- The Washington Times - Friday, February 10, 2006

A District restaurant owner charged with pocketing money his customers paid in sales taxes pleaded guilty yesterday to tax evasion and federal mail-fraud charges.

Under a plea agreement, Gholam H. Kowkabi, 45, of Vienna, Va., could face three years in prison and would pay the D.C. government $1.7 million in restitution.

Kowkabi, a U.S. citizen from Iran, admitted to one count of felony tax evasion and one count of mail fraud. He originally was charged under a 32-count indictment.

When announcing the charges in April, prosecutors called this one of the largest sales-tax cases ever brought in the District.

Kowkabi owned four restaurants and one nightclub.

“He would only report a small percentage of the sales he had actually experienced at the restaurants,” Assistant U.S. Attorney Anthony M. Alexis told U.S. District Judge John D. Bates.

Mr. Alexis said the mail-fraud charge was related to Kowkabi knowingly engaging in a scheme to use the U.S. Postal Service to defraud the D.C. government.

The two-year investigation focused on the Alamo Grill, Ristorante Piccolo and Sole Restaurant in Georgetown and Tuscana West and the Home Nightclub, both downtown.

From 1998 to 2005, Kowkabi underreported his sales by $33,000 to $184,000 monthly, pocketing more than $2 million, according to charging documents.

There were times when Kowkabi reported sales that were less than the tips collected by his employees, prosecutors said. They said a reliable tip led them to search Kowkabi’s businesses.

D.C. officials have said the offenses could be widespread in the restaurant industry.

Kowkabi’s attorney, David Schertler, originally said his client did not intentionally violate the law.

But Kowkabi admitted to the crimes yesterday in federal court. The judge told him the maximum sentence is 30 years in prison and fines up to three times the amount Kowkabi gained in the scheme.

Kowkabi, dressed in a gray suit, declined to comment through his attorney after the hearing.

All four of his restaurants have since filed for bankruptcy protection, Mr. Alexis said. Sole Restaurant has closed, and its assets were liquidated.

Sentencing was delayed, in part, to allow Kowkabi to gather money to pay his restitution. He was released yesterday and is due back in court May 1 for a status hearing.

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