President of Washington, D.C., Area Community Newspaper Chain Pleads Guilty to Failing to Pay Employment Taxes

WASHINGTON – Peter Labovitz, of Alexandria, Va., pleaded guilty to two counts of failing to pay employment taxes to the Internal Revenue Service (IRS), the Justice Department and IRS announced today. Specifically, Labovitz pleaded guilty to willfully failing to pay over to the IRS the federal income taxes and Federal Insurance Contributions Act (FICA) taxes due and owing to the United States for Connections Newspapers LLC for the quarters ending Sept. 30, 2007, and Dec. 31, 2007.

According to the plea agreement and statement of facts, Labovitz was the president of Connection Newspapers LLC, a Northern Virginia newspaper publisher that currently publishes approximately 15 community newspapers throughout Northern Virginia and Maryland. Between 2002 and 2008, Labovitz ran Connection Newspapers’ day-to-day operations, directed employees, approved payments by the company and made financial decisions on behalf of the company. Labovitz admitted that between 2002 and 2008, he caused to be deducted and collected from the total taxable wages of his employees federal income taxes and FICA taxes. However, Labovitz failed to timely pay over more than $940,000 in federal income taxes and FICA taxes withheld and due and owing to the United States, despite the fact that he was required to do so by law.

Labovitz faces up to one year in prison, a $100,000 fine and up to one year of supervised release for each count of conviction. Magistrate Judge John F. Anderson scheduled sentencing for Sept. 27, 2011, at 10 a.m.

The case was investigated by the IRS-Criminal Investigation Division and prosecuted by Assistant U.S. Attorney Tim Belevetz and Justice Department‘s Tax Division Trial Attorney Caryn Finley.

More information about the Tax Division and its enforcement efforts can be found at www.justice.gov/tax.