By Gina Martinez
Spa Castle’s owners are facing 11 felony charges for tax evasion.
The controversial College Point spa’s owners were indicted Wednesday for their alleged theft or failure to remit over $1.5 million in sales and other taxes owed by Spa Castle, state Attorney General Eric Schneiderman said.
According to the charges, 57 year-old Steve Chon, his brothers Daniel Chon, 54, Victor Chon, 50, and his daughter, 29-year-old Stephanie Chon own and operate Spa Castle Inc., a popular spot located at 131-10 11th Ave.
The Chon family allegedly failed to report millions of dollars in revenue collected by the spa from 2010 to 2013, which left New York state short of $621,000 in sales taxes, $207,000 in withholding taxes, $610,000 in corporate taxes and $131,000 in Metropolitan Transportation Authority Surcharge taxes, the attorney general said.
The investigation was a joint effort between the state Attorney General’s Office and the StateDepartment of Taxation and Finance, Criminal Investigations Division.
“Companies that fail to pay their fair share of taxes leave ordinary New Yorkers to foot the bill,” Schneiderman said. “We will not tolerate irresponsible business owners who cheat the system and undermine our tax laws.”
The four family members have each been charged with two counts of grand larceny, eight counts of criminal tax fraud in the second-degree and one count of criminal tax fraud in the third-degree.
“The scale of theft alleged in this case is staggering,” Acting Commissioner of the Department of Taxation and Finance Nonie Manion said. “If proven, these felony crimes show a blatant disregard for New York state law and all law-abiding New Yorkers and business owners, who shoulder the added tax burden and suffer the loss of revenue used for vital programs and services. We’ll continue to work with Attorney General Schneiderman and all our partners in law enforcement to prosecute these cases and ensure a level playing field.”
Schneiderman said Spa Castle’sCollege Point location generated over $22 million per year in revenues from 2010 to 2013.
In August 2015, investigators from the AG’s office and te state Department of Taxation executed a search warrant at Spa Castle.
Records seized during the search allegedly showed that the defendants avoided paying required taxes by under-reporting the amount of money earned and by paying employees and vendors in cash, prosecutors said.
Between 2010 and 2013, the Chon family allegedly under-reported millions of dollars in income for Spa Castle Inc., failing to pay over $621,000 state sales taxes from March 2010 to August 2013 Schneiderman said.
The Chon family and Spa Castle also allegedly withheld but failed to send to the state over $207,000 in taxes between January 2010 and September 2013, and did not remit over $610,000 in corporate taxes and $131,000 in MTA surcharge taxes from January. 2011 to December 2012.
The defendants were arraigned in Queens County Supreme Court, bail was set at $100,000 bond for each defendant, the AG said. If convicted, each defendant faces five to 15 years in prison.
Reach Gina Martinez by e-mail at gmart