Mambo Night at the Meschutt Beach Hut in Hampton Bays,...

Mambo Night at the Meschutt Beach Hut in Hampton Bays, July 19, 2017. Credit: Marisol Diaz

In a case prompted by a continuing Suffolk Comptroller audit, a food concessionaire for Babylon town and the county has agreed to pay $1.114 million in unpaid state and county sales tax and penalties for sales made between 2012 and 2016.

The Beach Hut concessions at Suffolk’s Smith Point and Cupsogue beaches, Babylon’s Tanner Park and Venetian Shores as well as Marchello’s Garden Grill in Smithtown, which has the same ownership, failed to pay $296,000 in sales tax on $3.4 million in sales.

According to prosecutors, Frederick Marsilio, part-owner of Beach Hut restaurants, filed false state income tax returns for the period from Jan. 1. 2012, to Dec. 31, 2016, failing to report all business income from the Beach Hut and Garden Grill and intentionally failing to report $1,776,792 of income to avoid paying state income tax of $127,783.

Before County Court Judge Stephen Braslow, Marchello’s Garden Grill pleaded guilty on Friday to violating tax law Section 1804 and criminal fraud in the third degree. Marsilio individually pleaded guilty to tax law Section 1802 and criminal fraud in the fifth degree. David Haber, Beach Hut attorney, did not return calls for comment.

Suffolk Comptroller John Kennedy said the nonpayments came to light as part of an audit of the county parks department that arose after he received complaints about Beach Hut on other issues. He praised prosecutors for “taking our work, embracing it and taking it that much further,” by looking into town concessions.

Prosecutors say Suffolk County will recover $495,677, including $363,677 in unpaid sales taxes and $131,557 the county should have received as profit-sharing in its contracts with Beach Hut. Babylon town will get $66,801.

Kennedy said he hoped their results will spur state lawmakers to renew funding for local officials to undertake similar audits to recoup sales tax revenues. He said he and Nassau Comptroller-elect Jack Schnirman will seek a meeting with Long Island’s Albany delegation for help in getting that funding.

Asked if the county had canceled Beach Hut contracts, Kennedy, a Republican, said, “You can’t make a silk purse out of sow’s ear. I’m not in a position to do administration. But the administration . . . has been woefully inept . . . at this point.”

Jason Elan, spokesman for Democratic County Executive Steve Bellone, said, “If the Comptroller has conducted an audit of an outside vendor, when he sends it to us, we will review it and take the appropriate action.”

Babylon Supervisor Richard Schaffer called the plea a “very serious issue” and he, the town attorney and town board would review the plea deal and the concession agreement with the town.

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