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.
- @HappyWater- The executives have admitted to their roles in this scheme, and I have included their comment indicating that they are paying the taxes and fines. How is the journalism one-sided?
— MikeKlein - I just hope I can still get my spicey chicken nuggets.— phillychick20
- For all of you uneducated folks out there, the media hypes everything up and makes it seem way worse than it really is. And the maximum years in prison would never happen in this situation...they said it was the maximum, that means its the longest they could serve, that doesn't mean its actually going to happen!! also for stuff like this, they could just be on house arrest.. like i said before, the media always hypes things up!
— MikeDalany - For all of you uneducated folks out there, the media hypes everything up and makes it seem way worse than it really is. And the maximum years in prison would never happen in this situation...they said it was the maximum, that means its the longest they could serve, that doesn't mean its actually going to happen!! also for stuff like this, they could just be on house arrest.. like i said before, the media always hypes things up! (HTML deleted)— MikeDalany
- All of you should stop talking trash about nifty's, and stop acting like you actually know what is going on. The media always hypes things up to get viewers, so they get more money for them. And the owners are great people despite what they had done, they actually talk to their customers and make friends with them. I don't know any other restaurant that has nicer owners than them. so stop being jerks when you don't even know them. This is a form of cyber bullying and is immature. Were all adults here so start acting like it and stop talking trash like immature children— MikeDalany
- Jail.— bobcitydoc
- If thiw a black run place the owners would be in jail. These four dirt bas should all do a little jail time.Al Capone was put in jail for income tax fraud. These creeps are no better than him. Maybe they can use the Timothy Geithner excuse, I didn't know. Hope the book keepers take a ride also.— oldbiker
- With the amount of money hidden, over an extended period of time, and done in such a calculated manner...they will be doing time. Regardless of the money paid back, no judge is going to let them slide. Prison food is not "nifty". Tax evasion is a REALLY serious crime.— kelprod2
- Mike Dalany,
You are needed back in the kitchen.— no10leclair - I don't see how this article was one-sided. The author was very factual and left little room for sensationalism. The author took direct figures and quotes from both the IRS and the alleged fraudsters.— no10leclair
- Since they got caught and paid back the taxes with fines and penalties, will they be appointed to Obama's Cabinet or be made a czar of some agency?— phillysgr8
- 50 % of the money is wasted?? OK, let's just cut defense by that much...starting with the contractors..and Mike...they put their families through this with probably a pretty opulent life style...— joegrink
- Which one will be the first to crack??????— pnolan
- It's going to very hard for them to run a legitamate business after cheating for 25 years. That $5 milkshake I bought last week will be $6.50 since they have now to pay payroll, income and sales tax on it.— JoeC.
- @Mike Dalany...Please, Mike. Wake up and smell the coffee! These dumbhead thieves should've thought of their families. No-one ever said criminals were smart...and here's proof. Did they have a clever scheme? Yes. Did they get nailed? Yes. Smart? No. End of any bleeding heart sentiment.— sky173
