Owner of Mystic Pizza to Serve Prison Time for Tax Evasion

The owner of Mystic Pizza, the restaurant made famous by the 1988 movie of the same name, faces a year in federal prison for hiding more than $1 million from the government between 2006 and 2011.

Restaurant owner John Zelepos, 49, of North Stonington, Connecticut, was sentenced in federal court Monday to 12 months and one day in prison, followed by three years of supervised release. His sentence will begin Oct. 30, according to the U.S. attorney's office.

Federal prosecutors said Zelepos siphoned more than $330,000 from Mystic Pizza's profits into personal and family bank accounts between 2006 and 2010. He also paid $162,000 to "no-show" employees who never worked at the restaurant.

Then, between January 2010 and January 2011, Zelepos made dozens of small deposits totaling $522,658. He kept each transaction under $10,000 to prevent the bank from reporting it, the U.S. attorney's office said.

Zelepos reported an average of $471,135 in taxable income annually, when in reality he earned an average of $616,810 per year, according to the government's sentencing memorandum.

"As a result, the defendant cheated the public and his fellow taxpayers by evading the payment of $234,407 in federal taxes for five years," the memorandum says.

Zelepos pleaded guilty in March 2015 to evading federal income taxes and structuring financial transactions.

He has paid restitution but still owes interest and penalties. Zelepos will also turn over the $522,658 he diverted in 2010.

Mystic Pizza is a name well-known to fans of Julia Roberts – the movie "Mystic Pizza," about teenagers working at pizza parlor in the Connecticut town of Mystic, helped launch her career.

It's not the first time Zelepos has been in trouble with the law. Last September, the Department of Labor accused him of depriving his employees more than $105,000 in wages.
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