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- Accepting credit cards for business transactions comes with convenience but also high fees that can cut into the bottom line of the 'mom and pop' shops
- Accepting credit cards for business transactions comes with convenience but also high fees that can cut into the bottom line of the 'mom and pop' shops
Nick's Roast Beef celebrated 40 years of being in business during 2015, an amazing accomplishment for small business owners/partners Nicholas Koudanis and Nicholas Markos. Its single location in North Beverly, MA (about 20 miles north of Boston) is as noted for its sliced roast beef sandwiches as it is for the arduous navigation of its tight parking lot. The place is packed from 10:00 am until closing at 10:00pm and patrons not only rave about the food, they are evangelical about spreading the word globally. Photos throughout the restaurant depict tourists holding their "Nick's Roast Beef" bumper sticker at locales ranging from Mt. Everest to the Sydney Opera House. It is "cash only" at Nick's and an ATM in the corner accommodates the modern customer who carries more plastic than currency. On December 10, things took a bad turn for the restaurant's owners. They were indicted on 17 federal criminal counts.
According to defense attorney Joel Androphy, who is not involved with this case, the federal government can easily target small businesses who tend to be less sophisticated in their business practices and financial controls. "Businesses like this are low hanging fruit for prosecutors," Androphy said, "which is a shame because large corporations are skating around paying taxes because of the inefficiency of the IRS Whistleblower program." That program is supposed to reward whistleblowers who tell on companies and individuals who are avoiding paying taxes. Androphy says there are hundreds of millions that the government could go after but those cases can be complicated. He has a point, in a report from Watchdog.org, the IRS program is mired in delays and the majority of the cases they work are for claims under $2 million--that hits small businesses hard.
While everyone should play by the rules, the rules seem to be enforced more on those who can least afford to fight. Defending a criminal case is expensive and the U.S. government has the resources to go as long as it takes to get a conviction. The charges, in the case of Nick's filing false tax returns and obstruction, do not carry long prison terms, but prosecutors are known for adding more charges later in order to pressure defendants into a guilty plea. In cases involving large amounts of cash, that could mean money laundering charges and that could lead to more than a decade in prison. "Nobody should cheat," Androphy said, "but the rich and large corporations can fight the government in a way the small businessman cannot."
Accepting credit cards for business transactions comes with convenience but also high fees that can cut into the bottom line of the 'mom and pop' shops . Having open invoices and clients that take a long time to pay is also a heavy burden for small businesses that are often getting money in as fast as they are paying it out. So cash-based businesses are the best solution but that comes with increased scrutiny from the government and risks associated with crossing legal lines. The Bank Secrecy Act from 1970 is getting renewed interest for fighting terrorism, drugs, and money laundering, but it also catches up with small businesses like Nick's. Banks have become the watchdogs who are supposed to monitor large cash deposits and withdrawals. While the indictment did not state how the Nick's investigation progressed, one can be sure that the popular restaurant was being monitored. At the time of their arrest, the Koudanis's had $1.6 million in cash in a safe in their home.
The fear in the community, which is near where I live, is not that some crime family is potentially running a deli, but instead concern for the families charged and whether the restaurant will close. The success of the business has been because at least one of the two owners (65 and 70 years old) could be seen behind the counter working everyday. I have visited Nick's a number of times and it is a place where you see little league teams gather after games. It is where families go after church on the weekend and it is where hardworking people head to for lunch. Policeman, fireman, doctors, nurses, all can be seen walking out the door with a recognized white paper bag of hot food from Nick's that is more take-out than dine-in. It has become a place that identifies with the people and the people identify with it.
Many times, the public's perception is that white collar crime prosecutions seem to bypass Wall Street, that may or may not be true. However, they hit Main Street America very hard and these stories rarely make national news--they barely make the local news. Few have the resources to mount a legal defense and save their company at the same time. Tonight, we are going to help a bit on both fronts because we will be eating at Nick's. It is not because we would support anyone breaking the law, in fact that has yet to be proven, but we believe in supporting small businesses that have supported our community, and did I mention they have a great sandwich?
Cases like this play out across the U.S., however, we should hope in this case that justice should also take into consideration the larger impact that the outcome will have on the people in the surrounding community. If banks are too big to fail, then businesses like Nick's are too essential to fail. There should be a way to resolve this matter in some way other than the usual zero sum game of justice of people being tossed in prison for years and prosecutors proclaiming we are better off as a result.
