Connection Newspapers CEO Guilty of Failing to Pay Taxes

Peter Labovitz, the president and CEO of Connection Newspapers, faces up to a year in jail after he pleaded guilty Tuesday to two counts of failing to pay the IRS nearly $1 million in payroll taxes.

Labovitz admitted in federal court that he collected income and Federal Insurance Contributions Act (FICA) taxes from the company's employees, but he did not pay the IRS in a timely manner for a three-month period in 2007. The total amount owed is more than $940,000, the Justice Department said in a news release. 

Labovitz, an Alexandria resident and the company's president for the past 20 years, attributed the Connection's financial difficulties to a drop in revenue after 9/11 and again during the recession. In a statement posted on the Connection website, Labovitz wrote that the company initially fell behind with its finances after 9/11. The problem occurred again in several quarters during 2008 and 2009. 

Labovitz said he accepted responsibility for what he called an oversight, and that he would make procedural changes to ensure that something like this never happens again. He also said he is making arrangements to pay the most-recent shortfalls in full.

"Since The Alexandria Gazette was founded in 1784, our organization’s journalism has played an essential role in our communities. But like all American newspapers, in recent years the Connection Newspapers have faced daunting technological and economic challenges," Labovitz said. "We have weathered repeated crises that killed or crippled many others in the news media. I am proud that we have kept these vital community voices alive."

Connection Newspapers publishes 15 newspapers throughout the Northern Virginia area, including the weekly CentreView, the Alexandria Gazette and the Fairfax Connection. 

Labovitz will be sentenced on Sept. 27 and faces up to a year in prison, a $100,000 fine and up to one year of supervised release for each count of conviction. 

Labovitz apologized to the company's employees, readers and the federal government and said he hopes to continue his role with Connection Newspapers.

"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," he said.