United States Department of Justice Michael J. Sullivan U.S. Attorney District of Massachusetts

United States Attorney's Office John Joseph Moakley U.S. Courthouse 1 Courthouse Way, Suite 9200 Boston, MA 02210 Press Office: (617) 748-3139

---

PRESS RELEASE

April 9, 2002

U.S. ATTORNEY'S OFFICE AND IRS ANNOUNCE THE
CHARGING OF NINE INDIVIDUALS WHO EVADED TAXES

Boston, MA... Nine individuals were charged in federal court today in a series of cases involving tax related crimes.

United States Attorney Michael J. Sullivan and Michael P. Lahey, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, announced today that criminal charges have been brought accusing nine individuals of cheating on their taxes by various means.

"These cases should serve as a clear reminder during the tax season that compliance is not an optional exercise," stated U.S. Attorney Sullivan. "Fulfilling individual tax obligations is a legal requirement and those who wilfully evade that responsibility will be prosecuted."

"The prosecution of individuals who intentionally conceal income and evade taxes is a vital element in maintaining public confidence in our tax system. We should not expect the honest taxpayer to foot the bill for those who hide income from IRS," stated Special Agent in Charge Lahey.

Criminal charges were announced against the following individuals:

1. PHYLLIS SCHLOSBERG, age 62, of Provincetown, Massachusetts;

2. ANDREW FILLIPPONE, age 67, of West Peabody, Massachusetts;

3. TIBERIO "BARRY" FURTADO, age 56, of Reading, Massachusetts;

4. JOSE SARDINHA, age 43, of Middleboro, Massachusetts;

5. MANUEL SARDINHA, age 49, of West Newbury, Massachusetts;

6. DINART SERPA, age 44, of Beverly, Massachusetts;

7. PAUL P. GOVOSTES, age 53, of Canton, Massachusetts;

8. THEODORE C. FOUNDAS, age 49, of Canton, Massachusetts; and

9. DEBRA FOUNDAS, age 44, of Canton, Massachusetts.

PHYLLIS SCHLOSBERG was charged in a criminal information with one count of filing a false tax return. The information alleges that in her tax return Form 1040 for the tax year 1995, SCHLOSBERG reported income of $37,635, when in fact she had income of at least $103,436 during the year.

If convicted on this charge, SCHLOSBERG faces up to three years' imprisonment, to be followed by one year of supervised release, and a $250,000 fine.

ANDREW FILLIPPONE was arrested late yesterday based on an indictment charging him with one count of corruptly endeavoring to impede the due administration of internal revenue laws.

According to the indictment, FILLIPPONE engaged in a course of conduct over the period of several years designed to evade the payment of income tax and employment tax liabilities of himself and corporations through which he conducted all his business. The indictment alleges that in 1990 and 1991, FILLIPPONE and his corporations were assessed by the IRS employment taxes in an amount totaling over $150,000. It is alleged that from 1991 through 1998, FILLIPPONE endeavored to prevent and obstruct the IRS from collecting the tax due and owing by: concealing the nature and extent of his and his related entities' income and assets; filing false schedules and documents with tax returns; making false statements to agents of the IRS; and placing income and assets in the names of nominees. FILLIPPONE is alleged to have accomplished this in several ways, including: by cashing, through check-cashing services and individuals rather than banks, receipts of his corporations totaling over $1 million from 1994 through 1998; changing the names of his corporations to avoid IRS levies; and providing false information to the IRS.

If convicted on these charges, FILLIPPONE faces up to 3 years' imprisonment, to be followed by 1 year of supervised release, and a $250,000 fine. In addition, he faces substantial civil tax liabilities, interest, and penalties.

TIBERIO FURTADO, JOSE SARDINHA, MANUEL SARDINHA, and DINART SERPA were charged in four separate informations with subscribing to false federal income tax returns. The informations allege that the four individuals owned a total of sixteen Dunkin' Donut franchises in the Greater Boston area. FURTADO owned 5 Dunkin Donuts shops located in Revere and Saugus. MANUEL SARDINHA owned 3 Dunkin' Donuts shops in Newburyport and Stoneham. JOSE SARDINHA owned 4 Dunkin' Donuts shops located in Lakeville, Hanover, and Middleboro. SERPA owned 4 Dunkin' Donuts shops in Rowley, Ipswich, and Beverly.

The informations allege that during the mid-1990s each franchisee participated in a false invoicing scheme known as the West Lynn Creamery ("WLC") rebate program. According to the informations, the franchisees purchased dairy products from WLC for their Dunkin' Donuts shops at an inflated price. It is alleged that shortly thereafter, the franchisees received a portion of the purchase price back from WLC as a "rebate" or kick back. It is alleged that each franchisee failed to report the rebated money as income on their tax returns.

If convicted on these charges, each defendant faces up to 3 years' imprisonment, to be followed by 1 year of supervised release, and a $250,000 fine. In addition, they each face substantial civil tax liabilities, interest, and penalties.

PAUL GOVOSTES, THEODORE FOUNDAS, and DEBRA FOUNDAS, were all were charged in a single information with conspiracy to defraud the IRS.

The information alleges that GOVOSTES, THEODORE FOUNDAS, and DEBRA FOUNDAS owned nine Dunkin' Donut shops in the Greater Boston area. The information charges that from 1994 to 1997 they also participated in the false invoicing scheme with West Lynn Creamery. According to the information, they were able to choose among prices they wanted to pay to WLC for cream and other dairy products. It is alleged that WLC "rebated" the difference between the inflated invoice price and the real price of goods back to the defendants either through yellow rebate checks made payable to the franchises or blue rebate checks made payable to the individuals personally. The information alleges that the defendants diverted approximately $668,065 in rebate monies, converted them to personal use, and failed to report them to the IRS.

If convicted on these charges, each of the defendants faces up to 5 years' imprisonment, to be followed by 3 years of supervised release, and a $250,000 fine. In addition, they each face substantial civil tax liabilities, interest, and penalties.

In June 2001, West Lynn Creamery pleaded guilty to its part in a criminal tax conspiracy to defraud the U.S. Internal Revenue Service stemming from its "rebate" program to franchisees, and was sentenced to pay a $7.2 million fine, the largest criminal tax fine in New England history. The Dunkin' Donuts Corporation has not been charged and is cooperating in the investigation.

These cases are being investigated by Special Agents of the U.S. Internal Revenue Service, Criminal Investigation. The cases are being prosecuted by Assistant U.S. Attorneys in Sullivan's Economic Crimes Unit.

Press Contact: Samantha Martin, (617) 748-3139