Questions? Feedback? powered by Olark live chat software

Arizona Developer Sentenced to Five Years for Restaurant Fraud Scheme

Avoid These IRS Red Flags If You Are Worried About a Tax Audit
May 3, 2022

Arizona Developer Sentenced to Five Years for Restaurant Fraud Scheme

 

A federal district court in Arizona recently handed down a sentence to restaurant and real estate development businessman Frank Capri after Capri plead guilty to charges of conspiracy to commit wire fraud and tax evasion. The court sentenced Capri to five years in prison and ordered the repayment of nearly $20 million in restitution and unpaid taxes.

Capri, an alleged former New York Mafia soldier, was responsible for a number of failed restaurant projects, including many that were part of chains related to country music sensations Toby Keith and Rascal Flatts. Despite agreeing to a plea deal, Capri still received the maximum sentence available for the two charges for which he admitted guilt.

If you are currently facing criminal tax charges or are concerned about a future government criminal tax investigation, audit, eggshell audit or reverse eggshell audit, the time to act is now. Prepare your defense with the help of one of the seasoned dual licensed Criminal Tax Defense Lawyers & CPAs at the Tax Law Offices of David W. Klasing, P.C. To find out more, call us at our offices at (800) 681-1295 or schedule online HERE.

If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS or state tax authority audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced tax defense attorney to determine your best route back into federal or state tax compliance without facing criminal prosecution.

Federal Court Sentences Scottsdale Arizona Businessman to Five Years in jail and over $19 Million in Restitution

Earlier this month, Frank Capri was sentenced to five years in prison for his part in an alleged scheme to defraud property developers in large-scale restaurant projects. Capri, 52, was also ordered to pay restitution of over $19 million to the victims of his alleged fraud, including the IRS.

Defendant Background

Capri was exposed as a former Mafioso by a journalistic investigation conducted by The Arizona Republic. Previously, Capri operated as a soldier of the infamous Lucchese organized crime family in New York. In the 1990s, however, Capri turned government witness and testified against the family. Capri, who the investigation claims is actually Frank Gioia, Jr., allegedly received his new identity and was transplanted to Scottsdale as part of the Federal Witness Protection Program.

Restaurant Scheme

Capri utilized his new identity to join the world of real estate development in Arizona. Throughout the 2000s and 2010s, Capri attached himself to numerous development projects through his companies, Boomtown Management LLC and RF Investments LLC. Most notably, Boomtown Management contracted to build chains of restaurants associated with country music stars Toby Keith and Rascal Flatts.

According to court documents of the allegations and the Arizona Republic investigation, Capri and his business entities negotiated contracts to build the restaurants but took the payments meant for the construction for himself. Capri and his businesses built 20 Toby Keith-themed restaurants (“I Love This Bar and Grill”), 19 of which closed within two years of opening. Only one Rascal Flatts restaurant of the 20 promised was ever opened, and developers claim they are owed more than $1.1 million in unpaid rent on that property alone.

Altogether, Capri and his partners have been responsible for the failure of 63 restaurants over the past 10 years that closed shortly after opening, failed to open, or were never even started.

Charges, Pleading, and Sentencing

Capri, along with his mother and another unnamed party, was indicted by a federal grand jury on 16 counts of various charges stemming from the failed restaurant development projects. The charges included wire fraud, money laundering, and conspiracy. Capri has been held without bail since being arrested on these charges in 2020.

Capri pled guilty in U.S. District Court for the District of Arizona to two felony counts: conspiracy to commit wire fraud and tax evasion. Capri did so as part of a plea agreement.

As part of the plea deal, Capri admitted to providing inflated financial projections to property developers and agreeing to pay higher rental prices so that developers would contribute more tenant improvement funds. Capri also admitted to directing employees to withdraw funds from project bank accounts for his own personal use.

U.S. District Court Judge John Tuchi sentenced Capri to five years in prison, the maximum available jail sentence on the two charges. Capri’s time already served will count against his sentence, and the sentences for the two charges may be served concurrently. Capri will be subject to a supervised release period of three years following the end of his sentence.

Additionally, the court ordered Capri to make restitution payments to developers and other victims of roughly $18 million, with an additional $1.5 million to the IRS for unpaid taxes that he owed.

Are Plea Deals a Good Idea When Faced with Criminal Tax Charges?

You may have noticed that Capri received the maximum sentence available despite agreeing to a plea deal. Unfortunately, this is the reality that many criminal defendants face when they plead guilty and leave their future in the hands of the court.

Plea deals are agreements between the defendant in a criminal case and the prosecutor where the defendant agrees to plead guilty in exchange for some consideration on the prosecutor’s part. This could come in the form of partially dropped charges, pleading guilty to lesser charges (or pleading down), or the prosecutor’s recommendation of lighter sentencing to the court.

However, when you plead guilty as part of an agreement, you are still admitting guilt to a felony and subjecting yourself to the will of the court. Prosecutor suggestions are just that and nothing more, meaning that entering a plea deal in exchange for an offer of a lighter sentencing recommendation may ultimately mean nothing.

Capri was initially indicted on 16 charges and ultimately only pled guilty to two of them, so the plea deal likely accomplished something. However, you should never agree to any kind of plea deal with the prosecution without having your criminal tax defense attorney thoroughly evaluate your situation.

You Deserve the Help of the Tax Law Offices of David W. Klasing

Criminal tax charges are incredibly serious. It is never too early to reach out to the seasoned dual licensed Criminal Tax Defense Attorneys & CPAs at the Tax Law Offices of David W. Klasing by calling (800) 681-1295 or schedule online HERE.

Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosurebefore the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process. Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth. See our Testimonials to see what our clients have to say about us!

More Commonly Asked Tax Audit Questions