Papa Keno’s Pizzeria is cleaning up after an internal embezzlement that occurred during the restaurant’s expansion into Colorado, the company’s owner said.

Now Greg Keenan, who founded the business 15 years ago, is repaying nearly $150,000 in unpaid sales taxes, payroll-withholding taxes and penalties to make things right.

“We’re in fine position,” Keenan said Thursday. “We have record sales every year. It wasn’t anything that caught us off guard. We’ve been working on this for six months with the state of Kansas.”

Keenan, who opened his first restaurant 15 years ago on East Ninth Street, today reports having $2 million in annual sales for his three remaining restaurants: at 1035 Mass. in downtown Lawrence, a 10-year-old location in downtown Overland Park, and a new place that opened in April in the Westport district of Kansas City, Mo.

“We’re not going anywhere,” he said.

Keenan is paying back money, and penalties, resulting from the under-reporting of sales at the Lawrence restaurant beginning in 2002 and extending into 2004.

“Somebody was stealing in my office,” he said. “I chose not to press criminal charges, and I handled the matter internally.”

The financial fallout is outlined in a tax warrant recently filed by the Kansas Department of Revenue, which shows the Lawrence restaurant owed $140,731 in sales taxes from 2003 to 2005, plus another $6,484 in withholding tax from 2004.

The debt has been reduced, Keenan said, now that he’s made a down payment of about $40,000 and entered into a monthly payment plan.

“It’s under $100,000,” he said.

Freda Warfield, a public service administrator for the Kansas Department of Revenue, declined to discuss the specifics of the Papa Keno’s case, but noted that tax warrants often had a way of convincing delinquent taxpayers to pay off their debts.

“Many times that is what brings taxpayers to set up a payment plan,” Warfield said.

Keenan said that the problems occurred while he was living in Denver, overseeing two Papa Keno’s Pizzerias that he’d opened there – one in 2001, and another in 2003. He sold the Denver locations in December 2003, and chose to return to Lawrence.

• 6News video: Papa Keno’s owner paying off unpaid taxes (11-10-05)

Now he just wants to reassure customers, employees and suppliers that the place that has sold “slices as big as your face” for 15 years now isn’t going anywhere.

“This is my life,” he said Thursday, between frequent phone calls in his office upstairs from the restaurant. “It’s what I do.”