CINCINNATI - A five-year scheme by employees to embezzle funds from the owner of Burger King restaurants in the greater Cincinnati area and not report the embezzled funds to the IRS has resulted in guilty pleas by two men to attempted tax evasion and bank fraud offenses.

Angelo W. DeSimone, 47, of Tampa, Florida, formerly a resident of northern Kentucky, pled guilty today to leading a conspiracy in which he and other employees embezzled money from RAC, Inc., which owned as many as eight Burger King restaurants. DeSimone was the Managing Director running the day-to-day operations for RAC, Inc, the owner of the restaurants, which discovered the conspiracy in 2001. DeSimone admitted that from 1996 to 2000 he committed bank fraud when he deposited to his personal bank account 101 rebate checks worth $442,387.69 which were payable to his employer and used the money for his personal expenses. He also admitted that from 1996 to 2001 he caused at least $882,000 in cash to be skimmed from sales at the restaurants and shared by himself and other employees. He also pled guilty to attempted tax evasion for failing to report his income and helping others not to report their income from the embezzlement.

William M. Scarborough, 32, of Lebanon, Ohio, pled guilty on February 12 to attempted tax evasion relating to the income he failed to report which he got from participating in the scheme. Scarborough was the District Manager under DeSimone. He admitted that he picked up cash from managers of the Burger King restaurants and delivered some of the cash to DeSimone while he kept some of the cash for himself. Scarborough also pled guilty to supplying false information to federally insured financial institutions in an effort to get a $128,000 home loan.

Gregory G. Lockhart, United States Attorney for the Southern District of Ohio; Cromwell A. Handy, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati Field Office; and Jim Casey, Assistant Special Agent in Charge, FBI, Cincinnati Division, announced the guilty pleas entered before United States Senior District Judge Herman J. Weber.

"The IRS Criminal Investigation Division and the FBI investigated the case," Lockhart said. "The investigation is continuing and more prosecutions are anticipated."

DeSimone admitted that, without the knowledge of the owner of RAC, Inc., he directed certain managers to skim $100-150 per day from the cash receipts of the restaurants they managed and to turn the receipts over to him or Scarborough. DeSimone permitted the mangers and Scarborough to keep some of the skimmed cash for personal use and kept some himself. DeSimone, Scarborough, and the managers covered up the cash skimming by not ringing sales on registers, by voiding sales, and by other means. Scarborough altered inventory documents to cover up the skimming. DeSimone also kept for himself cash from sales on Thanksgiving when he opened a restaurant that should have been closed, collected kickbacks from service providers to the restaurants; sold food from the restaurants to other food vendors and kept the money for himself; used RAC, Inc. food, equipment, supplies, and "Burger Bucks" in a food business he himself owned; paid ghost employees who were usually family members and friends for work they did not do; and used a RAC, Inc. credit card to pay for personal expenses.

DeSimone admitted that he attempted to evade his own federal income tax and helped other employees to attempt to evade their own federal income tax in the combined amount of $370,828.55 during the years 1996 through 2000.

Scarborough admitted that he received at least $164,534.57 in skimmed cash, did not report the skimmed cash on his individual federal income tax returns, and evaded the payment of $46,069.68 in federal income taxes for the years 1996, 1997, 1998, 1999, and 2000.

As part of their Plea Agreements, DeSimone and Scarborough agreed to file amended tax returns and cooperate with the IRS in its collection of unpaid taxes, interest, and penalties from him.

Tax evasion carries a maximum penalty of five years, a fine of the greater of $250,000 or twice the loss or gain, and the costs of prosecution. The false loan application and bank fraud offenses each has a maximum penalty of 30 years and a $1,000,000 fine.

Judge Weber set May 22, 2003 as the date sentencing Scarborough, and May 9, 2003 for sentencing DeSimone. Both are free on bond until sentencing.