Local restaurateur admits cheating school lunch program, IRS
The owner of a Delaware food service company servicing the Delaware County Courthouse and Government Center pleaded guilty to tax fraud and related charges in Delaware federal court.
Frank D. Dolce, 51, of Wilmington, pleaded guilty before U.S. District Judge Gregory M. Sleet to two counts of filing a false tax return, as well as one count each of structuring deposits to avoid reporting requirements and theft from the National Breakfast and Lunch Programs, according to a plea agreement entered March 30.
“At some point my client made a decision to put this matter behind him, acknowledge his responsibility and go forward with his life in a positive direction,” said Dolce’s attorney, Rocco Cipparone, Tuesday. “This is his first contact with the criminal justice system and I don’t expect he’ll be back in any time.”
Dolce owns and operates Primo’s Food Service, which also services charter schools in the Philadelphia area, according to an indictment filed last year.
The indictment indicated Dolce conspired with Primo’s employees to overstate the number of students receiving subsidized meals through the National School Breakfast and Lunch Programs between April 2011 and January 2014 in order to receive larger reimbursements from the U.S. Department of Agriculture, which administers both programs.
Assistant United States Attorney Jennifer K. Welsh, who prosecuted the case, said Tuesday that she could not comment on whether any additional charges are pending against other defendants.
Food service providers who contract with Pennsylvania schools are supposed to tally the “count” of students served in order to receive a reimbursement from the Pennsylvania Department of Education, according to the indictment.
Prosecutors say PDE overpaid Primo’s based on inflated numbers provided by Dolce. In some instances, the meal counts exceeded the total number of students in attendance at the school that day.
Dolce also filed false personal income tax returns and underreported hundreds of thousands of dollars’ worth of cash sales at schools and the Courthouse Café on corporate tax returns between 2009 and 2012, according to the indictment.
Primo’s reported gross total sales of $4,070,673 in 2011, when the company actually earned more than $4.6 million that year. Dolce also reported $6,017,482 in gross sales for 2012, when the true figure was in excess of $6.8 million, according to the indictment.
Cash sales at the schools were supposed to be deposited into non-profit school food service accounts, according to the indictment, but Dolce instead directed employees to return the cash to the company’s offices in Wilmington. Some cash from the Courthouse Café was likewise brought back to the Primo’s office, according to the indictment. None of the cash collections were entered into Primo’s corporate bank accounts or recorded in corporate books and records.
Dolce also directed an employee to make 27 cash deposits into two different accounts at two TD Bank branches between January and February of 2013. All of the deposits were slightly less than $10,000 and some of the transactions occurred on the same day.
Prosecutors believe this was an effort to avoid triggering the bank’s reporting requirements to the Department of the Treasury for deposits greater than $10,000. The 27 cash deposits totaled $250,000, which Dolce later consolidated into a single account and used to buy a boat for $355,500, according to the indictment.
Dolce has agreed to forfeit any rights to that boat as part of the plea agreement and to provide a full accounting of assets that could be used to help pay restitution.
Delaware County Solicitor Michael Maddren said the county entered into a five-year contract with Primo’s in September 2015.
County council Chairman Mario Civera, who previously served for 30 years as state representative for the 164th District, bristled at the mention of the National School Breakfast and Lunch Programs when told of the plea Tuesday.
“That children’s program – we fought hard to get that,” he said. “You don’t want to see people lying about it, fudging numbers about it. That’s wrong. That’s dead wrong.”
Civera said he would speak with Maddren to determine whether there might be any legal complications to the county ending the Primos’s contract.
Dolce is meanwhile scheduled for sentencing July 19. He faces up to 10 years in prison and a $500,000 fine for the structuring charge, as well as three years imprisonment with a fine of $100,000 for each of the tax fraud counts. Dolce could also be sentenced to up to five years for the theft count and fined $250,000. Each of the counts also carries a three-year period of supervised release.