By Carlotta Mohamed
Spa Castle Inc. in College Point and its owner both pleaded guilty last week to felony tax fraud charges and will have to cough up $2.5 million in criminal restitution and civil damages, according to state officials.
Daniel Chon, one of the four family owners of Spa Castle Inc. at 131-10 11th Ave., was sentenced to a three-year conditional discharge after pleading guilty to attempted criminal tax fraud and will serve no time behind bars, according to state Attorney General Barbara Underwood and Acting Tax Commissioner Nonie Manion.
“We have zero tolerance for tax cheats who leave New Yorkers to foot the bill,” said Underwood. “The defendants orchestrated a multimillion-dollar scheme to defraud taxpayers.”
The spa facility offered a variety of services including massages, facials, saunas, swimming pools, restaurants, bars and other amenities.
Spa Castle Inc. generated revenue by charging admission to the facility and by charging additional fees for the other services offered. Between 2010 and 2013, Spa Castle generated over $22 million per year in revenues, according to the attorney general’s office.
In the fall of 2014, a tip from a whistleblower led the attorney general’s Taxpayer Protection Bureau to launch a civil investigation into Spa Castle.
A preliminary investigation of the information provided by the whistleblower revealed substantial evidence of knowingly fraudulent conduct on the part of Spa Castle and its principles, according to the attorney general’s office.
“We’re grateful to the whistleblower who helped bring this egregious conduct to light — and it should serve as a wake-up call to all tax fraudsters who think their misconduct will go unnoticed,” said Underwood.
The whistleblower will receive $575,000 for bringing the misconduct to light, as the New York False Claims entitles whistleblowers who report fraud against the government to a share of the recovery, the AG’s office said.
In March 2017, Chon and his siblings were indicted in Queens County Supreme on charges of theft or failure to remit over $1.5 million in sales and other taxes owed by Spa Castle Inc.
The four family members were 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 cases against Chon’s siblings — Victor Chon, Stephanie Chon and Steve Chon — were all dismissed with prejudice, Chon’s lawyer. Michael Weinstein told the New York Post.
Chon and Spa Castle Inc. failed to send to the state over $207,000 in taxes between January 2010 and September 2013, and did not remit more than $610,000 in corporate taxes and $131,000 in MTA surcharge taxes from January 2011 to December 2012.
“This conviction proves that the local community is watching and they won’t stay silent when business owners violate their trust,” said Manion. “Robbing New Yorkers of funding for vital public programs and services carries serious consequences and we’ll continue to work with the attorney general and all our law enforcement partners to bring tax cheats to justice.”
In addition to tax fraud, the popular bathhouse has made headlines in the past its health and safety violations from the city Department of Health.
State Sen. Tony Avella (D-Bayside) had called for the spa’s permit and variance to be revoked. Avella had pressured the city on multiple occasions to create a task force that would monitor spa establishments, particularly the College Point Spa Castle location.
In December 2014, an 80-year-old Forest Hills resident was discovered unconscious and unresponsive in the pool, followed by a fatal near-drowning incident in March 2016 involving a 6-year-old girl, and reports of child labor violations after an investigation was completed in December 2017.
Reach reporter Carlotta Mohamed by e-mail at cmoha