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.
Read the information here.