Nifty Fifty's owners accused of skimming millions in cash
The IRS alleges a scheme that started in 1986.
Nifty Fifty's owners accused of skimming millions in cash
Michael Klein, Philly.com
Five owners of the popular Nifty Fifty's throwback-theme restaurant chain were accused today of beating the IRS out of millions of dollars, which the feds claim was stashed in safes.
The feds also allege that this was business as usual from the founding of Nifty Fifty's in 1986. The chain now has five locations in Pennsylvania and New Jersey. The stores plan to remain open.
Robert Mattei, 73, of Del Ray Beach, Fla., Leo McGlynn, 52, of Swarthmore, Brian Welsh, 48, of Springfield, Joseph Donnelly, 49, of Springfield, and Elena Ruiz, 46, of Drexel Hill, are charged with conspiracy to commit tax evasion, and tax evasion, for allegedly constructing a long-running scheme to avoid paying millions of dollars in personal and employment taxes as related to their restaurant chain, the U.S. Attorney's Office announced.
The company issued a statement: "We deeply regret our misconduct and accept full and complete responsibility for our actions. We have been fully cooperative with the IRS to resolve these issues and have repaid all back taxes and penalties. We will continue to run each of our five restaurants in full compliance with the law. We wish to thank all of our employees, friends, and business partners for their continued support as we move forward. Because this matter is still in the court system, we can have no further comment on this matter at this time."
The information - a formal complaint that often indicates that a plea deal is in the works - alleges that the five owners not only evaded paying the taxes they owed, they filed false income tax returns claiming they were due refunds. Mattei, McGlynn, Donnelly, and Welsh are also charged with bank fraud; and McGlynn and Donnelly are also charged with aggravated structuring of financial transactions.
The information says the defendants paid employees a portion of their wages with unreported cash in order to evade payroll taxes; paid suppliers with unreported cash; and had false tax returns prepared that under-reported income and falsely inflated expenses and deductions.
Just between the years 2006 and 2010, it is alleged the defendants deliberately failed to properly account for $15.6 million in gross receipts, thereby evading $2.2 million in federal employment and personal taxes.
It is further alleged that Mattei, McGlynn, Donnelly, and Welsh committed bank fraud by submitting to the bank bogus income tax returns in order to secure several business loans; and that McGlynn and Donnelly structured numerous cash deposits of undeclared income into a bank account in an effort to avoid federal reporting requirements.
Potential penalties: If convicted, Mattei and Welsh face a maximum sentence of 40 years of imprisonment, five years of supervised release, a fine of up to $1.5 million, full restitution to the IRS, and a $300 special assessment. If convicted, McGlynn and Donnelly face a maximum sentence of 50 years of imprisonment, five years of supervised release, a fine of up to $2 million, full restitution to the IRS, and a $400 special assessment. If convicted, Ruiz faces a maximum sentence of 10 years of imprisonment, three years of supervised release, a fine of up to $500,000, full restitution to the IRS, and a $200 special assessment.
- Nah, I don't have much sympathy for crooks. They should have thought about their families before doing this. I guess next we should all feel sorry for the families of murderers and rapists, too? Let me guess, someone in your family broke the law, and had to suffer the consequences, and your poor feelings were hurt.
— verve 
Wow!! They are members of 53% crowd that pay taxes trying to be part of the 47% crowd that don't pay any taxes at all.— jerryk2b- Just remember if these folks aren't paying their taxes, the rest of us are. Talk about welfare queens. They're disgusting.— palmer1619
- Whenever I am out, I always pay by credit card. Even the tip. Leave a paper trail and no one (me, waiter, owner) gets ripped off.— tedster
- Was the cash in the safe all in fifties? Nifty!— Middle_Class
- "alleges that the five owners not only evaded paying the taxes they owed, they filed false income tax returns claiming they were due refunds". Whoa. In the dictionary next to "chutzpah", they have pictures of these folks.— Jen D
- They are open for now. Its hard for restaurants to stay open for 25 years, that alone raises suspicions— Sports4Life
- I believe they only recently began accepting plastic. Well past the point of everyone using it. They wanted cash.— chham57
Now raise your sights on the bigger targets that do the same thing all the time, only worse...large corporations and Wall Street banks. How about charging a Wall Street firm with "aggravated structuring of financial transactions." They do that millions of times every day.— jp8899- My comment was removed because I used some restaurants name. Let me rephrase it. The majority of restaurants do the same thing (pay partial cash) as well as hire illegal immigrants(check out the kitchens) Also, for those who get to read this before it gets removed... if it does get removed, it means Michael Klein has connections to some restaurant with questionable tactics.— DoomsdayCritic
- The US is becoming more like Greece every day.— Wilhelm Von Humboldt
- Now if they could just clean their Northeast location to NOT make it smell like the men's room urinal - that would be great.— phillyPeteZ
- There is pig dollars in poodle skirts, it is an emerging market.— LJM
- I wonder how their employees earned income was reported to social security? Food for thought or the IRS take your pick.— mactheknife
- Did you notice the nice area's the five defendents are living in, living the good life in suburbia, not a care in the world!!! A unhappy partener or employee turned them in, the IRS wouldn't go back to 1986, unless they were told !!!!— Dadair1
