"WATCH US do it fresh," is how the owners of the local restaurant chain Nifty Fifty's pitch customers on the chain's website. A bit too fresh for Uncle Sam, apparently.
The U.S. attorney in Philadelphia have charged two owners and three managers of the chain — which includes five locations in southeastern Pennsylvania and South Jersey — with tax evasion for allegedly masterminding a long-running scheme to evade millions of dollars in personal and employment taxes.
Those charged Wednesday include: Robert Mattei, 73, of Delray Beach, Fla.; Leo McGlynn, 52, of Swarthmore; Joseph Donnelly, 49, and Brian Welsh, 48, both of Springfield, Delaware County; and Elena Ruiz, 46, of Drexel Hill. Ruiz is Mattei's daughter.
Mattei and McGlynn were each 50 percent owners of the restaurants, and the others had various managerial positions, authorities said.
All defendants were charged by criminal information, a process that typically indicates that a plea deal is in the works.
The owners issued a statement Wednesday saying that they "deeply regret [their] misconduct," are cooperating with the IRS and have repaid all back taxes and penalties, adding that they would continue to run their five restaurants in "full compliance" with the law.
Federal prosecutors said the tax-evasion scheme dated to at least 1986, when the restaurant chain was established.
The charging document said the defendants paid employees a portion of their wages with unreported cash to evade payroll taxes, paid suppliers with unreported cash and had false tax returns prepared that underreported income and falsely inflated expenses and deductions.
The feds said that between 2006 and 2010, the defendants deliberately failed to properly account for $15.6 million in gross receipts, thus evading $2.2 million in federal employment and personal taxes.
Mattei, McGlynn, Donnelly and Welsh also are charged with bank fraud. Federal prosecutors said that between Dec. 16, 2003, and Nov. 30, 2009, they submitted bogus income-tax returns to Sovereign Bank in order to obtain almost $2.3 million in business loans.
McGlynn and Donnelly also were charged with structuring 22 deposits of more than $200,000 cash between Oct. 30, 2009, and Dec. 11, 2009, to avoid federal reporting requirements. n