DISTRICT ATTORNEY - NEW YORK COUNTY

NEWS RELEASE
July 9, 2009

Contact: Alicia Maxey Greene
212-335-9400

Manhattan District Attorney Robert M. Morgenthau announced today the arrest and guilty plea of the owner of Nargila Grill, arising out of the theft of hundreds of thousands of dollars in collected sales tax and the evasion of State and City corporate taxes. The Nargila Grill is a Kosher Mediterranean restaurant that operated at 247 W. 72nd Street, Manhattan, until it closed just after the execution of a search warrant. A second restaurant continues to operate at 1599 York Avenue, in Manhattan.

The defendant, YUVAL AROETY, 49, pleaded guilty to Grand Larceny in the Second Degree, a class C felony. AROETY pleaded guilty as well to one count of “False returns or report; corporate taxes,” in violation of Tax Law §1805(b), and one count of “False Returns or Reports, Utility Tax, Corporate Taxes or Unincorporated Business Tax,” in violation of New York City Administrative Code §11-4004(b), both class E felonies. AROETY agrees to pay $539,082.48 in State and City sales and corporate taxes, accrued interest and penalties. AROETY must also pay $60,000 in criminal fines. If AROETY does not fully comply with the plea agreement he will be sentenced to one year in a New York City correctional institution.

The investigation leading to the guilty plea revealed that during the period of June 1, 2004 through February 28, 2009, AROETY stole $310,751 in New York State and New York City sales tax collected from customers of Nargila Grill. This represents at least 50 percent of the sales tax owed by the two restaurant locations and all of the sales tax owed by the catering side of the restaurant. In addition, AROETY underreported the corporate liability for the tax year 2007 for one of the restaurant entities. The investigation also revealed that AROETY evaded sales tax owed by some of the bagel bakeries he owned in New York County. On some of the sales tax returns AROETY under-reported the gross sales and services of the restaurant and/or claimed that all or a portion of the gross sales and services were exempt from sales tax.

Said Mr. Morgenthau: “In an era in which the State and City governments are having difficulty funding basic services, it is inexcusable for the well-to-do to avoid paying their fair share of lawful taxes. This disposition should serve as a warning to others that these matters are being prosecuted vigorously.”

Mr. Morgenthau thanked Acting Commissioner Jamie Woodward of the New York State Department of Taxation and Finance and her staff. Auditors Daksha Nyshadham, Mukaila Rabiu, and Ronald Chan and Associate Attorney Robert Eisman of that Department assisted in the AROETY case.

Mr. Morgenthau also thanked Acting Commissioner Michael Hyman and Audit Group Chief Michael Schenk of the New York City Department of Finance, and Captain Ronald Haas and Robert Mistretta of the DAOS.

Assistant District Attorney Gilda I. Mariani, Chief of the Money Laundering and Tax Crimes Unit investigated and prosecuted this case, assisted by Senior Accountant Investigator Accountant Michael Lentini, Financial Chief Investigator Robert Demarest, Senior Computer Forensics Analyst Avram Lansky, Senior Financial Investigator Elodia Marco and analysts Jason Campiola and Evelyn Marrero.

Defendant Information:

YUVAL AROETY, 5/1/1960
315 E. 72nd Street
New York, New York

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