U.S. News

'Mystic Pizza' owner sentenced to year in prison for tax evasion

BRIDGEPORT, Conn. (Reuters) - The owner of the Connecticut restaurant that was the setting for the 1988 movie “Mystic Pizza” was sentenced on Monday to a year and a day in prison in federal court for tax evasion and hiding hundreds of thousands of dollars in revenue.

John Zelepos, 49, could have faced up to 15 years in prison, but prosecutors had sought a three-year prison sentence and defense attorneys had asked for no prison time. Located in the touristy port town of Mystic, his restaurant has long capitalized on its role in the film about the lives of three waitresses.

U.S. District Court Judge Victor Bolden in Bridgeport sentenced Zelepos to a year and a day, three years probation, a $25,000 fine and ordered $522,658 in forfeiture. Bolden has already paid more than $234,000 in restitution.

Zelepos also reached a settlement months ago with his employees in a separate matter after the Connecticut Labor Department accused him last year of paying less than minimum wage and withholding overtime pay.

Federal prosecutor Peter Jongbloed stated in court documents that over a five-year period reviewed by IRS investigators, Zelepos averaged more than $470,000 a year in taxable income. He earned about nearly $300,000 during his worst year, and $785,000 in his best year, Jongbloed said.

Between 2006 to 2011 Zelepos earned more than $3 million in taxable income, prosecutors said, and is accused of evading$234,000 in federal taxes, in part by trying to keep hidden more than $500,000 illegally placed in various business and family bank accounts.

“He is a financially wealthy person who has no valid financial reason for not paying all his federal taxes,” Jongbloed wrote.

In arguing for a “non-incarceration sentence,” defense lawyer William Dow said while Zelepos made a mistake, he had no prior convictions.

“We are pleased the judge issued a sentence lower than what prosecutors were seeking,” Dow said.

Editing by Scott Malone and Sandra Maler