The owner of 13 Chicago-area gas stations has reached a multimillion-dollar settlement with the Illinois Attorney General’s Office over alleged under-reporting of merchandise sales.

Attorney General Lisa Madigan announced late last week that a $4.5 million settlement was reached to resolve a lawsuit filed under the Illinois False Claims Act regarding the 13 stations.

Madigan’s lawsuit alleged that since 2002, George Nediyakalayil submitted false monthly sales tax returns to the Illinois Department of Revenue, resulting in millions of dollars in lost revenue to the state. The lawsuit alleged that Nediyakalayil operated the scheme of under-reporting general merchandise sales and using inaccurate sales-tax reporting rates. Ten of the stations are currently in operation and owned by Nediyakalayil. Tito Kandarapallil co-owns one of the stations with Nediyakalayil.

“This settlement is another warning to business owners considering ripping off Illinois residents and the state by failing to pay their taxes,” Madigan said. “Cheating the state out of millions of taxpayer dollars will not be tolerated.”

Reached at his Northbrook home, Nediyakalayil had no comment, referring all questions to his Gas Depot company offices.

The 13 Chicago-area gas stations involved in the lawsuit are:

• Shell, 3216 W. North Ave., Stone Park.
• BP, 4401 N. Harlem Ave., Norridge.
• Shell, 1551 W. North Ave., Chicago.
• Shell, 1768 W. Armitage Ave., Chicago.
• BP, 2800 W. Fullerton Ave., Chicago.
• BP, 4000 W. Peterson Ave., Chicago.
• Shell, 3200 N. Kimball Ave., Chicago.
• BP, 1200 W. Belmont Ave., Chicago.
• BP, 3968 W. Belmont Ave., Chicago.
• Marathon, 7850 S. Martin Luther King Drive, Chicago.
• Marathon, 2474 Thatcher Ave., River Grove.
• Shell, 2401 Lincoln Hwy., Olympia Fields.
• BP, 800 W. Touhy Ave., Des Plaines.

The Shell station on North Avenue in Chicago has been the proposed site of an eight-story, 99-room hotel. Nediyakalayil has been before city officials seeking a zoning change for the property, to demolish the gas station and develop a hotel on the site.

Nediyakalayil told city officials earlier this year that he’d signed a letter of intent with Hyatt for the hotel development.

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