BY JON CRONIN
The embattled owners of College Point’s Spa Castle have pleaded guilty and were convicted of felony tax fraud, according to the state attorney general.
Spa Castle corporate officer Daniel Chon and the owners of Spa Castle will have to pay $2.5 million in criminal restitution and civil damages.
Last week, State Attorney General Barbara Underwood and Acting Tax Commissioner Nonie Manion announced the criminal convictions of the owners and Chon in a civil settlement for False Claims Act violations.
“We have zero tolerance for tax cheats who leave New Yorkers to foot the bill,” said Underwood. “The defendants orchestrated a multimillion-dollar scheme to defraud taxpayers. We’re grateful to the whistleblower who helped bring this egregious conduct to light—and it should serve as a wake-up call to all tax fraudsters who think their misconduct will go by unnoticed.”
Underwood said that the whistleblower exposed millions in unreported income from the facility. The whistleblower will receive $575,000, under the New York False Claims Act, which entitles whistleblowers to a percentage of the unreported tax.
“This conviction proves that the local community is watching and they won’t stay silent when business owners violate their trust,” said Manion.
According to the state attorney general’s office, Spa Castle Inc.’s College Point location made more than $22 million per year in revenue.
The whistleblower filed an action in 2014 as part of the New York False Claims Act’s “qui tam” provisions, which are provisions to reward the whistleblower if the government’s case is successful. After that, the attorney general’s Taxpayer Protection Bureau launched a civil investigation. The investigation found “substantial indications of knowingly fraudulent conduct on the part of Spa Castle and its principals.”
According to statements made by the prosecutor, records seized in 2015 by the attorney general’s office and the state Department of Taxation and Finance during the execution of a search warrant proved that the owners did not pay required sales, corporate and MTA surcharge taxes by underreporting millions of dollars in income. A criminal indictment was filed by the attorney general’s office in March 2017 at the Queens Supreme Court.
Spa Castle’s owners and Chon pleaded guilty last week to criminal tax fraud. Chon also pleaded guilty to attempted criminal tax fraud.