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Owner of three North Shore restaurants pleads guilty to tax fraud schemes

September 17, 2024 by Adam Levine

BOSTON — A New Hampshire resident pleaded guilty to tax fraud schemes on Sept. 6, according to a press release from the United States Attorney’s Office for the District of Massachusetts.

John Drivas, 66, of Hampton, New Hampshire pleaded guilty to defrauding the Internal Revenue Service regarding federal employment taxes and the Massachusetts Department of Revenue regarding state meals taxes over a six-year period on Sept. 6, according to the press release.

Drivas owned and operated Red’s Kitchen and Tavern in Peabody, Red’s Seabrook in Seabrook, NH, and Red’s Sandwich Shop in Salem between January 2016 and October 2022, according to the release. He was the sole shareholder of the Salem restaurant until he sold it to an employee in September 2022, the sole owner of the Peabody restaurant with his wife, and the 52% owner of the Seabrook restaurant with his children.

He pleaded guilty to five counts of failure to collect and pay over employment taxes owed to the IRS and four counts of wire fraud for state meals taxes he collected from restaurant customers, but failed to pay to the state Department of Revenue, the release stated.

He paid wages to many employees through both payroll checks and in cash, according to the release. Drivas did not report the cash wages to the IRS or pay employment taxes on them. Since federal tax law requires employees to withhold employees wages for income taxes, Social Security, and Medicare taxes, he caused employment tax losses of $439,341.

Drivas also collected more than $1.5 million in state meals taxes paid by restaurant customers which he failed to pay over to the state as required by law, the release stated. All owners and operators of restaurants and bars are required to collect 6.25 sales tax on meals across the Commonwealth, and Salem and Peabody also require restaurants and bars to collect an additional 0.75% local option meals excise tax.

He collected the taxes from customers, but “intentionally withheld” $1,596,775 of the meal taxes from months reports and payments owed to the Massachusetts Department of Revenue.

“The charge of failure to pay over taxes carries a maximum potential sentence of five years in prison, three years of supervised release, a fine of $250,000 or twice the gross gain or loss and restitution. Each wire fraud charge is punishable by up to 20 years in prison, supervised release for three years, a fine of $250,000 or twice the gross gain or loss, and restitution,” according to the release.

Sentences are imposed by the federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors, the release stated. U.S. District Judge Julia E. Kobick scheduled sentencing for Dec. 5, 2024.

Acting United States Attorney Joshua S. Levy, Harry Chavis, Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office and Katherine Mulligan, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts made the announcement, the release stated.

The Criminal Investigations Bureau of the Massachusetts Department of Revenue. Assistant United States Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit is prosecuting the case, according to the release.

  • Adam Levine
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