A.G. Schneiderman And Acting Tax Commissioner Manion Announce Guilty Plea Of Steuben County Restauranteur For Failing To Pay Over $175K In Sales Tax

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
February 6, 2018

Attorney General’s Press Office / 212-416-8060
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A.G. SCHNEIDERMAN AND ACTING TAX COMMISSIONER MANION ANNOUNCE GUILTY PLEA OF STEUBEN COUNTY RESTAURANTEUR FOR FAILING TO PAY OVER $175K IN SALES TAX

Christopher Klee, Former Owner of Sonora’s Mexican Restaurants in Bath and Corning, Failed to Pay Over $175,000 in Sales Tax Owed to New York State 

Defendant Will Pay Over $350,000 In Unpaid Sales Tax and Penalties

STEUBEN COUNTY - Attorney General Eric T. Schneiderman and Acting Commissioner of Taxation and Finance Nonie Manion today announced the guilty plea and conviction of Christopher Klee, 56, and his business CKP Holdings, LLC, for failing to file numerous sales tax returns and remit over $175,000 in sales tax that was collected at two Sonora’s Mexican Restaurant locations in Bath and Corning, New York. Klee will be required to pay over $350,000 to the Department of Taxation and Finance for unpaid sales tax, penalties, and interest.

When New Yorkers spend their hard-earned money, they expect the business is following the rules,” said Attorney General Schneiderman. “My office will continue to hold accountable those who seek to steal from taxpayers to line their own pockets.”

“By blatantly disregarding his tax obligations, this defendant violated the trust of his customers, deprived the communities where he operated of revenue needed for vital services, and put similar businesses at a competitive disadvantage,” said Acting Commissioner of Taxation and Finance Nonie Manion. “We’ll continue to work with the Attorney General and all our law enforcement partners to bring tax criminals to justice.”

The Bath restaurant, formerly located at 330 W. Morris Street, opened in September 2004 under the name Sonora’s Mexican Restaurant. An investigation and audit conducted by the Department of Taxation and Finance (“DTF”) revealed that from September 1, 2006 through August 1, 2011, the Bath restaurant failed to file sales tax returns and made over $1,850,000 in total sales and collected over $140,000 in sales tax that was not remitted to New York State.

The Corning restaurant, formerly located at 84 E. Market Street, opened in February 2010 under the name CKP Holdings, LLC. The DTF audit revealed that from December 1, 2009 through November 30, 2011, no sales tax returns were filed for the Corning restaurant during which it made over $480,000 in total sales and collected over $38,000 in sales tax that was not remitted to New York State. 

In November 2011, one year after the DTF began their investigation, Klee submitted seven sales tax returns and remitted approximately $35,000 in collected sales tax to New York State covering the period from December 1, 2009 through August 31, 2011. However, Klee failed to file a sales tax return for the last quarter ending November 30, 2011, and still owed over $3,500 in collected sales tax for that quarter alone.

On February 5, 2018, Klee, 56, pleaded guilty before the Honorable Peter C. Bradstreet in Steuben County Court to Petit Larceny, a Class A misdemeanor. 

CKP Holdings, LLC, pleaded guilty to Grand Larceny in the Third Degree, a Class D felony, and was sentenced to an unconditional discharge.  

Pursuant to his plea, Klee paid $225,000 to the New York State Department of Taxation and Finance for the unpaid sales tax, related penalties, and interest. Klee will be sentenced to a period of supervised release on March 26, 2018 and will pay the remaining $129,380.40 to the Department of Taxation and Finance as a condition of his sentence. 

The case was initially investigated by the Department of Taxation and Finance’s Criminal Investigations Division, and then referred to the Attorney General’s Office for further investigation and prosecution. The Attorney General thanks the New York State Department of Taxation and Finance for their valuable assistance in this investigation.

The Attorney General’s investigation was conducted by Investigator Joel Cordone under the supervision of Supervising Investigator Richard Doyle and Deputy Chief Antione Karam. The Investigations Bureau is led by Chief Dominick Zarrella.

The case is being prosecuted by Assistant Attorney General Andrew Tarkowski of the Criminal Enforcement and Financial Crimes Bureau. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Stephanie Swenton and Deputy Bureau Chief Joseph G. D’Arrigo. The Division of Criminal Justice is led by Executive Deputy Attorney General Margaret Garnett.