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NEWS RELEASE |
Contact: Alicia Maxey Greene |
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Manhattan District Attorney Robert M. Morgenthau announced today the arrest and indictment of a Long Island man for evading taxes on compensation he earned in connection with the 2005 sale of the Riverside South Properties by Hudson Waterfront Associates, one of the largest real estate transactions in New York City history. The defendant, BARRY D. GROSS, 45, has been indicted on charges of grand larceny, falsifying business records, offering a false instrument for filing, filing a false personal tax return, and failure to file unincorporated business taxes. The crimes charged in the indictment occurred between February 2006 and September 2008. The investigation leading to today’s indictment and arrest revealed that GROSS, a project director for Hudson Waterfront Associates, acted as a key player during the sale negotiations. GROSS served as the intermediary between the majority owners, located in Hong Kong, and the purchasers, Extell and the Carlyle Group. The deal was finalized in November 2005 for a total price of $1.76 billion. The crimes charged against GROSS relate to his handling of the compensation he received from the sale. The investigation revealed that Hudson Waterfront Associates paid GROSS a $1 million bonus for his role in the sale of the property. GROSS requested his bosses in Hong Kong to label the $1 million bonus as a fee payable to a shell corporation GROSS controlled, Itamar Capital, which GROSS formed after the completion of the Riverside South deal. This falsification of Hudson’s business records allowed GROSS to receive the $1 million through Itamar thus evading New York City and State taxes. After learning of the criminal investigation, GROSS attempted to conceal his fraud by filing amended tax returns; the amended returns evaded the payment of unincorporated business taxes. Furthermore, the returns filed the following year were fraudulent as well. Knowing that his returns were false and that he owed money to the city and state, GROSS nevertheless cashed a New York State refund check he had received, committing grand larceny. GROSS has been indicted on one count of Grand Larceny in the Third Degree, a class D felony punishable by up to 2 1/3 to 7 years in prison; three counts of Offering a False Instrument for Filing in the First Degree, class E felonies punishable by up to 1 1/3 to 4 years in prison; one count of Falsifying Business Records in the First Degree, a class E felony; one count of Violation of Tax Law § 1804(b), a class E felony; and one count of Failure to File Unincorporated Business Taxes, a violation of New York City Administrative Code § 11-4002, a class A misdemeanor punishable by up to 1 year in jail. The defendant is scheduled to be arraigned this afternoon in State Supreme Court, Part 44. The investigation into further aspects of the sale of the Riverside South Properties is continuing. Mr. Morgenthau thanked New York State Department of Taxation and Finance Acting Commissioner Jamie Woodward and Chief Auditor Tommy Chan as well as the New York City Department of Finance Commissioner David M. Frankel and Tax Manager for the Office of Tax Enforcement Michael Schenk. Assistant District Attorney Jeannette Molina, Deputy Chief of the District Attorney’s Frauds Bureau, along with Assistant District Attorney Frank Mazzarelli, presented the case to the Grand Jury under the supervision of Frauds Bureau Chief Michael Kitsis. Senior Investigator Patrick McKenna, under the supervision of the District Attorney’s Investigation Bureau Chief Joseph Pennisi and Assistant Chief Terrence Mulderrig, and Financial Investigator Nicholas Cangro of the District Attorney’s Financial Crimes Bureau, under the supervision of Chief Frank Puma, assisted in the investigation. Investigative Analyst Claire Botnick also assisted in the investigation. Defendant Information: BARRY DAVID GROSS, 10/14/63 ###
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