Agents search Macgregor's in Havre de Grace after alleged statements to undercover investigator

IRS probing restaurant

December 12, 2006|By Justin Fenton | Justin Fenton,Sun reporter

When Harford County Executive David R. Craig decided to throw a bash for his volunteers after a successful campaign, he chose Macgregor's Restaurant and Tavern, the two-story seafood restaurant where every table offers a view of Chesapeake Bay headwaters.

The restaurant, part of the revitalization of Havre de Grace's historic downtown district, is where locals go to socialize and listen to live music.

It also might be violating tax laws, according to federal agents.

The owner, believing that he was speaking to a potential buyer of the business this year, is alleged to have told an undercover investigator that he had skimmed proceeds to avoid paying taxes, according to an affidavit filed in federal court by investigators seeking a search warrant.

Agents, armed with the search warrant, shut down and searched the restaurant for a day last week.

Macgregor's has reopened, and its owners have not been charged with any crime.

But word of the investigation stunned some of its most loyal patrons this week.

"For me and my friends, we always love going there," said Cecelia M. Stepp, a former Harford County councilwoman from Havre de Grace. "It's just a great place to congregate. It's one of those places where you feel like home."

Craig's spokeswoman, Roxanne Lynch, said the reports were "hard to believe."

"They've been a stalwart business in Havre de Grace," Lynch said.

Calls placed to owner Daniel Lee at the restaurant Friday and yesterday were not returned.

Augustus F. Brown, a Bel Air attorney who represented Lee in a separate legal matter, said he was not familiar with the circumstances surrounding an Internal Revenue Service investigation.

"I have had no communication with the IRS," Brown said yesterday.

Lee, 54, has been the primary operator of the restaurant since 1990, three years after it opened in a former bank building with a commanding presence in the 300 block of Saint John St.

Court records list Lee and his wife, Cynthia, as the owners.

The restaurant offers a waterfront view from all tables, and its banquet hall is a popular venue for weddings and business meet-and-greets.

Lee, whose father and grandfather served on the county's Democratic Central Committee and owned Buick dealerships, has contributed more than $1,800 to local politicians, mostly in the past election cycle.

IRS agents closed down the restaurant at 8 a.m. Wednesday.

According to the affidavit, Lee was introduced to the undercover agent through a pair of Baltimore brokers as he quietly tried to sell the business for $3 million this year.

He met twice with the agent, in May and July, allegedly displaying spreadsheets that showed the unreported sales and income. He told the agent that he also kept unreported transactions on a personal laptop.

Lee and the agent had candid discussions about how the cash side of the business operated, the affidavit shows.

At one point, he boasted that he owned five cars - running the gas, travel and maintenance expenses through the company - and five Rolexes, including a $4,000 watch with a diamond bezel that he had purchased for his wife, the affidavit says.

Lee allegedly told the agent that he paid the salaries of several employees and all employee bonuses in cash, and that catering was "the big one" for cash transactions. He told the agent that he knew how to get additional cash out of the computer system by voiding checks and changing sales numbers.

He also said he received cash from the restaurant's poker and cigarette machines, his rental apartment in the building next door, and friends who would purchase food through Lee, according to the affidavit.

Overall, Lee estimated that he made $80,000 to $100,000 per year in unreported cash, though his reported income usually showed a loss or small gain, he allegedly told the agent.

"I always try to make it close," he said, according to court records.

A spokeswoman for the U.S. attorney's office in Baltimore declined to comment, and a spokeswoman for the IRS Criminal Investigation field office in Baltimore could not be reached.

Lee was previously involved with two now-defunct restaurants in Harford County - Georgetown North and Ernie's, both once-popular restaurants on Main Street in Bel Air.

Macgregor's has been a key part of Havre de Grace's downtown revitalization, a balance of historic preservation blended with building a tourist destination at the top of the bay.

Many are familiar with the Lee family; others recall the building's roots as a bank.

George F. Harrison Jr., a top aide to former County Executive Eileen M. Rehrmann, said Macgregor's catered his daughter's wedding.

It's also where he had Thanksgiving dinner last month, he said.

"It's a first-class restaurant, probably one of the top restaurants in Havre de Grace and certainly in Harford County," Harrison said.

Stepp said Lee and his wife were a visible presence in the restaurant.

"They're great folks," Stepp said.

justin.fenton@baltsun.com

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