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.
I suppose the investigation will now move on to Charlie's.— Murrayman- I went to eat there one day but they only accepted CASH.. no debit or credit cards..
hmmm... go figure.— kevgret - They actually do except credit cards..get your facts straight — MikeDalany
- There is a reason they call this "white collar crime"...— WeArePennState
- I have been a fan of Nifty Fifty's since day one. I know what they did was wrong, but there is no need for all of the nasty comments. Think about what there families are going through. Despite what they did, I will always be a fan, they have great food and service.— MikeDalany
- I have been a fan of Nifty Fifty's since day one. I know what they did was wrong, but there is no need for all of the nasty comments. Think about what there families are going through. Despite what they did, I will always be a fan, they have great food and service.— MikeDalany
Comment removed.- Well, on the up side they have great milk shakes.— drbob1
- Wow, go figure an all cash business didn't pay their taxes. The IRS should look a lot further than Nifties. I've always liked Nifties, but their product has suffered over the years. My last visit will likely be that, my last visit. I got takeout and waited literally 40 mins for a burger, fries and a milkshake while countless red shirts behind the counter stood around and doing little or nothing. Lastly, to the owners and their statement... I noticed you thanked your employees, friends and business partners for their support. I'd say its par for the course that you didn't thank your customers, because you obviously care very little for them. Pay your taxes knuckleheads.— PhilaObserver
- You said that the owners don't care about their customers. Thats not true!! I Know many customers that come in everyday because they have developed a good friendship with the owners, I myself come in everyday for they past 10 years and talk to the owner to see whats new. Nifty Fifty's is the only restaraunt that I have been to in my entire life where the owner actually sits down with you and gets to know you. — MikeDalany
Shake rattle and STOLE. Well done.- I'm also accusing them of having awful food! Good milkshakes though!— EBeckels
- Comment removed.
- To the people who think income taxes pay for services, you would be incorrect.
According to President Ronald Reagan's Grace Commission, not a single penny goes to services. Instead, it's paid to a private corporation based in Delaware known as the Federal Reserve. It's as Federal as Federal Express.
Google it. It's true.— MarkusAllen - An open mind should be taken with this story concerning a local business that has invested in the local community for decades. Tthe journalism seems very one sided here.— Happywater
