NJ Restaurant Operator Evaded $500K In Sales Taxes: AG

UNION TOWNSHIP, NJ - A New Jersey restaurant operator faces up to three years in state prison for failing to shell out roughly $500,000 in New Jersey sales taxes over seven years, state officials said.

John Garofalo Sr., 75, of Union Township. and operator of Mario’s Tutto Bene restaurant on Chestnut Street, pleaded guilty on Monday, June 19, 2023, in connection with a multi-year underreporting tax scheme, New Jersey Attorney General Matthew Platkin said in a statement.

Garofalo Sr. entered the guilty plea before Superior Court Judge Sherry L. Wilson in Mercer County, admitting to one count of second-degree theft by failure to make required disposition of property, Platkin said.

At the time of his plea, Garofalo Sr. paid the full $496,374.99 in sales tax that he collected to the state Division of Taxation.

Under the terms of the plea agreement, the state is slated to recommend a three-year prison term for Garofalo Sr. at sentencing.

“John Garofalo Sr. illegally pocketed hundreds of thousands of dollars in tax revenues that belonged to the State, money that is used to fund infrastructure improvements, education, public assistance, and other programs and services that benefit the residents of New Jersey,” Platkin said. “We will not allow defendants to enrich themselves at the expense of honest taxpayers who rely on the services and benefits funded by their tax dollars.”

Before Judge Wilson, Garofalo admitted to reporting only 40 percent of the sales tax collected from patrons of the restaurant from July 2015 through March 2022. The state’s Division of Taxation requires restaurants to impose a 6.625 percent sales tax on food and drinks they sell and requires 100 percent of that tax to be handed over to the state.

“Restaurant operators cannot increase patrons’ restaurant bills under the guise of collecting sales tax and then keep for themselves what they ostensibly collected on behalf of the State,” said Pablo Quiñones, Legal Chief of the Office of Securities Fraud and Financial Crimes Prosecutions. “The willful withholding of sales tax is stealing, plain and simple. As this case demonstrates, the Office of Securities Fraud and Financial Crimes Prosecutions will hold accountable those who deliberately skirt the State’s sales tax requirements.”

Sentencing is scheduled for Sept. 28.