DC Area Restaurant Owners Sentenced For COVID Relief, Tax Scheme

VIENNA, VA — Tax evasion and misuse of COVID-19 relief funds led to prison and probation sentence for two Vienna residents who own a prominent Georgetown restaurant and McLean restaurant.

Gholam “Tony” Kowkabi, 63, and Karen Kowkabi, 64, of Vienna, were sentenced to prison and probation, respectively, in D.C. federal court Monday for tax offenses. Gholam Kowkabi was also sentenced for stolen COVID-19 relief funds through his Georgetown restaurant, Ristorante Piccolo. Gholam Kowkabi was sentenced to 57 months in prison, and Karen Kowkabi was sentenced to 24 months of probation.

According to federal prosecutors, the tax offenses are related to Ristorante Piccolo as well as other restaurants they owned — Catch 15 and Tuscana West. The couple had an unpaid tax balance of over $1.3 million from 1998 to 2018, which includes $1,351,038.51 federal income and employment taxes and Trust Fund Recovery Penalties. Gholam Kowkabi admitted to attempting to evade taxes by concealing assets and large amounts of money he took from the businesses. The strategies used to conceal money and assets included purchasing property in the name of a nominee entity and using false entries in the business bookkeeping to conceal personal purchases. Karen Kowkabi admitted to failing to pay the owed taxes.

Gholam Kowkabi's COVID-19 relief scheme involved emergency small business relief funds for Ristorante Piccolo. According to prosecutors, Kowkabi received $474,000 from the first round of Paycheck Protection Program, $499,900 in Economic Injury Disaster Loans and a $631,823.28Restaurant Revitalization Fund grant. The PPP funds were supposed to be used for business expenses like payroll and benefit costs, mortgage interest, rent, utilities and more. EIDL loans were intended for operating expenses and other business needs like business debt payments, while Restaurant Revitalization Funds were for payroll costs like sick leave, payments on business mortgage obligations, business rent payments, utility payments, maintenance expenses and other business expenses.

When applying for the funds, Kowkabi fraudulently agreed to use the funds for the permitted business purposes. Instead, he used a portion of the funds for personal expenses like over $500,000 for two joint venture investments, over $250,000 for the construction of homes in Great Falls, over $78,500 to open Divan Restaurant in McLean, over $11,000 for his home mortgage, more than $14,000 for vacations, more than $62,000 on personal legal expenses, more than $20,000 on home improvements, and more than $5,500 on college tuition payments. He also purchased a waterfront condo in Ocean City, Maryland, prosecutors said.

Gholam Kowkabi will have three years of supervised release following prison and must pay $1,351,038.51 in restitution to the IRS and $738,657.18 in restitution to the Small Business Administration. He also forfeited the Ocean City condominium, interest in multiple joint ventures, and a money judgment of $738,657.18. Karen Kowkabi also jointly owes the money to the IRS.