Owner of restaurants in Mass., NH sentenced to prison for multi-million dollar tax fraud scheme

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Owner of restaurants in Mass., NH sentenced to prison for multi-million dollar tax fraud scheme

The owner of two restaurants on the North Shore of Massachusetts and one on the seacoast of New Hampshire was sentenced to prison Thursday for defrauding the Internal Revenue Service of federal employment taxes and the Massachusetts Department of Revenue of state meals taxes.

John Drivas, 66, of Hampton, New Hampshire, was sentenced in federal court in Boston to one year and one day in prison followed by one year of supervised release after he failed to pay federal employment tax and state meals taxes over six years, the United States Attorney’s Office announced in a news release. He was also ordered to pay restitution of $1,596,775 to the Massachusetts Department of Revenue and $439,341 to the IRS, in addition to a $20,000 fine.

Drivas, the owner of Red’s Sandwich Shop in Salem, Red’s Kitchen and Tavern in Peabody, and Red’s Seabrook in Seabrook paid “under-the-table” wages of $1,496,417 to multiple restaurant employees and did not report those wages to the IRS or pay employment taxes on them from at least January 2017 to June 2022, causing more than $439,000 in employment tax losses, according to federal investigators.

Drivas also pocketed the state and local “meals taxes” paid by restaurant customers, which he failed to pay over to the state as required by law.

He pleaded guilty to five counts of failure to collect and pay over employment taxes owed to the IRS and four counts of wire fraud for state meals taxes he collected from restaurant customers but failed to pay to the state Department of Revenue in September 2024.

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