More than a Slice of Pizza

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Interested in some fun pizza facts? The U.S. pizza market is worth $44 billion and there are approximately 76,723 pizzerias in the nation earning an average of $579,127 in sales per year. When business owners generate revenue, they are required to pay a variety of taxes including employment, Federal Insurance Contributions Act (FICA), Medicare, sales and income. Today’s Wayne, Pennsylvania restaurateur used four of his pizzerias to commit business tax fraud. He was hungry to pocket the profits so he failed to report approximately $2 million in income to the Internal Revenue Service (IRS). (To put it in perspective, that’s about 150,000 pizzas at an average cost of $13 per pie.)

Today’s fraudster is the co-owner of three pizzerias located in Wilmington, Delaware and Philadelphia, Pennsylvania. He also owns an Italian restaurant in Wayne, Pennsylvania. The government unfortunately discovered that the Eagleville, Pennsylvania man conspired with his business partners to defraud the IRS of income taxes and payroll taxes.

Businesses are required to pay federal income tax as revenue is earned during the year either through withholding, through estimated taxes or when the annual tax return is filed. Payroll taxes are taxes paid based on the wages and salaries of employees. These taxes are used to support social insurance programs like Social Security and Medicare. (So, when employers neglect to pay into this pot of government money, there’s less to go around at retirement time. This is one of the reasons the nation’s Social Security program is in danger of disappearing.)

The restaurateur got around paying $2 million in income and payroll taxes by skimming cash from three of his pizzerias. (Skimming occurs when someone takes money from a cash transaction and reports a lower bill.) Today’s pizzeria owner avoided paying income tax because he didn’t report the cash income to the IRS. He also paid his employees “under the table.” (And, neglected to inform his accountant or the IRS about his businesses’ cash payrolls.)

A Department of Justice press release details that in all, the restauranteur had more than $3 million in unreported gross receipts and failed to pay $1 million in income and payroll taxes to the IRS. He originally pleaded “not guilty” to the charges against him, but wisely changed his plea to “guilty” on two counts of conspiring to defraud the IRS and nine counts of filing false tax returns. (That was a smart move.)

The 49-year-old Pennsylvania pizzeria entrepreneur faces a maximum of 37 years behind bars, three years supervised release, a $2.75 million fine and a $1,100 special assessment for committing business tax fraud.

This man was serving up way more than a slice of pizza when he carried out his fraudulent scheme by stealing money from honest taxpayers. It looks like there’s a possibility he’ll be heading to prison where it may be substantially more difficult to receive a fresh pizza pie. (Speaking of, I think I’ll go order myself a pizza right now with the nation’s three most popular toppings: pepperoni, sausage and mushrooms. But, instead of paying cash, I’ll charge it.)

Today’s “Fraud of the Day” is based on an article entitled, Wayne Restaurateur Giuseppe DiMeo Guilty In Tax Fraud Case: Feds,” published by Radnor Patch on September 14, 2017.

WAYNE, PA – A co owner of Arde Osteria in Wayne pleaded guilty to counts of tax fraud Thursday, Sept. 14 after being accused of skimming cash from three other restaurants he owns, federal officials said.

Giuseppe “Pino” DiMeo, 49, of Eagleville, changed his initial not guilty plea to guilty on two counts of conspiring to defraud the IRS and nine counts of filing false tax returns, according to Acting United States Attorney Louis D. Lappen.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.