Steuben County restaurant owner admits to failing to pay more than $175K in sales taxes

A Steuben County restaurant owner has pleaded guilty for failing to pay more than $175,000 in sales taxes at two Sonora’s Mexican Restaurant locations in Bath and Corning.

Christopher Klee, 56, and his business CKP Holdings, LLC, is required to pay more than $350,000 to the state, the office of New York Attorney General Eric Schneiderman said in a news release.

Klee, 56, on Monday pleaded guilty to a misdemeanor charge of petit larceny in Steuben County Court.

CKP Holdings, LLC, pleaded guilty to a felony charge of grand larceny in the third degree and was sentenced to an unconditional discharge.

With his plea, Klee paid $225,000 to the New York State Department of Taxation and Finance (DTF) for the unpaid sales taxes, related penalties, and interest.

“When New Yorkers spend their hard-earned money, they expect the business is following the rules,” Schneiderman said. “My office will continue to hold accountable those who seek to steal from taxpayers to line their own pockets.”

Klee will be sentenced to a period of supervised release on March 26, 2018 and will pay the remaining $129,380.40 to the state DTF as a condition of his sentence.

DTF’s criminal-investigations division initially investigated the case and referred it to the attorney general’s office for further investigation and prosecution.

 “By blatantly disregarding his tax obligations, this defendant violated the trust of his customers, deprived the communities where he operated of revenue needed for vital services, and put similar businesses at a competitive disadvantage,” Nonie Manion, acting commissioner of taxation and finance, said in Schneiderman’s release. “We’ll continue to work with the attorney general and all our law enforcement partners to bring tax criminals to justice.”

Case background

The Bath restaurant, formerly located at 330 W. Morris St., opened in September 2004 under the name Sonora’s Mexican Restaurant.

The state DTF conducted an investigation and audit of the establishment.

It revealed that the Bath restaurant failed to file sales-tax returns between Sept. 1, 2006 and Aug. 1, 2011. In that time, it generated more than $1.85 million in total sales and collected more than $140,000 in sales taxes that were not remitted to New York State, Schneiderman’s office said.

The Corning restaurant, formerly located at 84 E. Market St. opened in February 2010 under the name CKP Holdings, LLC.

The DTF audit revealed that no sales-tax returns were filed for the Corning restaurant between Dec. 1, 2009 and Nov. 30, 2011. In that time, the restaurant made more than $480,000 in total sales and collected over $38,000 in sales taxes that were not remitted to New York State.

In November 2011, one year after the DTF began its investigation, Klee submitted seven sales-tax returns and remitted about $35,000 in collected sales taxes to New York State covering the period between Dec. 1, 2009 and Aug. 31, 2011.

However, Klee failed to file a sales-tax return for the last quarter ending Nov. 30, 2011, and still owed more than $3,500 in collected sales taxes “for that quarter alone,” Schneiderman’s office said.

Contact Reinhardt at ereinhardt@cnybj.com

Photo credit: New York State Attorney General’s office