This is the story of how a $1.50 bottle of Perrier water at a fashionable Washington restaurant grew into a tax-deductible dinner for four.
James J. Donohue, 61, of Great Falls, Va., owner of a real estate brokerage company and one-time assistant to the president of Blake Construction Co. in Washington, admitted before federal Judge Walter E. Black Jr. here today that he padded business expenses on his 1979 federal income tax returns for thousands of dollars and also tried to get the owner of a restaurant to deep-six its records that showed his meals were a lot skimpier than he claimed.
Prosecutor Elizabeth H. Trimble told the judge that Donohue claimed $46,000 in meals, entertainment and other business-related expenses in 1979. Some of these were verifiable credit-card expenses, she said. But more than $31,000 were claimed to have been paid in cash -- at a time when Donohue had only about $4,000 available, according to an analysis of Donohue's bank cash flow, Trimble said.
In one instance, Donohue claimed he had dinner for four at the Intrigue Restaurant in Washington's Foggy Bottom area, costing "many, many dollars," Trimble said. As proof of that expense, she said he produced the bottom portion of a restaurant stub, which customers can fill out for tax purposes. But prosecutors subpoenaed the top of the stub, she said, and it showed the purchase of a single bottle of Perrier water: Price $1.50.
When federal investigators first got on the trail, Trimble said, Donohue went to Intrigue Restaurant co-owner Barbara Laricos and urged her to "lose" various restaurant records, including Donohue's meal stubs. She refused.
Donohue, who prosecutors said figured in what has become a dead-end investigation of Blake Construction Co., already has served almost a year in prison for contempt of court for failing to turn over records to a grand jury looking into Blake operations in Baltimore.
Currently free on personal bond, he was indicted last year on seven counts of obstructing justice and filing false tax returns for the years 1976 through 1979.
He formally pleaded guilty today to one count each of tax evasion and obstruction.
Judge Black will sentence Donohue within the next few weeks. He faces a possible maximum penalty of three years in prison and a $5,000 fine on the tax charge and five years and $5,000 on the obstruction count.