The Beach House owner Pleads Guilty to Tax Evasion

The owner of The Beach House in Portsmouth pleaded guilty in federal court in Providence today to three counts of tax evasion.

Authorities said Kenneth J. O'Brien, 47, of Portsmouth, falsified tax returns, kept two sets of books and pocketed cash in a scheme to avoid paying taxes on nearly $1 million in revenue.

United States Attorney Peter F. Neronha and William P. Offord, Special Agent in Charge of Internal Revenue Service Criminal Investigation, announced the guilty plea in a statement Thursday, saying O'Brien told an undercover agent that "I steal five to ten thousand a month."

"On a slow month, five, on a good month, ten," he reportedly told the agent.

Court records show O'Brien allegedly failed to disclose $929,095 in income from the business, failing to pay the IRS $171,990 in taxes, plus interest and penalties over the course of three years between 2007 and 2010.

O'Brien could face up to five years in federal prison and a fine of $100,000 when sentenced on Sept. 2. 

O'Brien entered his guilty plea before U.S. District Court Judge John J. McConnell Jr., and in his admission, said he kept two sets of business bookkeeping records, pocketed the cash and ultimately falsified his personal income tax returns.

The investigation was spurred by a July 2011 IRS review that saw The Beach House was listed for sale. That sale uncovered the double set of books. One set was the true record of the business' income - the second was "fictitious for the purpose of third party disclosures necessary to maintain and operate the business," a release stated.

The case is being prosecuted by Assistant U.S. Attorney Richard W. Rose, with the assistance of Assistant U.S. Attorney Terrence P. Donnelly.