Food vendors for employees and the public at Kennedy Airport will fork over $13 million in a cash settlement of a state attorney general lawsuit that accused them of cheating New York State out of sales tax revenue, failing to withhold payroll taxes and illegally paying lower fees to the Port Authority, officials said Thursday.
A coalition of vendors collectively known as Express Hospitality Group, according to state Attorney General Eric T. Schneiderman, conducted schemes to underpay taxes and fees between January 2011 and February 2016.
“For years, Express Hospitality Group disregarded state law and New York taxpayers,” said Schneiderman in a news release.
In addition, one of the vendors, Yankee Clipper Food Services I Inc., pleaded guilty Thursday in Queens Supreme Court to one count of first-degree grand larceny, one count of second-degree grand larceny, and one count of first-degree scheme to defraud.
“Today’s felony conviction and settlement should send a clear message to those attempting to avoid paying their fair share: tax evasion is illegal, disgraceful — and it will not be tolerated.”
The vendors’ attorney could not be reached for comment.
The resolutions grew out of the ongoing Operation Greased Runway, an investigation into procurement and contracting practices at Kennedy Airport, officials said. The operation was launched as a result of a whistleblower’s allegations.
Express Hospitality group, which runs multiple Panini Express shops, “intentionally underpaid over $5 million in taxes owed to New York and underpaid approximately $350,000 owed to the Port Authority of New York and New Jersey as part of a fee for operating at the airport,” officials said, adding that the firm kept two sets of accounting books – one with actual numbers and one with false ones – to conceal the scheme.
The vendors include “Yankee Clipper Food Services, Inc. and Yankee Clipper Food Services I Inc., which operate multiple Panini Express stores, two bars, and a mobile hot dog stand at JFK Airport; R&G Food Services, Inc., which operates the employee cafeteria at JFK Airport’s Terminal Five; and A&R Food Services, Inc., which operates employee cafeterias at JFK Airport’s Terminal One, and the American Airlines cafeteria, catering and vending machine businesses at LaGuardia Airport,” officials said.
The 49-page civil settlement identifies Express Hospitality group proprietor Rocco Manniello as having performed a number of illegal acts including: “collecting, but failing to remit New York State and New York City sales, tax; underreporting receipts for corporate franchise tax purposes; failing to withhold and pay personal income taxes on some compensation paid to employees.”
The alleged illegal acts also included: “underreporting gross receipts to the Port Authority so as to decrease the amounts of rent due by certain Express Hospitality businesses as a condition of their use of airport facilities.”
Manniello died before the completion of the investigation, the officials said.
A history of the company that is posted on Express Hospitality Group’s website says Manniello’s relationship with the Port Authority began when he “was selected in 1982 as the operator of the Yankee Clipper, a restaurant and bar in the historic Marine Air Terminal at LaGuardia” Airport.