Washington, D.C. restaurant operators Gholam “Tony” Kowkabi and his wife Karen Kowkabi were sentenced in federal court this week for evading taxes and spending $738,000 in Covid Relief Funds on their lavish lifestyle.
Gholam Kowkabi faces 57 months in prison, and Karen Kowkabi faces 24 months of probation, the U.S. Attorney’s Office for the District of Columbia said Monday.
The charges include failure to pay more than $1.35 million in taxes related to the operation of several restaurants in the D.C. area, which include Catch 15 and Tuscana West. In addition, Gholam Kowkabi was charged with stealing more than $738,000 from the emergency small business relief funds received by his Georgetown restaurant Ristorante Piccolo during the pandemic.
As part of his guilty plea in August, Gholam Kowkabi said he spent the money on a waterfront condo in Ocean City, Md., as well as on personal investments, vacations and college tuition for his children.
In total, Gholam Kowkabi obtained more than $1.6 million in Covid relief funds, including $474,000 in Paycheck Protection Program (PPP) loans; $499,900 in an Economic Injury Disaster Loan (EIDL); and $631,823 as a Restaurant Revitalization Fund (RRF) grant.
PPP loans were supposed to be used for payroll costs and employee benefits, and could also be used for certain specific business operation costs. EIDL loans were also designated to be used only for certain operating expenses, but the U.S. Attorney’s Office said the Kowkabis used some of the funding for their own personal enrichment.
In addition to the Ocean City condo, the couple invested in other real estate, spent more than $11,000 on their home mortgage and $20,000 on home improvements, $14,000 on vacations, $5,500 on tuition, and $62,000 on personal legal expenses—though $78,500 was used to open Divan Restaurant in McLean, Va.
In 2021, the Attorney General established a Covid-19 Fraud Enforcement Task Force to investigate misuse of relief funding that was designed to help keep businesses afloat during the pandemic shutdown.
A growing number of similar cases are emerging across the country. Last week a former restaurateur in Saratoga Springs, N.Y. pleaded guilty to PPP fraud-related charges.
New York City restaurateur Besim Kukaj was sentenced to 57 months in prison in April for stealing $1.5 million in PPP funding from his Bkuk Group restaurants, all of which were in Manhattan.
The owners of several restaurants in San Diego were indicted on charges of wire fraud and money laundering earlier this year in a PPP-related alleged scam.
The former owner of a Massachusetts pizzeria was sentenced to two years in prison and ordered to pay back $680,000 in fraudulently obtained Covid relief funds, which he had used to purchase a farm and eight alpacas.
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