Owner Of Castro Valley Pizzeria Pleads Guilty To Failing To Pay Employment Taxes

OAKLAND, Calif. – Frank Eugene Gemignani III pleaded guilty to failing to pay over employment taxes today, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

Gemignani, 46, of Concord, operated Pyzano’s Pizzeria in Castro Valley from 1991 through 2012.  As the sole proprietor, Gemignani exercised control over Pyzano’s business affairs, including signing and filing Pyzano’s tax returns and paying to the IRS payroll taxes withheld from Pyzano’s employees’ paychecks.  According to the plea agreement, Gemignani admitted that from April 1, 2008, through December 31, 2010, he deducted and collected approximately $184,267 in federal income taxes and Federal Insurance Contributions Act taxes (FICA) from Pyzano’s employees’ wages, but then failed to pass these taxes on to the IRS.  Additionally, Gemignani failed to pay at least $63,333 of FICA and Federal Unemployment Tax Act taxes Pyzano’s owed for 2009 and 2010.  Also, for 2007, Gemignani claimed a credit for amounts withheld from his Pyzano’s paychecks on his U.S. Individual Income Tax Return, Form 1040, even though he knew he had never paid those withholdings over to the IRS.

Gemignani was charged by Indictment on June 19, 2014, with 11 counts of failure to pay over employment taxes and one count of filing a false tax return.  Gemignani pleaded guilty to one count failure to pay over employment taxes, in violation of Title 26, U.S.C § 7202.  Gemignani’s sentencing hearing is scheduled for September 15, 2015, at 1:00 p.m., before the Honorable Jeffrey S. White, United States District Judge, in Oakland.  The maximum statutory penalty for each count of failure to pay over employment taxes, in violation of 26 U.S.C § 7202 is five years in prison, and a fine of $250,000.

Assistant U.S. Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.