Niagara Falls businessman sentenced on tax charge, forfeits $1,000,000

By Barbara Burns

Public Affairs Officer

United States Attorney's Office, Western District of New York

U.S. Attorney Trini E. Ross announced Frank R. Parlato, Jr., 68, who was convicted of willful failure to file returns involving cash transactions of more than $10,000, was sentenced to serve one-year supervised release, to include five months home detention, and fined $10,000 by U.S. District Judge Richard J. Arcara. Parlato also agreed to forfeit $1,000,138 and will pay $184,939 in restitution to the IRS.

Assistant U.S. attorneys Charles M. Kruly and Michael DiGiacomo, who handled the case, stated that between 2004 to 2017, Parlato had an ownership interest in and/or managed the One Niagara Building in Niagara Falls. Following Parlato’s acquisition of One Niagara, he permitted vendors to lease space both inside and outside the building. These vendors catered to tourists and sold food, souvenirs, and tours of Niagara Falls. With business typically busy in the summer, each season Parlato negotiated new seasonal rental agreements with the building’s vendors, typically requiring each vendor to pay 25% of their gross revenue as rent. Parlato was required to file an IRS Form 8300 when receiving annual cash rent payments in excess of $10,000 in one transaction or two or more related transactions. During the time period that he owned and/or managed One Niagara, Parlato willfully failed to file IRS Form 8300 for annual cash rent payments he received from One Niagara’s vendors, which were in excess of $10,000.

For example, in 2008, a vendor who operated a food stand, agreed to rent space for 25% of the vendor gross sales. In 2010, the vendor paid Parlato approximately $19,970 in rent in cash, however, Parlato failed to file an IRS Form 8300 for the 2010 season. Parlato admits that, from 2006 to 2017, the tax loss from unreported income was approximately $390,346.

The sentencing is the culmination of an investigation by the Federal Bureau of Investigation, under the direction of Special Agent in Charge Matthew Miraglia and the Internal Revenue Service, criminal investigation division, under the direction of Special Agent-In-Charge Thomas Fattorusso.