Local Restaurant Owner Gets Jail Time for Tax Evasion

A North Haven restaurant owner was sentenced to five months of jail time today for failing to pay her taxes.

According to David B. Fein, United States Attorney for the District of Connecticut, Virginia Mazzaro, 63, failed to pay five years of taxes, totaling approximately $669,000, on income generated through the North Haven bar and restaurant, J. Roos.

In addition to prison time, Senior United States District Judge Alfred V. Covello ordered Mazzaro to spend five months of home confinement and one year of supervised released. She also was ordered to pay a fine in the amount of $5,000.

On Sept. 21, 2010, Mazzaro pleaded guilty to one count of filing a false federal tax return. As a condition of her plea agreement, she has paid the IRS $1,412,102.37 in back taxes, penalties and interest. Mazzaro also will pay approximately $145,000 in unpaid federal payroll taxes.

“We all have an obligation to pay the taxes we owe, and business owners are no exception,” Fein said. “Those who cheat the government cheat their fellow citizens who file honest tax returns. The risk of not doing so is clear: A felony conviction, loss of liberty, and financial penalties that far exceed the original amount of taxes owed.”

According to court documents and statements made in court, from 2004 to 2008, Mazzaro failed to deposit all of the cash receipts generated by the restaurant into the bank account of the business. Instead, she deposited the restaurant’s cash receipts into her personal bank account and then invested most of those funds in certificate of deposit (CD) accounts at various financial institutions. During this time, according to those documents, Mazzaro also structured cash deposits into her personal and business bank accounts in an attempt to evade financial institution reporting requirements for cash transactions of more than $10,000.

The district attorney's office said Mazzaro has admitted that she knowingly filed materially false federal individual income tax returns for the 2004 through 2008 tax years. For the five-year period, Mazzaro claimed total income of $904,970.  However, during that same time, she failed to report $1,807,221 in gross receipts generated by the operation of the restaurant, underpaying federal taxes in the approximate amount of $669,000.

This case was investigated by the Internal Revenue Service – Criminal Investigation, and was prosecuted by Assistant United States Attorney Douglas P. Morabito.