Peace, love and tax evasion: donut shop founder sentenced

Though the founder of Peace, Love, and Little Donuts was sentenced Thursday for bankruptcy and income fraud, the Oakland franchise will remain open and unaffected.

The donut chain’s co-founder Ronald Razete, who founded the chain with his wife, was charged with underreporting his income on the United States Individual Income Tax Return Form 1040 for 2010. He was also charged with hiding assets or property from the U.S. government in a petition of liquidation bankruptcy in August 2011.

Razete was convicted Thursday of these charges, and sentenced to five years of probation for each charge, to be served concurrently. He was also fined more than $40,000 to be paid by Dec. 12.

Max Andrzejewski, the owner of the Oakland franchise of Peace, Love and Little Donuts, emphasized that his shop has no connection with Razete.

“Because we were the first [franchise], we didn’t do a contract to him, so we have no legal ties to him,” Andrzejewski said.

Razete and his wife Marci founded Peace, Love and Little Donuts in 2009. The original store is in the Strip District, but the chain now has 22 locations across several states, concentrated primarily in Pennsylvania and Ohio.

Breaking down the numbers

According to court documents from the United States of America v. Ronald V. Razete case — filed in June — Razete reported his 2010 income from Peace, Love and Little Donuts as just over $16,000 when he had actually earned more than $194,000 that year. Razete’s reported income was about 8.4 percent of his actual income.

Because the average full-time employee in the United States works 2,000 hours each year — equal to 40 hours per week with two weeks of vacation — Razete’s reported income was equivalent to a rate of $8.13 per hour, slightly more than the 2010 Pennsylvania minimum wage of $7.25 per hour.

In comparison, Razete’s own actual earned income in 2010 was equivalent to $97.16 per hour, nearly 13.5 times the 2010 minimum wage.