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, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.