NEWARK, N.J. – The former owners of a restaurant in Paterson, New Jersey, today admitted failing to pay over $240,000 in taxes by concealing income from their cash-only business, U.S. Attorney Craig Carpenito announced.
Elio Federico, 71, of Totowa, New Jersey, and his brother, Ralph Federico, 68, of Saddle Brook, New Jersey, each pleaded guilty before U.S. District Judge Susan D. Wigenton in Newark federal court to one count of tax evasion.
According to documents filed in this case and statements made in court:
Elio and Ralph Federico co-owned an Italian restaurant in Paterson that had been in business since 1967. The brothers operated the restaurant on a cash-only basis, paid a substantial portion of the employee payroll in cash, and paid virtually all of their suppliers in cash.
Elio and Ralph Federico admitted that they concealed a portion of their income from the IRS by among other things, taking a cash “skim” from the restaurant’s gross receipts, which they did not report as income; reprogramming the cash register so it would not maintain a gross receipt balance for more than a few days; and deliberately failing to provide the restaurant’s accountant with invoices that reflected the true cost of goods sold and the actual amount of gross income that the business generated.
Elio and Ralph Federico admitted that they failed to pay the necessary income and employment taxes that they owed from 2011 through 2014, resulting in a tax loss to the United States of $241,219.
The tax evasion charge to which they pleaded guilty carries a maximum potential penalty of five years in prison and a $250,000 fine. Sentencing is scheduled for Sept. 4, 2018.
U.S. Attorney Carpenito credited special agents of IRS-Criminal Investigation, under the direction of Acting Special Agent in Charge Bryant Jackson in Newark, with the investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorney Bernard J. Cooney of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
Elio Federico: Frank Agostino Esq. and Jeffrey Dirmann Esq., Hackensack
Ralph Federico: Richard J. Sapinski Esq. and Joseph B. Shumofsky Esq. Newark