The owner of Georgetown’s decades-old Italian mainstay Ristorante Piccolo misappropriated COVID-19 emergency relief money for his own personal gain. Gholam “Tony” Kowkabi pleaded guilty this week in the U.S. District Court for D.C. to stealing $738,000 in government funds intended to help his small business during the pandemic.
As part of his plea deal, Kowkabi admitted to spending the money on the purchase of a waterfront condo in Ocean City, Maryland, as well as other residential investments, vacations for his family, home improvements, and college tuition for his child. Prosecutors also say he also rerouted $78,500 to open Divan in McLean, Virginia, the Tehran native’s first Persian restaurant that received a glowing 2022 review from Northern Virginia Magazine.
From May 2020 to July 2021, Kowkabi received $1.6 million in emergency funds and loans across three federal relief programs. The biggest chunk ($631,800) came from the Restaurant Revitalization Fund.
“This defendant robbed a program intended to help fellow restauranteurs and other small business owners who were struggling to stay afloat amid the devastating economic impacts of the COVID-19 pandemic,” said U.S. Attorney U.S. Matthew Graves, in a statement.
The Vienna, Virginia resident and his wife, Karen Kowkabi, also admitted to evading $1.35 million in taxes from 1998 to 2018 on Piccolo and two of their now-closed D.C. restaurants, Catch 15 and Tuscana West.
The Kowkabis’ defense attorney, Jonathan Jeffress of KaiserDillon PLLC, provided the following statement to Eater this week:
The Kowkabis are long-time contributing members of the community. Although not mentioned in the government’s filings, it is undisputed that the Kowkabis worked tirelessly and spent considerable resources to ensure that the restaurants operated by Mr. Kowkabi remained open during the pandemic, without a single employee losing their job.
Georgetown’s Piccolo, a romantic trattoria with a second-floor balcony overlooking the historic C&O Canal, has racked up several accolades over its 37-year run. That includes a 2019 Rammys finalist nomination for Service Program of the Year and an Honorary Milestone Rammy Award in 2021.
Piccolo recently made headlines after a two-alarm fire destroyed part of the restaurant on June 29. According to its reservation portal on OpenTable, “it will be at least four months before we are able to open,” with the first available seatings showing for October 1. Customers are encouraged to sign up on its website for reopening updates. Piccolo previously sustained fire damage in 2008.
A spokesperson for the U.S. Attorney’s office tells the Washington Business Journal that the plea agreements were reached in early June — which was weeks before the fire occurred.
The operator of another Italian restaurant in D.C. reacted with disdain to Kowkabi’s abuse of federal relief dollars. Chef Matt Adler, who opened Caruso’s Grocery on Capitol Hill during the depths of the pandemic, wrote on X:
The real crappy part is lots of restaurants needed that $ and didn’t get it because the fund ran dry.— Matthew Adler (@mattadler81) August 16, 2023
Piccolo was one of 730 restaurants in D.C. that benefitted from Small Business Administration’s Restaurant Revitalization Fund. Out of the 370,000 applicants nationwide, only about a third were awarded grants totaling $28.6 billion.
As part of the plea deal, Tony Kowkabi has agreed to pay the $738,657 in restitution to the SBA and forfeit the personal real estate assets funded with COVID-19 relief money. The Kowkabis also agreed to pay back $1.35 million in taxes owed to the IRS.
Tony Kowkabi, who admitted to trying to avoid paying taxes by hiding assets and large sums of money through a complex bankruptcy protection scheme, pleaded guilty to wire fraud and tax evasion and faces up to 25 years in prison. Karen Kowkabi pleaded guilty for willfully failing to pay taxes and faces up to five years in prison. Sentencing hearings are scheduled for December 1.
This isn’t the first time Tony Kowkabi has faced time behind bars. In 2006 he was sentenced to 18 months in federal prison for failing to pay D.C. sales tax on dishes and drinks served at Ristorante Piccolo, Alamo Grill, Sole, Tuscana West, and Home nightclub. He was ordered to pay $1.77 million in restitution.