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Landmark Paterson Restaurant Owners Admit Ducking $240,000 In Taxes

Ralph and Elio Federico
Ralph and Elio Federico Photo Credit:

The former owners of a landmark Italian restaurant in Paterson admitted Wednesday that they cheated the U.S. government out of more than $240,000 in taxes by concealing income from their cash-only business through various methods.

Elio Federico, 71, of Totowa, and his brother, Ralph Federico, 68, of Saddle Brook, each pleaded guilty in federal court in Newark to a single count of tax evasion.

Elio and Ralph Federico operated the more-than-50-year-old E&V 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, , U.S. Attorney Craig Carpenito said.

The brother told a U.S. District Court judge on Wednesday that they:

  • took a cash “skim” from the restaurant’s gross receipts;
  • reprogrammed the cash register so it would not maintain a gross receipt balance for more than a few days;
  • "deliberately failed 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," Carpenito said.

They admitted that they ignored the necessary income and employment taxes that they owed from 2011 through 2014, resulting in a tax loss to the U.S. of $241,219.

A judge scheduled sentencing for Sept. 4.

Carpenito credited special agents of IRS-Criminal Investigation with the investigation that produced the guilty pleas, secured by Assistant U.S. Attorney Bernard J. Cooney of his Health Care and Government Fraud Unit in Newark.

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