East Valley Restaurant Owners Convicted of Fraudulent Schemes and Tax Evasion

Co-Owners of Teakwoods to pay nearly $3 million in restitution and fines and serve jail time for failing to pay tax.

Phoenix, AZ–The former owners of Teakwoods, a restaurant with one location in Gilbert and another in Chandler, were convicted of three felonies each related to a multi-year scheme to evade paying certain Arizona transaction privilege tax (TPT), withholding tax, and individual income tax.

A Judge sentenced George Krotonsky to the Arizona Department of Corrections to one and a half years, followed by seven years of supervised probation after his release. George Krotonsky previously pled guilty to one count of Fraudulent Schemes and Artifices, a Class 2 Felony, and two counts of Filing a False Tax Return, Class 5 felonies. The court ordered George Krotonksy to pay restitution to the Arizona Department of Revenue in the amount of $1,974,569.16 and a fine in the amount of $100,000.

A Judge sentenced Aubrey Sturdivant to jail for nine months in the Maricopa County Jail and seven years of supervised probation. Aubrey Sturdivant previously pled guilty to one count of Fraudulent Schemes and Artifices, a Class 2 Felony, and two counts of Filing a False Tax Return, Class 5 Felonies. The court ordered Aubrey Sturdivant to pay restitution to the Arizona Department of Revenue of $1,052,616.31 and a fine of $100,000. 

Background: George Krotonsky and Aubrey Sturdivant were indicted by a State Grand Jury on November 22, 2021, alleging failure to pay transaction privilege tax and withholding income tax along with failing to file the corresponding returns between January 1, 2013 and October 31, 2019. The investigation shows that both Teakwoods locations were properly charging and collecting TPT from customers, however, the business owners kept the TPT collected from their customers instead of remitting the tax to the Arizona Department of Revenue. 

An investigation also uncovered that between January 2013 and October 2019, Krotonsky and Sturdivant were withholding income tax from employees’ paychecks and not remitting that tax to the State, but instead kept the tax withholdings. The State Grand Jury charged George Krotonsky with four counts of Filing a False Tax Return for underreporting on his Arizona individual income tax for 2015, 2016, 2017, and 2018. Similarly, the State Grand Jury charged Aubrey Sturdivant with three counts of Filing a False Tax Return for underreporting on her Arizona individual income tax returns for 2017, 2018, and 2019. 

This was a cooperative investigation between the Criminal Investigations Unit of the Arizona Department of Revenue and the Special Investigations Section of the Office of the Arizona Attorney General. 

If you are a business owner who has fallen behind in filing your tax return(s), please reach out to the Arizona Department of Revenue for help. Our staff are here to help you come into voluntary compliance, if at all possible. You can contact the Voluntary Disclosure and Compliance team to answer your questions and seek assistance.

Thursday, May 4, 2023