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.
are the restaurants closed? or closing?— manzi- It's in the 3rd sentence of the story. Did you just read the headline and post this??? — argyjr
- I hope not! Keeping the money in the community is far better then letting the IRS waste it on fraud and pork.— IBINUBU
- Yeah, those annoying working traffic lights, roads, schools, police, medical research, defense, clean drinking water, etc. are terrible. Lets just all quit paying taxes and go live in the woods. — JonKap
- This.
It's one thing to want the government to spend less. But people who want to have a government, but don't want anybody to pay taxes, are not thinking things through. 
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NOOOOOOOOOOOOOOOOOOOOOOOOOOO...where will i go for my egg cremes.. (HTML deleted)- Yes. They are open as usual.— watershed
- Doesn't sound good - Shame. They have(or maybe I should say had) a killer breakfast.— Kennedy
- Tough to get a good milkshake where these folks are headed. My dog would not eat prison food. Those jail food trays are really "nifty"....— kelprod2
- i never had an egg creme— mwright252
- Nifty 50 is the amount of time these jokers might get. Of course we all know they will be lucky to see the inside of a jail, they will pay their fines, get a slap on the hands, but if I was to not pay a parking ticket, I'd have my car confiscated.— Anthony Palmer
- Hey Philly, don't forget to get your gross receipts tax from them, too!— gYo
- Did anyone else chuckle when you read the potential penalties and you got to the 'special assessment' part?— Oh the Hypocrisy
- You think this is funny? Do you have a heart at all? Think about their families are going through right now. Its not cool to be a jerk. — MikeDalany
