Old Saybrook pizzeria owner to serve three months for false tax returns

The owner and operator of Pizza Works restaurant in Old Saybrook, who authorities said failed to report more than $767,000 in income over a five-year period, was sentenced Friday in U.S. District Court to three months in prison, followed by a year of supervised release.

Robert Kehayias, 58, of Old Saybrook had pleaded guilty in U.S. District Court to filing a false tax return.

According to the government, Kehayias deposited most of the cash receipts from the restaurant, which also is known as Pizza Junction LLC, into his personal money market account and other personal accounts rather than into his business bank account during the 2010-14 tax years. He provided his tax preparer with QuickBooks reports that significantly understated the gross receipts of the business each year.

As a result, Kehayias failed to report more than $765,733 in taxable income on his federal income tax returns for the 2010-14 tax years, and failed to pay approximately $343,000 in taxes, according to the government.

Kehayias has paid all of his back taxes, but still owes approximately $361,000 in interest and penalties, according to the government. At the sentencing, the judge ordered him to make a $200,000 payment to the IRS within two weeks.

This case was investigated by the Internal Revenue Service's Criminal Investigation Division, and was prosecuted by Assistant U.S. Attorney Douglas P. Morabito.

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