PRIMOHOAGIES Owner of Nellie’s Provisions Pleads Guilty to Tax Fraud [Updated]

PRIMOHOAGIES franchise controversy involving the tax fraud conviction of Nick Papanier Sr.,  was detailed in this press release (below).  PrimoHoagies attorney Craig Tractenberg of Nixon Peabody disputes some of the U.S. Attorney’s representations.

(UnhappyFranchisee.Com)  The press release “Owner of Nellie’s Provisions Pleads Guilty to Tax Evasion” originally appeared on the NJ District Attorney’s Office website.

The U.S. Attorney’s press release alleges that PrimoHoagies franchisor Nick Papanier “persuaded Primo Hoagies franchise owners to buy Thumann’s deli products from Nellie’s Provisions, often paying for them in cash. He took a significant amount of the cash paid to Nellie’s Provisions and deposited it into his personal bank accounts. He then used the money from his personal accounts to pay personal expenditures.”

Mr. Papanier, who also owned Nellie’s Provisions, allocuted in open court that between 2006 and 2008 he diverted $556,666 in unreported cash from his businesses into his personal accounts.  According to Philly.Com,  Papanier was sentenced to 4 months  in prison and 4 months of house arrest, followed by 20 months of probation.

In addition to restitution, U.S. District Judge Noel L. Hillman ordered Papanier to forfeit $484,010 that was seized from his bank accounts.

In response to UnhappyFranchisee.Com’s posting of this press release, PrimoHoagies attorney Craig Tractenberg of Nixon Peabody wrote:

Nellies is a company which sells products to Primo, to franchisees and to unaffiliated third parties like restaurants, grocery stores and the like. No franchisee ever paid Nellies in cash. No franchisee money was taken from Nellies. No money intended to be paid by a franchisee to Nellies was ever diverted or taken.  The collection of cash by people who paid Nellies has nothing to do with Primo Hoagie, which is only one of many customers of Nellie’s.

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The US Attorney made reckless statements. Nothing in the case supports those statements…

When asked about Mr. Tractenberg’s allegations, Matthew Reilly, Deputy Public Affairs Officer, U.S. Attorney’s Office/District of New Jersey, said they stood by the accuracy of their press release.

Mr. Reilly wrote:

The press release is still accurate. The press release says Nellies sold products to Primo and other customers, which is accurate. It says he diverted money paid by his customers from his company to his personal use and avoided taxes on that money, which is accurate.

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They’re saying that of the money that customers paid to Nellies, none came from Primo franchisees. There is nothing in the public record that confirms or refutes that claim.

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No one from Primo’s franchisees has ever contacted us and asked us change that press release, which has been up on our public website for more than a year.

Also read:  PRIMOHOAGIES Franchise Complaints

Are you familiar with PrimoHoagies, Nick Papanier and Nellie’s Provisions?  Please share your experience with them – positive or negative – below.

Owner of Nellie’s Provisions Pleads Guilty to Tax Evasion

FOR IMMEDIATE RELEASE

March 22, 2013

CAMDEN, N.J. – The owner of a meat distribution company admitted today to evading taxes related to income diverted from his companies for his personal use, U.S. Attorney Paul J. Fishman announced.

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Nicholas Papanier Sr., 57, of Sewell, N.J., pleaded guilty before U.S. District Judge Noel L. Hillman to an Information charging him with one count of tax evasion.

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According to documents filed in this case and statements made in court:

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Between 2006 and 2009, Papanier owned Nellie’s Provisions, a meat distribution company that provided all of the meat for Primo Hoagies franchises and other independent restaurants. In 2006, 2007 and 2008, Papanier persuaded Primo Hoagies franchise owners to buy Thumann’s deli products from Nellie’s Provisions, often paying for them in cash. He took a significant amount of the cash paid to Nellie’s Provisions and deposited it into his personal bank accounts. He then used the money from his personal accounts to pay personal expenditures. He diverted a total of $556,664 for the calendar years 2006, 2007 and 2008 in the amounts of $56,395, $349,264, and $151,005, respectively.

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Papanier admitted that he did not report the diverted cash to the IRS and only reported Form W-2 wages, interest and dividend income, and property tax information. By omitting all of the diverted cash, he failed to disclose and report a significant portion of this income on his tax returns, causing those tax returns to substantially understate the amount of income he received.

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He admitted that for 2006, 2007 and 2008, had he reported the additional cash on his income tax returns he would have owed the government $189,656.

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As part of the plea and in addition to the restitution, Papanier agreed to forfeit $484,010 to the United States. On Oct. 14, 2009, the United States filed a Verified Complaint for Forfeiture In Rem to forfeit and condemn to the use and benefit of the United States $372,042.54 in United States currency that was seized from Papanier’s bank accounts. On Sept. 16, 2010, the United States filed another Verified Complaint for Forfeiture In Rem to forfeit and condemn to the use and benefit of the United States an additional $111,967.50 in United States currency that was seized from Papanier’s bank accounts. The Complaints alleged that the subject funds were subject to forfeiture to the United States because they were involved in and were traceable to Structuring of Currency to Avoid a Reporting Requirement.

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The charge to which Papanier pleaded guilty is punishable by a maximum potential penalty of five years in prison and a fine of $250,000. Sentencing is scheduled for June 28, 2013.

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U.S. Attorney Fishman credited special agents of IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, for the investigation leading to today’s guilty plea.

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The government is represented by Assistant U.S. Attorneys Jason M. Richardson of the U.S. Attorney’s Office Criminal Division in Camden in the criminal case, and Jordan Anger of the U.S. Attorney’s Office Asset Forfeiture Unit in Newark in the civil action.

ALSO READ:

FRANCHISE DISCUSSIONS by Company

 

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