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.
- Haha, I Know!! those houses in Springfield and Drexel Hill are huge! They have 3 bedrooms and sit on a 1/16 of an acre! A lot of them even have driveways! Must be nice, must be nice. I hope those one percenters rot in jail. wahhhhh wahhhhh.
— BillyDelco - No probation here. They're going away.— Sanchez
- I refuse to spend money at places that do not accept credit or debit cards. I always wondered why places didn't accept plastic, now I know!— finngov
- Duh.... — BillyDelco
- well, it could be because they don't feel like losing 3% of their receipts to the CC companies . . . — ekw555
- They were a cash only business only until a couple years ago..I wonder how much they really stashed— hottnikks97
- Apple, Google, GE, and many other corporate titans use Bermuda sub-corporations to skip out on hundreds of millions in taxes, no problem... a small local restaurant chain though... GET EM!— magicboy2
- Amen, magicboy. — wilcowaits
- 100% Correct Magic Boy...like they say, the Gov't hates competition!
— Dhaze - Hey @DoomsdayCritic. Your comment was pulled because you accused a specific restaurant by name of doing something illegal.— MikeKlein
- Hey JonKap: have you ever looked at the federal budget? Do you know how little is spent on things like education and environment? The defense part is right, plenty of money being wasted there. Those in charge of our taxes should be jailed for the waste and back room deals that take place. Sure, let's just give Haliburton all our money...they sure need it. I'm still waiting for someone to show me the law that says that you have to pay income tax. Go check out Aaron Russo's documentary on income tax. The citizens of this country are constantly being scammed by big businesses that have unbelievable ties to the federal gov't. The banks, the mortgage companies, Monsanto Food Corp, the drug companies, the insurance companies all take far more than they should and give very little. It doesn't surprise me in the least that people try and keep all they can from the feds.— wilcowaits
- good for you guys,congrats.... god bless america— jok
- how could i have forgotten the oil companies?! my goodness, 4 plus dollars to go 20 miles...now that is a scam if i ever heard one. but i guess there is nothing our president or politicians can do about it and we will just keep on paying whatever they ask for.— wilcowaits
- I'm pretty CERTAIN they have paid the IRS plenty in taxes! Shame on them for trying to keep some of their hard earned money for themselves rather than pay for our politicians, etc and their families to go on vacations, have rest of life severance packages and insurance, etc etc. Now that IS a real crime! Give me a break.— change1
