An iconic Philadelphia area burger chain and its owners are in hot water with the U.S. government for allegedly failing to report more than $15 million in sales to the Internal Revenue Service.
The U.S. Attorney’s Office last Wednesday announced tax evasion and conspiracy charges against Delaware County-based Nifty Fifty’s and five of its owners and managers. The chain has five company-owned restaurants, including one at 2491 Grant Ave. in the Northeast and another at 2555 Street Road in nearby Bensalem Township.
The defendants are accused of “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 said in a printed statement.
“The defendants not only evaded paying the taxes they owed, they filed income tax returns claiming they were due refunds based on the erroneous reporting of their incomes,” the federal prosecutor said.
The individual defendants include Robert Mattei, 73, of Delray Beach, Fla.; Leo McGlynn, 52, of Swarthmore; Brian Welsh, 48, of Springfield, Delaware County; Joseph Donnelly, 49, of Springfield, Delaware County; and Elena Ruiz, 46, of Drexel Hill.
All but Ruiz are also charged with bank fraud, while McGlynn and Donnelly are charged with aggravated structuring of financial transactions.
According to the charging document — a criminal information — the defendants have evaded taxes since the company’s 1986 founding by, among other methods, paying employees a portion of their wages with unreported cash, thereby avoiding payroll taxes; paying suppliers with unreported cash; and having false tax returns prepared that under-reported income, while falsely inflating expenses and deductions.
Between 2006 and 2010, the defendants allegedly failed deliberately to account for $15.6 million in gross receipts, thereby evading $2.2 million in federal employment and personal taxes.
On the heels of the U.S. Attorney’s announcement, the company issued a statement of apology.
“We deeply regret our misconduct and accept full responsibility for our actions,” the statement said. “We have been fully cooperative with the IRS to resolve these issues and have repaid all back taxes and penalties.”
The company said it plans to continue operating its five restaurants.
If convicted, Mattei and Welsh could face up to 40 years in prison, $1.5 million in fines and full restitution; McGlynn and Donnelly could face up to 50 years in prison and $2 million in fines; and Ruiz up to 10 years in prison and $500,000 in fines. ••EndFragment