Business & Tech

Connection Newspapers CEO Charged with Tax Evasion

Executive failed to pay more than $984,000.

The president and chief executive officer of a company that publishes community newspapers in Maryland and Northern Virginia — including the Burke Connection, Springfield Connection and Fairfax Station- Clifton Connection — pleaded guilty Tuesday to two misdemeanor counts of failing to pay federal payroll taxes.

Peter Labovitz, who has led Connection Newspapers for 20 years, did not pay more than $984,000 in federal income and FICA taxes between 2002 and 2008, according to a Justice Department news release. During that time, Labovitz oversaw the company’s day-to-day operations, directed employees and made financial decisions on behalf of the company, according to the Justice Department.

Labovitz, of Alexandria, specially pleaded guilty to failing to pay payroll taxes for the second half of 2007 — which accounts for about $330,420, according to court documents.

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According to a statement attributed to Labovitz on Connection Newspapers’ website, the company began falling behind financially after the Sept. 11, 2001, terrorist attacks and continued to struggle.

“To our employees, our readers, our communities and local and federal governments, I apologize,” Labovitz stated. “I understand that newspapers are a public trust and I know our entire organization works hard every day to earn that trust. I will do all I can to sustain that trust as we go forward.”

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The newspaper industry has been struggling financially for years, forcing employers large and small to lay off staff, shrink newsrooms and close offices.

Connection Newspapers, which publishes about 15 community newspapers, faced similar challenges, both technological and economic.

“We have weathered repeated crises that killed or crippled many others in the news media,” Labovitz stated. “I am proud that we have kept these vital community voices alive.”

Each count carries a maximum penalty of one year in prison, a $100,000 fine and up to a year of supervised probation. Sentencing will be Sept. 27.

Labovitz stated he was making arrangements to pay “the most recent shortfalls” in full, and that the company has been current on its payroll taxes for more than three years.

Labovitz must pay about $647,511 in restitution to the IRS, according to his plea agreement.

“It’s my privilege and responsibility to serve as steward of these historic and vital newspapers,” he stated. “I hope to continue in this role. I am committed to doing whatever I can to ensure the Connection Newspapers adapt to these very difficult and challenging times and continue serving our communities for years to come.”

The IRS Criminal Investigation Division handled the investigation. The U.S. Attorney’s Office in Alexandria prosecuted the case.


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