New York Attorney General Letitia James today recovered more than $1.8 million from the former owner of two New York City diners for failing to report more than $650,000 in cash receipts and lying on tax statements. An investigation by the Office of the Attorney General (OAG) found that the former owner of the Georgia Diner in Queens and the Bridgeview Diner in Brooklyn, Dimitrios Kaloidis, underreported taxable receipts and filed false tax returns, violating the New York False Claims Act. The investigation found that the diners collected taxes from patrons on cash receipts, however, Mr. Kaloidis pocketed those taxes instead of reporting them to the state. As a result of this agreement, the estate of Mr. Kaloidis must pay $1,878,493 in penalties and owed taxes plus interest.
“When New Yorkers pay taxes, they should feel confident that those funds will help support our state's investments in education, health care, transportation, and services all residents rely on,” said Attorney General James. “By pocketing these tax dollars, the former owner of these diners violated New Yorkers' trust and deprived our state of essential resources. These recovered funds will now go to invest in our state, and hopefully this settlement sends a clear message that my office will hold tax cheats accountable.”
The OAG opened an investigation into the diners after receiving a whistleblower complaint. The New York False Claims Act allows private individuals to file civil actions on behalf of the government and to share in any recovery. The investigation found that from 2015 to 2022 the diners’ former owner, Dimitrios Kaloidis, systematically underreported taxable receipts and the unreported cash was used to pay business expenses or disbursed in $10,000 “bricks” to the former owner himself.
In addition, the investigation revealed that Bridgeview Diner in Brooklyn knowingly understated taxable receipts on its tax returns by maintaining two separate transactional books, only one of which was reported to the state. One set of books recorded credit card and cash receipts from diner sales in the morning, and the sales taxes on those transactions were remitted to the state. However, the diner also maintained a separate set of books in which afternoon cash transactions went unreported and pocketed by the former owner. The OAG also found that the Georgia Diner in Queens failed to remit sales taxes on cash receipts. Together, both diners failed to report more than $650,000 in taxes.
The estate of Dimitrios Kaloidis, who owned the diners until his death in 2019, has paid $1,187,272 in owed taxes plus interest and $334,307 in penalties. The agreement also requires the estate to pay $356,913 to the whistleblower.
Attorney General James would like to thank the Department of Taxation and Finance for its assistance in investigating this double-books tax evasion scheme.
At OAG, the investigation was led by Assistant Attorney General Laura Jereski of the Taxpayer Protection Bureau, with the assistance of Legal Support Analyst Iuliia Belyshkina, under the supervision of Senior Enforcement Counsel Bryan Kessler. The Taxpayer Protection Bureau is led by Bureau Chief Thomas Teige Carroll and Deputy Bureau Chief Scott J. Spiegelman and is a part of the Division for Economic Justice, which is led by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.