Ciaran Dillon is alleged to have kept back about a month of sales tax each year from the chain of Irish pubs that operated around the Midwest for nearly a decade
Ciaran Dillon, who works for Claddagh Irish Pubs, has been accused of falsifying documents to avoid paying $1 million in sales tax to eight US states.
Dillon, of Solon in Ohio, is alleged to have kept back about a month of sales tax each year from the chain of Irish pubs that operated around the Midwest for nearly a decade.
According to court records, Dillon was charged on Wednesday in federal court in Cleveland with two counts of wire fraud and then arrested in the Orlando, Florida area, according to court records.
Reports in US media say an arraignment date has not yet been set and that the case is assigned to US District Judge Christopher Boyko.
Dillon is named as the chief financial officer for CDG Acquisition LLC, which alongside the pubs, were a US investment by Supermac’s owner McDonagh.
Mr McDonagh previously told the Business Post in 2021 that Claddagh Irish Pubs was his “biggest mistake” and had cost him millions in business losses. He also told the paper that he was in the process of selling off the pubs and restaurants.
A spokesperson for Supermac’s told the Sunday World: “This is not related to Supermac’s and Supermac’s is not involved in the proceedings.
“Claddagh Irish Pubs reported financial irregularities in the United States and were aware that a number of employees of Claddagh Irish Pubs in the United States were questioned at the time.
“As an investigation is ongoing it would be inappropriate to comment further.”
Based in Ohio, Ciaran Dillon is originally from Ireland and is believed to have previously worked as a financial controller for Supermac’s.
Dillon is accused of running the scheme from January 2010 through May 2018 for 15 restaurants in Ohio, Indiana, Kentucky, Illinois, Michigan, Minnesota, Pennsylvania and Wisconsin, according to the indictment.
A statement from the U.S. Attorney’s Office in the Northern District of Ohio reads: “The indictment states that based on the defendant’s instruction, the accountant would edit the company's sales and sales tax figures, file false tax returns and pay states the amount instructed by the defendant.
“It is alleged that one common way to underpay sales tax was for the company to report and pay sales tax for four weeks during a five-week period, leading CDG to collect a week’s worth of sales taxes that were omitted from state sales tax filings.
“In total, it is alleged that during this time, the defendant defrauded the States of Indiana, Kentucky, Illinois, Michigan, Minnesota, Ohio, Pennsylvania and Wisconsin out of more than $1 million in sales tax revenue collected from CDG customers across fifteen restaurants.
“An indictment is only a charge and is not evidence of guilt. The defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.”
Several Claddagh Irish Pubs have closed in recent years, including one in Legacy Village in Lyndhurst and one in Crocker Park in Westlake.
Local news website, Cleveland.com, refers to this as the latest in a string of litigation surrounding Claddagh Irish Pubs as the chain suffered financial losses in the mid-2000s and became embroiled in a major lawsuit.
The dispute was between Mr McDonagh and Claddagh’s then chief executive Kevin Blair, a former operations manager at Supermac's main office in Galway
The two men fell out over $21 million (€15 million) that Mr McDonagh gave Claddagh. He claimed it was a loan but Mr Blair said it was an investment.
Mr McDonagh won the legal battle when a Cincinnati court ordered Claddagh to repay the $21 million to him.
The court also ordered Mr Blair to pay $2 million in damages to Mr McDonagh which Blair was reportedly appealing.
Claddagh Irish Pubs ended up in bankruptcy in 2007.
Ciaran Dillon at the time was Supermac’s financial controller, according to the Irish Times.
McDonagh and Supermac’s then bought the pub chain through the bankruptcy proceedings in 2008 through its Solon-based CDG Acquisitions for $10 million, according to court records.
In September 2007, Ciarán Dillon, as Supermac's financial controller, was quoted as saying Claddagh's affairs were still subject to ongoing litigation but discussions were still under way on the purchase of Claddagh from a court-appointed trustee. "It's still on the cards but I'm not going to talk about Claddagh today," he was quoted as saying.
Mr Dillon said the Irish business performed well in 2006, with turnover on the rise to €27.31 million from €24.76 million in 2005.
"It was an exceptional year and indeed 2007 continues to hold the same line. We're up 10 per cent," he said.
Mr Dillon said the turnover at all restaurants in the chain will be close to €100 million the year.
In March 2008 Independent.ie reported that McDonagh had succeeded in acquiring the US-based Claddagh Irish Pub restaurant chain for more than $10m (€6.3m), despite objections from a number of creditors owed money from the business.