Date: Sept. 9, 2024 Contact: newsroom@ci.irs.gov BOSTON — A Hampton, N.H., man pleaded guilty on Sept. 6, 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. Defendant owned and operated three restaurants: in Salem, MA; Peabody, MA; and Seabrook, N.H. John Drivas 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. U.S. District Judge Julia E. Kobick scheduled sentencing for Dec. 5. Between January 2016 to October 2022, Drivas was the owner and operator of three restaurants: Red’s Sandwich Shop in Salem, MA, Red’s Kitchen and Tavern in Peabody, Mass. and Red’s Seabrook in Seabrook, N.H. He was the sole shareholder of the Salem restaurant until he sold it to an employee in September 2022. He was the 100% owner of the Peabody restaurant with his wife and the 52% owner of the Seabrook restaurant with his children. Drivas paid wages to numerous employees of the restaurants partly by payroll checks and partly in cash. He did not report the cash wages to the IRS or pay employment taxes on them. Federal tax law requires employers to withhold from any employee wages an amount for income taxes and other amounts for Social Security and Medicare taxes. Drivas 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. In Massachusetts, all owners and operators of restaurants and bars are required to collect 6.25% sales taxes on meals. Salem and Peabody also require restaurants and bars to collect an additional 0.75% local option meals excise tax. Although Drivas collected the taxes from restaurant customers, he intentionally withheld $1,596,775. of those taxes from monthly 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. Sentences are imposed by the federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors. Acting United States Attorney Joshua S. Levy, Harry Chavis, Special Agent in Charge of the Internal Revenue Service Criminal Investigation (IRS-CI), Boston Field Office and Katherine Mulligan, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts made the announcement today. Valuable assistance was provided by 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. IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
