Tax Evasion, Stolen COVID Funds Prompt Vienna Couple's Guilty Plea

WASHINGTON, DC —A Vienna couple who owns DC area restaurants, including Georgetown's acclaimed Ristorante Piccolo, pleaded guilty in relation to unpaid taxes and stolen COVID-19 relief funds.

Gholam "Tony" Kowkabi, 63, and Karen Kowkabi, 64, of Vienna, made the guilty plea in DC federal court Monday. Gholam Kowkabi pleaded guilty to wire fraud and tax evasion, which respectively have a statutory penalty of 20 years and financial penalties, and five years and financial penalties. Karen Kowkabi pleaded guilty to five counts of willfully failing to pay taxes, which has a statutory penalty of one year and financial penalties.

The Kowkabis have owned Ristorante Piccolo in Georgetown since 1986, but the restaurant is temporarily closed due to damage from a fire in late June. They also own DC's Catch 15 and Tuscana West and McLean's Divan Restaurant.

According to prosecutors, the couple did not may more than $1.35 million in taxes related to operating several DC area restaurants. Gholam Kowkabi's wire fraud guilty plea stems from stealing more than $738,000 in small business relief funds intended for his Georgetown restaurant, Ristorante Piccolo. According to the plea agreement, Kowkabi spent the business relief funds on personal expenses such as a waterfront condo in Ocean City, Maryland, personal investments, family vacation, and college tuition for his child.

"This defendant robbed a program intended to help fellow restauranteurs and other small business owners who were struggling to stay afloat amid the devastating economic impacts of the COVID-19 pandemic," said U.S. Attorney Matthew M. Graves. "He also created an elaborate scheme to hide assets and play a shell game with the IRS so he could avoid paying the more than one million dollars in taxes that he and his business owed."

Prosecutors say the Kowkabis accumulated over $1.3 million in unpaid taxes from 1998 to 2018, which includes federal income and employment taxes and Trust Fund Recovery Penalties. Gholam Kowkabi admitted to attempting to evade tax payment by concealing assets and hiding the large amounts of money he took from the businesses. He hid the money and personal purchases through business bank accounts by purchasing property in the name of a nominee entity and causing false entries in the businesses’ books and records. The couple will pay the amount of unpaid taxes — $1,351,038.51 — to the IRS.

The COVID-19 relief funds scheme involved more than $1.6 million in funds Gholam Kowkabi received for his restaurants from May 13, 2020 and July 27, 2021. That included $474,000 from Paycheck Protection Program loans, $499,900 Economic Injury Disaster Loan and $631,823.28 Restaurant Revitalization Fund grant.

Prosecutors say Gholam Kowkabi falsely claimed in the applications that the funds would be used for eligible business purposes. Instead, he used the funds for a waterfront condo in Ocean City, Maryland priced over $500,000, two joint venture investments over $237,000 to construct homes in Great Falls, over $78,500 to open Divan Restaurant in McLean, over $11,000 on his home mortgage, more than $14,000 on vacations, more than $62,000 on personal legal expenses, more than $20,000 on home improvement, and more than $5,500 on college tuition payments.

Gholam Kowkabi has agreed to pay $738,657.18 in restitution to the Small Business Association, agreed to money judgment of $738,657.18, and gave up his waterfront condo and the two joint ventures funded with COVID-19 relief funds.

Sentencing is scheduled for Dec. 1.