GRAND RAPIDS, Mich. (WOOD) — The popular Vitale's restaurants are facing a lawsuit alleging they are running a "criminal enterprise" under the rules set by the Federal Racketeer Influenced and Corrupt Organizations Act, more commonly known as RICO.
The lawsuit, filed in federal court July 11, names five Vitale's locations and five defendants and says the company "engaged in a pattern of racketeering activity including wire fraud and mail fraud, involving numerous RICO predicate acts, all in an effort to defraud the state, local, and federal tax authorities, as well as to defraud Plaintiff and the members of the class of their wages, and defraud their workers compensation insurance carrier."
An attorney representing the plaintiff, a former Vitale's employee, told 24 Hour News 8 the company doesn't pay workers overtime wages.
"Essentially they were using two time cards. Requiring the employees to use two time cards to record their hours. On one time card they recorded no more than 40 hours and on the second time card they recorded any hours over 40 hours in a work week, and they would pay the workers the hours that they worked on the second time card in cash, and paid them straight time," attorney Robert Anthony Alvarez with Avanti Law Group in Wyoming explained over the phone Thursday. "In other words, they weren't paying them overtime."
He added that a company paying employees in cash and off the books would mean defrauding tax authorities and worker's compensation.
"They're then not paying any of the withholding on the employer's side or taking withholding from my client," Alvarez said.
One portion of the lawsuit says a customer learned of the payout scheme and threatened to expose the scheme and alert the IRS. The plaintiff alleges he overheard the Salvatore Vitale imply that he wasn't worried about getting caught and saying he could "make people disappear."
On Thursday, 24 Hour News 8 went to the Vitale's location on Leonard Street NE in Grand Rapids to get video when Salvatore Vitale, a named defendant in the lawsuit, told the crew to leave even though they were on public property.
24 Hour News 8 asked Vitale if he had been using a two-card system. He had no response.
He then mentioned something about contacting an attorney, shut his car door and drove off. Despite being asked, he did not give 24 Hour News 8 the name of his attorney.
In an email to 24 Hour News 8 later Thursday night, Vitale's attorney Ian Northon of the Rhoades McKee law firm in Grand Rapids said his client had not yet been served with the civil suit. He also emphasized that his client does not face any criminal charges and said they would defend against the suit in civil court.
He called the claims in the lawsuit "false," "misleading" and "unsubstantiated." He said they came from a "disgruntled former kitchen manager who took the company credit card on his way out the door over a month ago."
Northon went on to say his client is a longtime "pillar of the local community" who donates to numerous charities and that he "provides good jobs to more than 30 people, many of whom have worked for him for decades."
Alvarez, the plaintiff's attorney, said he believes corrupt payroll practices are a big problem in the restaurant industry. He said he hopes this suit gets his client — and potential clients via class-action status — the closure they deserve.
"My client, he has no ill feelings, he wants to make sure that this doesn't happen anymore; that everyone gets paid how they're supposed to be paid and what they're supposed to be paid," Alvarez said
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