The owners of the Nifty Fifty's restaurant chain in our area are charged with tax evasion. The federal government is accusing Robert D. Mattei and Leo T. McGlynn of conspiring with employees and an accountant to keep cash they got from customers instead of reporting it as income.
They're also accused of filing false tax returns to keep from paying millions in taxes.
Mattei and McGlynn share ownership of Nifty Fifty's restaurants and split all the profits equally, according to the court documents filed in federal court today.
Investigators say the Nifty Fifty's owners and employees had a scheme going to keep and hide money when customers paid cash for their meals. According to the indictment, they stashed the cash in personal safes in their own homes and in bank safe deposit boxes.
The five alleged conspirators paid themselves in cash as well as most of the other restaurant employees, which allowed them to avoid paying more than $850,000 in employment taxes from 2006 to 2010, according to the indictment. During that same time period, they also used the cash to pay suppliers, which allowed those other businesses and people to evade paying taxes.
The defendants hired an accountant to prepare false federal tax returns for the restaurants, as well as false individual tax returns, according to the indictment. From January of 2006 to August 23 of 2010, the defendants did not properly account for more than $15.6 million in gross receipts, according to the indictment. That means they evaded paying taxes that amount to more than $2.2 million, according to the government.
All of the defendants under reported their personal income, sometimes claiming their taxable income was $0. On some of their returns between 2006 and 2010, they asked for refunds.
Other employees named in the indictment are two head managers -- Joseph B. Donnelly and Brian F. Welsh. Office manager, Elena V. Ruiz, who handled payroll and paid all the bills is also named as a conspirator. She is Mattei's daughter.
According to government investigators, those five people conspired for more than twenty years to defraud the government. The scheme to hide cash started in 1986 and went on until October of 2010, according to the government.
If convicted, Mattei and Welsh could spend up to 40 years in prison. McGlynn and Donnelly face a maximum sentence of 50 years if convicted, and Ruiz faces ten years.
A spokesman for Nifty Fifty issued this 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.