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    Friday, April 19, 2024

    Owner of Mystic Pizza sentenced to one year in prison in tax evasion case

    The owner of Mystic Pizza, the restaurant made famous by the 1988 movie of the same name, was sentenced in U.S. District Court Monday to 12 months and one day in prison for tax evasion and structuring bank deposits to avoid financial reporting requirements.

    John Zelepos, 49, of North Stonington, was ordered to report to prison on Oct. 30 during his sentencing in U.S. District Court in Bridgeport. Judge Victor A. Bolden also imposed three years of supervised release, a $25,000 fine, $234,407 in tax restitution — which Zelepos had already paid — and forfeiture of $522,658.

    Noting the government had requested a prison term of at least 30 months, Zelepos’ attorney, William F. Dow III, said Bolden had gone below federal sentencing guidelines, giving Zelepos “substantial credit” for his contributions to the Mystic community. The judge recommended that Zelepos serve his sentence at a federal prison camp, which is a minimum-security facility, Dow said during a brief phone interview.

    According to the government, Zelepos diverted $567,435 in cash from the business into bank accounts for himself, his wife and his children from 2006 to 2010; deducted wages for his brother and mother, though they were “no show employees”; and made 61 “structured” cash deposits of less than $10,000 to avoid financial reporting requirements.

    In a government sentencing memorandum, Assistant U.S. Attorney Peter S. Jongbloed had urged the judge to impose up to 37 months of incarceration, noting Zelepos is “a financially wealthy person” who lives in a $750,000 mortgage-free house in North Stonington and owns a lucrative restaurant business and a property management company. Jongbloed wrote that Zelepos has extensive securities holdings and other assets, including a 2014 Porsche, 2015 Volkswagen and 2013 Subaru. He has no debt.

    “The defendant acted without regard to his responsibilities to adhere to the laws of this country as a citizen and member of his community,” Jongbloed wrote. “Moreover, his repeated criminal conduct was not born out of any economic necessity, deprived upbringing, or lack of formal education and opportunity. Rather, the conduct stems from greed.”

    Dow had argued for a fully suspended sentence, writing in a sentencing memorandum that Zelepos had already repaid the $234,407 in taxes owed and is committed to paying the penalties and interest. He said that Zelepos had agreed to repay more than $500,000 for the structuring offenses or to address the debt by filing amended tax returns.

    Dow said that Zelepos is a good corporate citizen who employs 50 people and regularly donates to local causes. He noted Zelopos, a family man with a wife and three college-age children, was convicted of a non-violent crime and will “bear the stigma of a federal felony conviction” and be subject to government supervision while on probation.

    “By fulfilling his obligations to family, employees and community, he has, as the late Judge Robert Zarnpano often said, made deposits into the bank of life, and at the time of sentencing is entitled to draw on those deposits and to be credited for those contributions,” Dow wrote in the sentencing document.

    Dow said that 54.5 percent of those convicted of tax violations in federal courts in Connecticut received sentences of probation only or probation with home confinement.

    Zelepos’ father, Steven Zelepos, opened the business in 1973, according to the court documents. Zelepos, involved from a young age, helped to build up the business after it received notoriety in the 1988 movie. He has been the sole owner of the business since 2001.

    His brother is expected to run the business while he is incarcerated, according to the court documents. Zelepos could not immediately be reached for comment.

    k.florin@theday.com

    Twitter: @KFLORIN

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