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Annapolis restaurateur faces tax charge; IRS accuses owner of Fran O'Brien's of misreporting income


The owner of two popular Annapolis City Dock restaurants, accused of cheating the IRS of about $109,000 in taxes by underreporting his income in 1997, was charged yesterday with tax evasion.

Joseph Jerome Hardesty, 58, who also runs the annual Annapolis and Ocean City wine festivals, told the IRS that his taxable income in 1997 was $175,000 -- but he had earned $567,000, according to prosecutors in U.S. District Court in Baltimore.

Hardesty owns Middleton Tavern and Fran O'Brien's Oyster Bar and Restaurant, both of which were raided by Internal Revenue Service agents in February 1999. The agency had been investigating Hardesty for two years and seized business and personal computers.

He was charged yesterday in a criminal information, a procedure that precludes taking the case before a grand jury and typically indicates that a defendant has cooperated with authorities.

Hardesty's attorney, George Petros, was unavailable to comment yesterday. Assistant U.S. Attorney Joseph L. Evans, who is handling the case, declined to comment. Hardesty did not return a phone call yesterday.

Court papers said Hardesty paid the IRS about $45,000 in taxes in 1997, based on his reported income of $175,000. But he had made $567,000 and was responsible for paying $154,000 in taxes, court papers allege.

A conviction on one count of tax evasion would require payment of back taxes with interest and penalties. Such a conviction carries a maximum penalty of up to five years in prison and a $250,000 fine.

Hardesty bought Middleton Tavern in 1968 with family members and later bought them out. The restaurant, in the Annapolis historic district, is a well-known General Assembly watering hole but is also popular with tourists and locals.

Both the tavern and Fran O'Brien's came under suspicion from the IRS after agents suspected discrepancies in Hardesty's tax disclosures. Among his sources of income is the Annapolis wine festival, which he began in 1988 as a small affair to promote local wineries.

The festival has grown to 12,000 visitors a year and charges $16 a person. He has clashed with some of the winery owners, who in 1997 unsuccessfully tried to seize control of the festival.

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