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CLEVELAND, Ohio — A Chagrin Falls businessman who once faced price-gouging accusations during the coronavirus pandemic was sentenced Tuesday to four years of probation for attempted tax evasion.
Mario Salwan, 52, tried to hide income he made from his garage finishing business to avoid paying $511,000 in payroll taxes for years, including secretly funneling money to a relative who bought his Pepper Pike home out of foreclosure.
U.S. District Judge Charles Fleming opted against federal prosecutors’ arguments for prison time, saying probation would give Salwan a better chance at paying restitution because his surviving business, Garage Finishers, remains successful.
“Everything the government said in arguing for prison makes sense,” Fleming said. “The other side of the coin is, if I put him in prison, we’ve shot ourselves in the foot, and I’ll have that much tougher of a time getting him to pay restitution.”
Salwan’s other two businesses — Buckeye Painting and Decks and Buckeye Realty — declined in 2006, and he fell behind on paying payroll taxes from 2007 to 2009. Salwan and his wife also didn’t pay income taxes during those years. Those businesses went under in 2012.
The IRS filed liens on his Pepper Pike home and another in Chagrin Falls. Salwan, however, had his brother buy back the Pepper Pike home during a sheriff’s sale and used money from his garage business to pay back the relative, instead of paying off his tax liens, prosecutors said.
He also took his name off Garage Finishers’ bank account so he could divert money into his personal accounts, instead of paying off the taxes.
Assistant U.S. Attorney Alex Abreu argued that Salwan’s crimes were “cool and calculated” and pointed out that he lived in a home worth $1 million. He said Salwan should have to abide by the same laws as everyone else.
“He lived a charmed and privileged life,” Abreu said. “We’re here because he didn’t want to play by the rules and didn’t want to pay.”
Defense attorney Eric Nemecek said Salwan struggled for years paying off various creditors to keep his businesses afloat. He said Salwan already paid back $133,000.
Salwan promised to pay the rest, plus more than $200,000 in interest. He apologized and said he embarrassed himself and his family.
“I haven’t lived a charmed life,” Salwan said. “It has been a living hell the past 15 years, being this broke, while raising a family. I have a house, yeah, but it doesn’t have a deck. There’s no landscaping. I’m just struggling every day.”
The IRS investigation launched in 2020 because of price-gouging accusations against Salwan at the height of the COVID-19 pandemic.
Salwan sold $2 N-95 masks for $36 each at a time when health care professionals desperately needed them.
Under an agreement with the Ohio attorney general’s office, he refunded customers $15,000 and relinquished 570 masks to the state, which were then given to MetroHealth Medical Center and the 10 healthcare professionals who alerted officials about Salwan’s prices.
Adam Ferrise covers federal courts at cleveland.com and The Plain Dealer. You can find his work here.
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