabi fraudulently and falsely promised that the PPP, EIDL and RRF proceeds would be used only for business-related and eligible purposes as specified in the applications.
Instead, he used a portion of all three funds for unauthorized purposes and his own personal enrichment, including the purchase of a waterfront condominium in Ocean City, Md., for more than $500,000, two joint-venture investments totaling more than $237,000 for construction of homes in Great Falls and more than $78,500 to open Divan Restaurant in McLean.
Gholam Kowkabi spent more than $11,000 of COVID relief funds on his home mortgage, more than $14,000 on vacations, more than $62,000 on personal legal expenses, more than $20,000 on home improvement, and more than $5,500 on college-tuition payments for his child.
Gholam Kowkabi has agreed to pay $738,657.18 in restitution to the Small Business Administration. He also has agreed to forfeit the waterfront condo and the two joint ventures funded with COVID-19 relief moneys.
Sentencing hearings are scheduled for Dec. 1. A federal district court judge will determine any sentence after considering the U.S. sentencing guidelines and other statutory factors.
