John Drivas, 66, the former owner of three North Shore eateries, admitted to orchestrating tax fraud schemes that robbed the IRS and Massachusetts Department of Revenue over several years. His guilty plea, entered on Friday, September 6, 2024, covered failure to collect and pay employment taxes, as well as wire fraud for not remitting state meals taxes collected from customers. According to the U.S. Attorney's Office, Drivas could face a substantial sentence including prison time, supervised release, fines up to $250,000 or twice the pecuniary loss, and restitution.
Drivas ran Red’s Sandwich Shop in Salem, Red’s Kitchen and Tavern in Peabody, and Red’s Seabrook in New Hampshire until October 2022, when he sold his interest in the Salem location. The defendant has been found to have paid employees partially through payroll checks and partially in cash, failing to report the latter to the IRS. This omission led to an employment tax loss of $439,341. In a detail that could only further shake the public's trust, Drivas chose to also not disclose more than $1.5 million in meals taxes, which he was legally obligated to pay to the state.
His actions extend the narrative of a businessman who exploited the tax system to unjustly enrich himself. Massachusetts law mandates that a 6.25% sales tax on meals is collected by restaurateurs, which Salem and Peabody complement with a 0.75% local option meals excise tax. Drivas, while diligently collecting these taxes from patrons, deceitfully withheld the sum of $1,596,775 from the state. The charges against him carry the weight of potentially decades in prison, a testament to the severity of his offenses.
Scheduled for December 5, 2024, sentencing will be handled by U.S. District Judge Julia E. Kobick, who will use the U.S. Sentencing Guidelines and other factors to determine Drivas' sentence. The case involved multiple agencies, with Acting U.S. Attorney Joshua S. Levy acknowledging the contributions of the IRS Criminal Investigation Boston Field Office and the Criminal Investigations Bureau of the Massachusetts Department of Revenue. Assistant U.S. Attorney Victor A. Wild from the Securities, Financial & Cyber Fraud Unit led the prosecution. This case serves as a cautionary tale for those tempted to misuse their power and obscure their financial obligations.
