Nifty Fifties owners and managers admit tax fraud

Posted: June 09, 2012

The owners and managers of the Nifty Fifty's restaurant chain pleaded guilty in federal court to tax evasion and skimming cash from the business.

Co-owner Robert Mattei, 73, of Delray Beach, Fla., pleaded guilty to conspiracy, tax evasion, and bank fraud, and faces up to 40 years in prison and a $1.5 million fine. Co-owner Leo McGlynn, 52, of Swarthmore, and Joseph Donnelly, 49, of Springfield, Delaware County, a head manager, pleaded to conspiracy, tax evasion, and bank fraud and aggravated structuring of financial transactions. They face up to 50 years in prison and a $2 million fine. They entered their pleas Wednesday.

On Thursday, another head manager, Brian Welsh, 48, also of Springfield, and office manager Elena Ruiz, 46, of Drexel Hill, Mattei's daughter, pleaded guilty to conspiracy and tax evasion. Ruiz faces up to 10 years in prison and a $500,000 fine. In addition, Welsh pleaded guilty to bank fraud. He faces up to 40 years in prison and a $1.5 million fine.

The chain operates five nostalgia-themed restaurants in Ridley Township, Bensalem, Northeast Philadelphia, Clementon, and Turnersville in New Jersey. The locations remain open, according to a spokesman. He would not take questions regarding the court proceedings.

The five were indicted in May for skimming $15.6 million cash from gross receipts for the 26-year-old chain. Between January 2006 and August 2010 alone, federal prosecutors said, the defendants concealed about $4.1 million in cash in safe deposits for the "exclusive benefit" of the equal co-owners Mattei and McGlynn.

Employees and suppliers were partially paid using the skimmed cash, prosecutors said.

The defendants also filed for tax refunds by erroneously reporting their taxable income.

Mattei, McGlynn, Donnelly, and Welsh also committed bank fraud when they submitted bogus income tax returns to Sovereign Bank while attempting to obtain a $2.28 million business loan. The defendants hired an accountant to prepare false returns that reported income "far in excess of that actually reported to the Internal Revenue Service," according to court documents.

The defendants will be sentenced in September, on different dates.

Contact Mari A. Schaefer at 610-892-9149, mschaefer@phillynews.com of on Twitter @marischaefer.

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