FBI: Nifty Fifty's Owners Charged with Tax Evasion

Five managers and owners of the Nifty Fifty's restaurant chain, including two Springfield residents, are charged with tax evasion and conspiracy to commit tax evasion, the FBI announced today, May 16.

Defendants Brian Welsh, 48, and Joseph Donnelly, 49, both of Springfield, Leo McGlynn, 52, of Swarthmore, Elena Ruiz, 46, of Drexel Hill and Robert Mattei, 73, of Del Ray Beach, allegedly constructed a long-running scheme that cheated the Internal Revenue Service by failing to properly account for more than $15 million in gross receipts, according to an FBI press release.

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.

“The charges announced today are the result of a lengthy and complex financial investigation involving Nifty Fifty’s restaurants,” said Acting Special Agent in Charge of IRS-Criminal Investigation Akeia Conner. “These charges summarize a scheme in which millions of dollars in income were skimmed from a successful business in order to evade paying taxes on the income. IRS-Criminal Investigation is committed to investigating these types of tax fraud schemes in order to build faith in our nation’s tax system and to ensure that everyone is paying their fair share. It is important to remember that tax evasion is not a victimless crime and the honest taxpayers suffer when others cheat the government.”

This case was investigated by the Internal Revenue Service Criminal Investigation Division and the FBI. It is being prosecuted by Assistant United States Attorneys Paul G. Shapiro and Nancy E. Potts.