Chris Karakosta, the founder of Mel's Diner, was arrested this week on charges of passing bad checks.

Karakosta, 54, owes back taxes and had gotten behind with a number of his creditors before closing the Mel's Diners in Bradenton and Sarasota this week. He closed another restaurant in New Port Richey last month.

Records show that Karakosta's company owes nearly $190,000 in sales tax for the Mel's Diners in Sarasota and Bradenton.

Employees at the Mel's Diner in Bradenton said that before the restaurant closed Florida Power & Light came to collect on the electric bill, asking for cash only.

Reports from the Collier County Sheriff's Office show that Karakosta was arrested after midnight on Tuesday as a fugitive from justice on two charges: fraud and writing worthless checks.

He was released on $1,000 cash bond on each charge Tuesday.

During a Wednesday interview, Karakosta said he had been struggling financially, but planned to pay employees at his closed restaurants. The cooks and wait staff had not been paid in at least two weeks.

He did not mention the arrest, and could not be reached for comment on Thursday.

"It's been very difficult," he said Wednesday. "We're an emotional family and a small business, so it's a very difficult time for us. It's been a big turn of events. Go easy on me."

Karakosta, who also owns the Big Al's restaurant in Sarasota, had been remodeling his diners, spending $250,000 to $500,000 on each one.

He said that his company grossed $28 million in 2006, but in the past year contractors have complained that they have not been getting paid, that Karakosta was behind on his bills and in recent weeks began paying his staff in cash.

Tony Katsarelas, president of Katsy Electric Inc., said Thursday that he has been trying to collect on a $16,000 check Karakosta wrote to him three months ago. The company had done work on the diner on Tamiami Trail, across from Sarasota Memorial Hospital..

Katsarelas, who has hired a lawyer, said he was one of several contractors to receive a bad check.

There are still seven Mel's Diners in operation from Venice to Naples. Karakosta said Wednesday that they have managing partners and will remain open.

It is not the first time Karakosta and his Creative Restaurant Management has had financial trouble. In 2002, his Venice landlord, 1763 Tamiami Corp., began eviction proceedings against that Mel's Diner. The case was settled after two months.

That same year, Robert Jackso sued Karakosta for not paying on a work contract. Karakosta also was sued in 2003 by National Linen Service.

Several former waitresses from Mel's Diner said they did not want checks from Karakosta because no one would cash them.

Margaret Hembree said she talked to Karakosta late Wednesday and that he promised that employees would get their pay checks on Friday.

But when Hembree asked for a certified check because too many of her paychecks had bounced, Karakosta promised that a bank would cash the check.

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