Posts Tagged ‘Nifty.Fiftys’

The Last Roundup at Nifty Fifty’s

Monday, August 10th, 2015

Last Thursday William Frio was sentenced to five years at ClubFed. Mr. Frio was the accountant for Nifty Fifty’s, the Philadelphia-area restaurant chain with food themed from the 1950s and a tax strategy from the 1850s. Beginning in 1986, Frio and the five founders of Nifty Fifty’s skimmed cash, paid employees in cash, and generally committed tax evasion to the tune of $15 million.

That wasn’t enough for Mr. Frio. An active participant in the evasion scheme at Nifty Fifty’s, he decided to embezzle from the chain; after all, one good crime deserves another. He saw no reason to pay tax on the evaded funds, structured his deposits of those funds, and lied on a loan application. Earlier this year he pled guilty to these charges; besides the five years at ClubFed he must make restitution of $1.7 million.

One Good Crime Deserved Another

Tuesday, January 27th, 2015

Let’s say you’re involved in a 20-year scheme that has successfully evaded millions of dollars in payroll and income taxes for your largest client. However, you’ve only had minor profits from the scheme. So why not embezzle millions of dollars from that client? Given that the owners of the client are knee deep (or more) in the tax evasion scheme, they’re not likely to say anything.

Yes, this happened.

William Frio was the accountant who prepared tax returns and provided accounting services to Nifty Fifty’s, the nostalgia themed restaurant change in Philadelphia. The owners of Nifty Fifty’s along with Frio began in 1986 to underreport their income, pay employees in cash, skim cash from the business, and basically ignore the law. The scheme worked for nearly 25 years and led to the chain evading over $2.8 million in taxes.

Mr. Frio not only was actively involved in the scheme, he decided to embezzle from the chain to the tune of $4 million. He didn’t report that income on his taxes; yes, illegal income is just as taxable as legal income. To assist with his embezzlement, he structured transactions–another felony. He also lied on loan applications; that’s another felony. He pleaded guilty to all this on Monday; he’ll be sentenced later this year.

When I first reported on Mr. Frio I used one of my favorite lines from J.R.R. Tolkien’s Lord of the Rings: “Oft evil will shall evil mar.” Mr. Frio will likely have plenty of time at ClubFed to read Tolkien: He faces up to 57 years plus restitution to the IRS plus a fine of up to $2.75 million along with criminal forfeiture.

One Good Crime Deserves Another

Sunday, May 18th, 2014

I’ve written about Nifty Fifty’s before. It’s a Philadelphia-area chain featuring food themed from the 1950s. The owners of the chain used ideas from the 1850s to help their profitability: They skimmed cash, paid employees in both paychecks and the skimmed cash, paid supplies with the skimmed cash, inflated expenses on their tax returns, and submitted false tax returns to bank to obtain loans. The five owners all pled guilty to various tax charges and were sentenced last year. Full restitution is being made to the IRS.

However, that wasn’t the end of the story. The accountant who prepared Nifty Fifty’s tax returns is now under indictment. William Frio is charged with conspiracy to commit tax evasion, filing false tax returns (his own returns), structuring, and loan fraud. Mr. Frio is alleged to have taken active participation in the Nifty Fifty’s tax evasion scheme. Frio is also alleged to have falsified a loan application and structured transactions with the same bank. And the structuring that happened is alleged to be quite large ($2.6 million). During this same time period he allegedly didn’t report some income that he received from another corporate account on his personal tax return.

The most interesting accusation in the indictment is that Mr. Frio allegedly embezzled “hundreds of thousands of dollars” from Nifty Fifty’s. “Oft evil will shall evil mar.”

Mr. Frio faces up to 57 years at ClubFed plus restitution to the IRS if found guilty of all charges.

Nifty Scheme Lands Five at ClubFed

Sunday, November 24th, 2013

Last year I reported on the inventive scheme used by the owners of Nifty Fifty’s, a Philadelphia area restaurant chain. Back in 1986, the restaurant was founded. The chain is themed on the 1950s; the owners apparently longed for the 1850s when there wasn’t an income tax.

What did the five owners do? From the DOJ press release:

The restaurant owners paid employees a portion of their wages with unreported cash in order to evade payroll taxes; paid suppliers with unreported cash; and had false tax returns prepared that under-reported income and falsely inflated expenses and deductions. Just between the years 2006 and 2010, 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. In the course of their conspiracy, Mattei, McGlynn, Donnelly, and Welsh committed bank fraud by submitting to the bank bogus income tax returns in order to secure several business loans.

The five owners of Nifty Fifty’s pleaded guilty to the various charges and agreed to full restitution. The IRS has received over $4.5 million in restitution to date. The five owners all received time at ClubFed, ranging from 12 months and a day to 36 months.