FREDERICK MAN PLEADS GUILTY TO FAILING TO PAY
SALES TAX MONIES

Attorney General J. Joseph Curran, Jr. and State Comptroller William Donald Schaefer jointly announced today that Bernard Philip Herring,62, the owner and operator of the Frederick Diner, located at 700 N. Market Street, Frederick, plead guilty Thursday to Failure to Pay Over Sales Tax and Misappropriation by a Fiduciary in connection with monies that he collected from customers who patronized his business. Between July 2001 and July 2002, Herring failed to remit approximately $12,000 in sales tax that he acknowledged was due in reports he filed with the Comptroller.

Anne Arundel County Circuit Court Judge Philip A. Caroom sentenced Herring on the charge of Failure to Remit Sales and Use Tax to six months imprisonment in the Anne Arundel County Detention Center, before suspending that sentence in favor of five years’ supervised probation. Herring was sentenced to a consecutive six-month term on the Misappropriation charge, which Judge Caroom also suspended. He was further ordered to pay $11,969.30 in restitution to the Comptroller’s Office, which represents the actual amount of tax due, excluding interest and penalties that may be assessed by the Comptroller.

The criminal charges cover a period of time following a civil assessment by the Comptroller’s Office in March 2001, at which time the Frederick Diner was assessed over $300,000 in sales and use tax, withholding tax, and interest and penalties for the period of time the Diner operated from late 1995 through March 2001. At the time of the audit, Herring acknowledged owing a large sum of money to the Comptroller’s Office. Although he applied for and opened a sales and use tax license in late 1995, when the Diner opened, the account was automatically closed in 1996 because he had filed zero returns and no remittance. The Comptroller’s Office mandated that the account be reopened at the time of the audit when it was determined that the Diner had been in uninterrupted operation since 1995 and collecting sales tax on all of its sales to customers. As sole owner and operator of the business, and upon request by the auditor, Herring began filing sales tax returns, although he failed to remit the monies he had collected on behalf of the Comptroller’s Office. It was only after the criminal charges were filed that he began to remit the monies with the sales tax returns.

Last week, the Frederick County Circuit Court refused to grant the Diner a stay on the Comptroller’s recent revocation of its sales and use license for a past assessment, thereby requiring the business to close until it becomes current.

The case was referred by the Comptroller’s Office, and investigated and prosecuted by the Office of the Attorney General, Criminal Investigations Division.

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