Cipriani Tax Plea Reverberates Around City

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The New York Sun

Charities and political campaigns are scrambling to reassess their relationships with the operators of some of the city’s most popular event spaces after two members of the Cipriani family pleaded guilty yesterday to tax fraud.

The district attorney of New York County, Robert Morgenthau, announced the guilty pleas yesterday of Giuseppe Cipriani, 42, the president and CEO of the Cipriani USA restaurant company, and his father, Arrigo Cipriani, 75, who owns the international Cipriani brand.

The father and son admitted to defrauding the city and state of $10 million of taxes, Mr. Morgenthau said at a press conference yesterday. The convictions are the latest in a growing rap sheet of white-collar crimes committed by the restaurant company’s top executives.

The father and son must pay back the $10 million and install an independent monitor until 2011 to ensure tax compliance.

Spokesmen for several non-profit organizations contacted by The New York Sun would not comment on whether they would host future events at any of the Cipriani restaurants, saying they did not want their organizations to be tied to the bad press.

The Cipriani family owns the Rainbow Room at Rockefeller Plaza, Cipriani 42nd Street, Cipriani Dolci in Grand Central Terminal, Harry Cipriani on Fifth Avenue, Downtown Cipriani on West Broadway, Cipriani Wall Street, and the banquet facilities at the Toy Building on Fifth Avenue.

The Manhattan Institute, a policy think tank, held its annual Alexander Hamilton Awards dinner at Cipriani 42nd Street last year, where it honored Mayor Giuliani for, in part, his tough stand against crime.

A spokeswoman for the institute declined to comment on whether yesterday’s convictions would change its plans to host events at Cipriani restaurants.

A spokeswoman for the Giuliani campaign said that it has held events at Cipriani restaurants in the past. She declined to comment on whether the campaign would continue to host events at Cipriani restaurants in the future.

The Clinton campaign, which has also hosted events at Cipriani restaurants, did not respond to requests for comment.

The 42nd Street restaurant is one of the top venues in the city for galas and events.

“I think rightly or wrongly this stuff just comes down to necessity – you need a venue that could fit your event,” the editor of an event planning magazine called Bizbash, Chad Kaydo, said. “I’m sure some people in the industry are interested, but I’m not sure how much it would affect their decision making,” Mr. Kaydo said.

Meals on Wheels hosts an annual “power lunch for women” at the Rainbow Room in November. The restaurant donates the space to the charity, the director of special events for Meals on Wheels, Heather Gere, said. She said she wasn’t sure the guilty pleas “would necessarily change our minds,” on where to have the event.

The editor of nysocialdiary.com, David Patrick Columbia, said the tax fraud charges put the Ciprianis in the same category as some of their individual customers. “There are a lot of guys going to these restaurants who have been in the same fix, trying to not pay the government in taxes,” Mr. Columbia said.

Giuseppe and Arrigo Cipriani admitted to sheltering New York income in Luxembourg, where the global Cipriani company is headquartered, Mr. Morgenthau said at a press conference yesterday.

Giuseppe Cipriani faces up to four years in prison and Arrigo up to one year, but Mr. Morgenthau said that he would not recommend prison time to the sentencing judge.

“The resolution of this matter allows the Cipriani family to put this incident behind them. They will continue to spend their efforts and energies in maximizing the growth of the unique Cipriani brand and their multi-faceted businesses,” the Ciprianis’ lawyer, Stanley Arkin, said.

Three corporate Cipriani entities – Cipriani Fifth Avenue Downtown Cipriani New York, and GC Alpha – also pleaded guilty yesterday to the tax felonies.

The former vice president of Cipriani USA, Dennis Pappas, was sentenced earlier this year to 1 1/2 to 4 1/2 years in state prison for defrauding insurance companies and the Social Security Administration of more than $1 million when he falsely claimed that heart problems prevented him from working. Pappas had previously been convicted of laundering money for the Colombo crime family.

The chief of investigations for district attorney’s office, Dan Castleman, said that customers of the restaurants did not appear to have been complicit in the tax fraud.


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