Northeast Times

Nifty Fifty's charged with tax fraud

Start­Frag­ment

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

You can reach at wkenny@bsmphilly.com.

comments powered by Disqus