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Spa Castle To Pay $2.5 Million For Tax Fraud

Dashed Arrow Spa Castle

Your favorite "sex spa" was ordered to reimburse the state millions of dollars Thursday after pleading guilty to felony tax fraud.

According to a statement from New York Attorney General Barbara Underwood's office, Spa Castle will pay $2.5 million after purposefully underreporting its substantial income. Corporate officer Daniel Chon, meanwhile, avoided a jail sentence with three years of conditional discharge. As his lawyer, Michael Weinstein, told the NY Post, Chon "accepted responsibility for tax deficiencies from many years ago," but admitted to only one of the many charges filed against him: Trying to dodge sales tax repayments to the state.

"We have zero tolerance for tax cheats who leave New Yorkers to foot the bill," Underwood said in the statement. "The defendants orchestrated a multi-million dollar scheme to defraud taxpayers. We're grateful to the whistleblower who helped bring this egregious conduct to light—and it should serve as a wake-up call to all tax fraudsters who think their misconduct will go by unnoticed."

Spa Castle, a hulking mega-bathhouse located in College Point, Queens, charges $50 for weekend admission, plus extra fees for access to its spa treatment menu. According to the AG, it raked in $22 million between 2010 and 2013, but dodged sales, corporate, and MTA tax payments. As Underwood mentioned, an informant filed a complaint against the super spa under the New York False Claims Act in 2014, prompting the AG's office to open an investigation. In 2017, the state hit Chon and his brothers—owner Steve Chon and Victor Chon—as well as his niece, Stephanie Chon, with two counts of grand larceny, eight counts of criminal tax fraud, and one count of criminal tax fraud. The AG alleged that the Chons had evaded $1.5 million in tax payments. The cases against Chon's family members have been dismissed, according to the Post.

Spa Castle, of course, is a medium-notorious New York bathing fixture with a checkered past. In 2014, an elderly man died in one of its hot tubs, and in 2016, a powerful vent snared a little girl's hair and trapped her underwater, almost drowning her. That same year, Spa Castle came under fire for allegedly barring a transgender man from its locker rooms and nude bathing areas. That the spa allows naked swimming reportedly makes for some raunchy parties, according to a NY Post expose detailing the rampant group sex and groping that apparently take place in the Castle's waters.

So where does all of this financial crime leave Spa Castle, you may be wondering—will these debts close down the complex's many pools of debauchery? Gothamist has reached out to Spa Castle for clarification, but given the profit this wellness racket turns, service changes seem unlikely.

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