Five owners of the Nifty Fifty's restaurant chain, which has locations on Blackwood Clementon Road in Gloucester Township and Route 42 in Washington Township, were charged Wednesday with tax evasion in a scheme that allegedly dates back more than 25 years and cheated the Internal Revenue Service of taxes on more than $15 million in receipts between 2006 and 2010.
In addition to its two South Jersey locations, Nifty Fifty's has three throwback-style restaurants in southeastern Pennsylvania.
The five owners—Robert Mattei, 73, of Del Ray Beach, FL; Leo McGlynn, 52, of Swarthmore, PA; Brian Welsh, 48, of Springfield, PA; Joseph Donnelly, 49, of Springfield, PA; and Elena Ruiz, 46, of Drexel Hill, PA—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 charges were announced by United States Attorney Zane David Memeger, IRS Acting Special Agent in Charge Akeia Connor with the Criminal Investigation Division, and FBI Special Agent in Charge George C. Venizelos.
“Owning your own business is part of the American dream. But with that dream comes responsibilities, including paying your fair share of federal taxes,” Memeger said. “It is alleged that these defendants conspired to disregard their responsibilities, to the tune of over $15 million, so they could enrich themselves at the expense of all the hardworking Americans who follow the rules and pay their taxes.”
Authorities allege the five defendants not only evaded paying taxes they owed, but also filed 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 FBI said in a press release.
Mattei, McGlynn, Welsh, Donnelly and Ruiz have allegedly evaded paying taxes since the restaurant was established in 1986 by, among other things, paying a portion of employees' wages with unreported cash in order to evade payroll taxes; paying suppliers with unreported cash; and having false tax returns prepared that under-reported income and falsely inflated expenses and deductions.
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.
A spokesman for Nifty Fifty's released the following 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."
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.