The owner of New York’s iconic bagel maker, H&H, is in big trouble.
From the New York DA:
Manhattan District Attorney Robert M. Morgenthau announced the indictment and arrest of the owner of H & H Bagels for stealing withholding taxes and evading unemployment insurance tax in connection with his wholesale and retail bagel business.
The defendant, HELMER TORO, 59, has been indicted on charges of grand larceny, offering a false instrument for filing and violating the labour law through unemployment insurance tax rate manipulation. The crimes charged in the indictment occurred between July 31, 2003 and April 24, 2009.
H & H Bagels operates a retail business at its original location on 2239 Broadway on the West side near 80th Street and its flagship baking location at 639 West 46th Street near 12th Avenue. The investigation leading to today’s indictment and arrest revealed that TORO collected but failed to pay $369,318.77 withheld from the payroll of the employees of his bagel business.
The investigation further revealed that during the period of this indictment, TORO filed State and City withholding tax returns under six successive company names. Sporadically, TORO made nominal payments to the New York State Department of Taxation and Finance even though TORO knew he was obligated to turn over all withheld tax. Through shell companies, TORO committed unemployment insurance tax rate manipulation by transferring a large segment of his workforce from an existing business to a new business for the purpose of obtaining a lower unemployment insurance tax rate. Although TORO formed a new company, many of the same workers were being employed at the new company and he was able to therefore obtain an advantageous rate for his unemployment insurance payments to the trust fund operated by the New York State Department of labour.
TORO has been indicted on five counts of Grand Larceny in the Second Degree, a class C felony; one count of Grand Larceny in the Third Degree, a class D felony; three counts of Offering a False Instrument for Filing in the First Degree, a class E felony; and two counts of a violation of labour Law §581(7)(c)(5) (Unemployment Insurance Tax Rate Manipulation), a class E felony.
A class C felony is punishable by up to 5 to 15 years, a class D felony is punishable by up to 2⅓ to 7 years, and a class E felony is punishable by up to 1⅓ to 4 years, all in prison.
TORO is scheduled to be arraigned today in State Supreme Court, Part 59.
“This case is a wake up call to all employers who fail to fulfil their fiduciary obligation to pay over taxes withheld from their employee’s salaries,” said Morgenthau. “It also demonstrates how tax evasion hurts our workers when an employer deliberately fails to contribute the appropriate amount into the unemployment insurance trust fund.”
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