- The Washington Times - Tuesday, July 25, 2006

A prominent D.C. restaurateur yesterday was sentenced to 18 months in federal prison for skimming at least $2 million in sales tax receipts owed to the city government.

Gholam H. Kowkabi, 44, is the first person to be charged and convicted under a new felony law imposing prison time for failure to pay D.C. sales tax.

Kowkabi has paid $1.77 million in restitution for shortchanging the city in taxes for meals and drinks he sold at the Sole Restaurant, Restaurant Piccolo, Alamo Grill and Tuscana West Restaurant, all located in Northwest.

He has since sold the businesses, according to court records.

“I’m sorry for everything,” Kowkabi told U.S. District Judge John D. Bates.

Kowkabi said the criminal investigation has had “a big impact on my lifestyle and my family.”

“I’m just happy it’s coming to an end and I can go on with my life,” Kowkabi said.

When he announced Kowkabi’s guilty plea in February, U.S. Attorney for the District Kenneth L. Wainstein called it one of his office’s most important tax cases.

Federal guidelines called for Kowkabi to receive 31 months to 41 months in prison, but Judge Bates cited Kowkabi’s “clear demonstration of acceptance of responsibility” in sentencing him to 18 months.

Assistant U.S. District Attorney John Carlin said yesterday that he had no objection to the 18-month term, which resulted from a plea agreement.

Under city law, restaurants must render a 10 percent sales tax to the District on drinks and meals.

According to charging documents, Kowkabi collected the money but diverted about 80 percent for “personal use.” The scheme lasted from 1998 to last year.

In addition, Kowkabi filed phony monthly sales figures that understated his sales tax collections, according to documents he submitted to the city’s Office of Tax and Revenue.

Prosecutors said Kowkabi kept a separate set of books that showed how much money he actually collected, as well as how much was owed to the District.

The Office of Tax and Revenue began investigating Kowkabi after he filed for Chapter 11 bankruptcy protection in 2004.

Kowkabi and his businesses were charged with 19 counts of mail fraud, six counts of bankruptcy fraud, one count of fraud under a city law and four counts of failure to pay D.C. taxes.

In a plea deal, he pleaded guilty to one count of mail fraud and one count of failure to pay taxes.

Kowkabi’s attorneys have asked that he be allowed to serve his prison sentence at the federal prison camp in Cumberland, Md., a minimum-security facility.

Kowkabi “is anxious to get his period of incarceration started and ended,” said his attorney, David Schertler.

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