Arthur Schneider, a Montauk resident who is the former owner of the Memory Motel there, was brought into East Hampton Justice Court last Thursday in handcuffs, led by Joseph T. Conley III, an assistant county district attorney who handles tax crimes, and a county detective, Don Conste, to be arraigned on a charge of grand larceny.
“Between Jan. 1, 2007, and Dec. 31, 2010, the defendant allegedly stole approximately $120,000 in sales tax and occupancy tax from the State of New York and Suffolk County,” said Robert Clifford, spokesman for the Suffolk District Attorney’s Office, in an e-mail sent later that day.
Mr. Schneider’s attorney, Colin Astarita, entered a plea of not guilty on behalf of his client.
In a brief interview before Mr. Schneider was brought to the courthouse, Mr. Astarita minimized the arrest, calling it “just a misunderstanding.” On Saturday, the lawyer sent a text message: “When Mr. Schneider sold the business, the contract was ambiguous with regards to who was responsible to pay the outstanding taxes, as well as any future sales tax liability.” He said Mr. Schneider had agreed to pay all taxes owed from the time when he owned the Memory, and that he was cooperating fully with the investigation.
“Mr. Schneider is a very hard-working guy who did not intend to defraud, or avoid any responsibility,” the lawyer wrote.
“It doesn’t involve me,” said Brian Kenny, who now owns the motel with Chris Reenock, adding that he and his partner had worked hard to build a strong working relationship with the town and to clean up any leftover problems. He referred questions to his attorney, Michael Griffith, who is in London at the moment and was not immediately available for comment.
Much of the Memory’s business is in cash. Its bar caters to a young crowd, with many of Montauk’s seasonal workers congregating there at night after their shifts are over. It rents rooms to the seasonal workers as well as to tourists.
Mr. Conley has a history of prosecuting cases, in conjunction with the New York State Department of Taxation and Finance, and obtaining convictions. In June 2012, Thomas H. Mattox, the commissioner of the state’s tax department, praised his work in obtaining a guilty plea from a Dix Hills man, Rong Q. Liang, for failing to declare over $2 million in corporate revenue.
Mr. Astarita told Justice Lisa Rana during the arraignment that he was waiving his client’s right to a speedy trial, a step often taken in criminal cases to allow more time for negotiations with the prosecutor. The step also frees the prosecutor to continue and/or widen the investigation.
Mr. Schneider, head bowed, did not speak during the proceedings except for saying one word, “Memory,” when Justice Rana asked him about his employment status, indicating that he is still affiliated with the motel.
Mr. Schneider was apparently taken into custody at his Montauk residence by county police. East Hampton Town police were not involved in the arrest.
Justice Rana released the defendant without asking him to post bail, in consideration of his longtime roots in the community. The charge against him, second-degree grand larceny, is a class C felony, punishable by between a minimum of one year in prison or up to 15 years.