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A.G. Schneiderman Announces Guilty Plea And Jail Time For Manhattan Restaurant Owner Who Committed Wage Theft; Restitution For Dozens Of Workers

NEW YORK -- Attorney General Eric T. Schneiderman today announced the guilty plea of Konstantinos Aronis, owner of K.M.S. Restaurant Corp. (“K.M.S.”) who operated a business under the name Nations Café. Aronis and K.M.S. faced these criminal charges for failure to pay restaurant staff for hours worked and for filing false documents with New York State in order to hide underpayments and avoid paying unemployment insurance.

The defendants today pled guilty to all charges before the Honorable Justice Larry Stephen and K.M.S. Restaurant Corp. was then sentenced in court. Aronis will be sentenced on March 31st to 60 days in jail and five years of probation. In addition, Aronis and K.M.S. Restaurant Corp. paid $300,000 in restitution today and agreed to pay an additional $204,000 for the stolen wages pursuant to a restitution order. Aronis and K.M.S. Restaurant Corp. also agreed to pay $58,561 in restitution to the New York State Department of Labor, Unemployment Insurance Division, for unpaid unemployment insurance premiums. In total, Aronis and K.M.S. Restaurant Corp. will pay $562,561 in restitution to workers and the State of New York.

This conviction follows a number of other steps taken by Attorney General Schneiderman to protect New York’s workers from exploitation, including but not limited to: ending unscrupulous non-compete agreements for workers at multiple companies; obtaining national agreements from six retail corporations comprising 13 brands, such as the Gap, Victoria’s Secret, Bath & Body Works, and J. Crew, to end the harmful practice of “on-call scheduling;” and pursuing a first-of-its-kind lawsuit against Domino’s Pizza for repeated violations of law and underpayment of workers at three franchise restaurants, which resulted in a $480,000 settlement.

Since taking office, the Attorney General has recovered more than $27 million for more than 20,000 workers victimized by wage theft, and levied more than $2.5 million in penalties against unscrupulous employers.

“A worker’s most basic right is the right to be paid for his or her work. We have zero tolerance for anyone who tries to exploit New York’s workers and the families they support,” said Attorney General Schneiderman. “My office will take aggressive action, including seeking felony convictions, payment of restitution, and jail time for any employer who breaks the law by failing to pay employees for their labor.”

“New York State will not tolerate the mistreatment of workers,” said New York State Labor Commissioner Roberta Reardon. “Under Governor Cuomo’s strong leadership, state agencies, including the New York State Department of Labor, continue to combat worker exploitation and misclassification to make sure all New York State workers are paid and treated fairly. I thank Attorney General Schneiderman and his team for working with us and for bringing Mr. Aronis to justice.”

The defendants admitted in court today that Aronis’ K.M.S. Restaurant Corp., located at 875 1st Avenue, New York, NY, failed to pay wages to its workers between May 2011 and May 2015. At varying times during this time period, the defendants employed numerous workers at Nations Café and two other restaurants located at 1066 2nd Avenue, New York, NY and 1072 2nd Avenue, New York, NY. The defendants violated the law by failing to pay their employees at least minimum wage for all hours worked and by failing to pay those employees overtime or one and one-half times their regular rates for hours worked in excess of 40 per workweek. 

Moreover, the defendants occasionally scheduled employees to work seven days a week and paid some employees a weekly salary instead of an hourly rate. The defendants also failed to keep accurate payroll records for each employee and failed to provide employees with paychecks indicating the hours each individual worked. 

Between May 2011 and May 2015, the defendants failed to pay at least minimum wage and overtime for all hours worked at the three restaurant locations resulting in $504,473 in wage underpayments owed to 34 workers. Additionally, the defendants filed false New York State Department of Taxation and Finance Form NYS-45 Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Returns by reporting that they had paid all required Unemployment Insurance Contributions, when in fact they had not. The Attorney General’s investigation revealed that the defendants underpaid Unemployment Insurance Contributions by nearly $60,000. 

The felony supreme court information, filed today in Manhattan Supreme Court, charges Aronis and K.M.S. with one count of Offering a False Instrument for Filing in the First Degree, an E felony, and one count of Failure to Pay Wages in Accordance with the Labor Law, an unclassified misdemeanor.

The Office of the Attorney General will pay out restitution collected from the defendants directly to the victimized workers.

As a condition of the plea, Aronis and K.M.S. Restaurant Corp. must re-file amended New York State Taxation and Finance tax documents to properly account for the employees that they employed between 2012 and 2016.

The Attorney General thanks the New York State Department of Labor Office of Special Investigations, Labor Standards Division, and Unemployment Insurance Division for their assistance in this investigation and prosecution.

The investigation was handled for the Attorney General’s Office by Investigator Elsa Rojas, Investigator Michael Leahy, and Supervising Investigator Sylvia Rivera, Deputy Chief Investigator John McManus, and Chief Dominick Zarrella.

The prosecution is being handled by Assistant Attorney General Jeremy Pfetsch, Criminal Section Chief Richard Balletta of the Labor Bureau, and Acting Bureau Chief Stephanie Swenton of the Criminal Enforcement and Financial Crimes Bureau. ReNika Moore is the Labor Bureau Chief and Alvin Bragg is the Executive Deputy Attorney General for Social Justice.