Two owners of Italian Village Pizza pleaded guilty today to tax evasion and conspiracy, confirming findings by IRS Criminal Investigations agents that they systematically under-reported earnings from the chain of around 20 restaurants.
John R. Miller, 58, of South Park, and Frank Veltri, 58, of West Mifflin, were charged two weeks ago. Both pleaded guilty before U.S. District Judge Gustave Diamond.
The two owned a few of the Italian Village Pizza stores and collected license fees from owners of others, according to the charging documents. From 2005 through 2012, they used, and encouraged their licensees to use, a system of under-reporting receipts, the IRS found.
If on a given day they had actual cash sales of $1,305, they would move the decimal point and report it as $13.05, according to the charges.
Licensees paid a fee of 4 to 5 percent of sales, the IRS found. They paid the fee for reported sales by check, and unreported sales in cash, according to the charges.
Mr. Miller and Mr. Veltri paid some expenses in cash, to hide the fact that they were not proportionate to reported sales, the IRS found. They then provided the false figures to their tax preparer.
The two also paid employees partly in cash, thus underpaying employment taxes, assistant U.S. attorney Steve Kaufman told Judge Diamond.
Mr. Miller, over four years, reported taxable income averaging around $66,000, while actually earning an average of more than $136,000, according to the charges. For those four years, Mr. Miller shorted the IRS by around $62,000, the agency found.
He already has paid $108,832 in restitution, which includes interest, said his attorney, David Berardinelli.
Mr. Veltri, over four years, reported earnings averaging around $43,000, while actually bringing in an average of more than $161,000 a year, underpaying the IRS by $110,000, according to the charges. One year he reported a loss and paid no federal income taxes, while actually earning $178,528, the IRS found.
He has paid $218,354 in restitution, including interest, said his attorney, Stephen Stallings.
Mr. Veltri said the stores continue to operate, and are expanding into Michigan and North Carolina. He added that he and Mr. Miller have instituted a compliance system, complete with cameras, to ensure that sales are recorded accurately.
Judge Diamond scheduled both men for sentencing for Jan. 6, at which time the prosecution and defense will debate whether their sentences should be enhanced for any leadership role he had in the offense. Depending on the judge’s ruling on that point, federal sentencing guidelines could suggest anywhere from a year to two and a half years in prison, though probation is possible.
Rich Lord: email@example.com, 412-263-1542 or on Twitter @richelord. First Published August 27, 2014 11:25 AM