NEW YORK Two members of the renowned Cipriani restaurant family have pled guilty to tax evasion and have agreed to pay $10 million in restitution, according to news reports.
Arrigo Cipriani, 75, and his son Guiseppe, 42, are scheduled to be sentenced in October. They could be given prison time of up to a year. But the office of Manhattan district attorney Robert Morgenthau is expected to recommend five years of probation for the elder Cipriani and three years for his son.
Along with other family members, the two operate high-end restaurants and catering halls here and in Italy that bear their name. The younger Cipriani serves as chief executive of Cipriani U.S.A.
The Ciprianis were accused of evading about $3.5 million in state and city taxes for six years beginning in 1998. Their reported method centered on Luxembourg-based parent company Cipriani S.A., which is owned by the elder Cipriani and holds the rights to the family name and other trademarked property. The U.S. division reportedly entered into a licensing agreement that required payment of 11.5 percent of the New York outlets' total sales for the use of the Cipriani name. Cipriani U.S.A. allegedly paid $30.7 million to the parent company in 2003 and 2004, the most recent years for which the company filed tax returns. But according to Morgenthau, those payments, which would have reduced the company’s taxable income, were never made. As a result the U.S. division’s income was higher than reported on its tax returns.
In addition to paying restitution, Cipriani U.S.A. also agreed to install an independent firm to ensure the companies pay their taxes through 2011. The companies also are expected to face a federal tax liability.