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Owner of Red’s Kitchen in Peabody sentenced for tax, wire fraud
John Drivas was ordered to serve one year and one day in prison and one year of supervised release afterward.
The owner of three restaurants in Peabody, Salem, and Seabrook, New Hampshire, was sentenced to prison Thursday for not paying federal employment tax and state meals taxes, authorities said.
John Drivas, the sole owner of Red’s Kitchen and Tavern in Peabody, was ordered to serve one year and one day in prison and one year of supervised release afterward. Drivas was also ordered to pay $1,596,775 in restitution to the Massachusetts Department of Revenue, $439,341 to the Internal Revenue Service, and a $20,000 fine, according to a statement from the United States Attorney’s office.
In September 2024, Drivas pleaded guilty to five counts of failure to collect and pay employment taxes and four counts of wire fraud for state meals taxes, the statement said.
In addition to owning Red’s Kitchen with his wife, Drivas owns 52% of Red’s Seabrook in Seabrook, N.H., with his children, and was the sole shareholder of Red’s Sandwich Shop in Salem until he sold it to an employee in September 2022.
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Drivas paid multiple restaurant employees “under-the-table” cash wages between 2017 and 2022 worth $1,496,417 and did not report those wages to the IRS, resulting in the government losing more than $439,000 in employment taxes, the statement said.
Drivas also did not pay the state and local “meals taxes” as required by law. Massachusetts requires restaurant and bar owners to charge a 6.25% tax on meals, with Peabody and Salem requiring its operations to charge an additional 0.75% local meal excise tax.
The restaurateur collected and intentionally withheld $1,596,775 of this tax from monthly reports to the Massachusetts Department of Revenue, according to the US Attorney.
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