Feds: Ex-mobster used Toby Keith and Rascal Flatts restaurants in nationwide fraud scheme – USA TODAY
PHOENIX – Arizona businessman Frank Capri used restaurant licensing deals with country superstars Toby Keith and Rascal Flatts as a lure to defraud developers nationwide, federal authorities say.
Capri enlisted his mother and other associates to funnel money meant to pay for restaurant construction at malls into their own accounts, according to indictments made public on Thursday.
Authorities said they used fraudulent paperwork, fabricated contractors, forged signatures and false notary stamps to convince developers work was progressing on projects when it wasn’t.
The indictments come after an ongoing investigation by The Arizona Republic that began in 2015. The Republic documented how Capri negotiated deals to build Toby Keith and Rascal Flatts restaurants throughout the United States, then took millions of dollars earmarked for contractors and walked away.
The indictments don’t mention Capri’s background as a former soldier in the New York City Mafia. In 2017, The Republic identified Capri as Frank Gioia Jr., a “made man” in the notorious Lucchese crime family who was given a new identity through the Federal Witness Protection Program.
The Arizona U.S. Attorney’s Office on Friday declined to answer questions about Capri’s status in the witness protection program.
“Unfortunately, the questions posed would require answers that are outside the public record,” spokesman Glenn McCormick said in an email. “Defendants are presumed innocent and comments that go outside the record can have a prejudicial effect on them, as well as potentially harm the government’s efforts to prove the case.”
Capri was arrested Wednesday and remains in custody pending a Feb. 11 hearing. He pleaded not guilty during an arraignment before U.S. Magistrate Michelle Burns.
Capri, 52, of Scottsdale, faces five counts of wire fraud, nine counts of transactional money laundering and two counts of conspiracy. He was charged along with his mother, Debbie Corvo, 68, of Cave Creek, and former business partner Chris Burka, who last year told The Republic he was living in Florida.
The Republic’s investigation found Capri’s company, Boomtown Entertainment, built 20 Toby Keith restaurants beginning in 2009 and announced plans to build 20 more that never opened. It closed 19 restaurants in about 18 months beginning in 2013. Even as restaurants went under, Capri was announcing plans to open new ones that never got built.
By 2017, judges in cities across the country ordered him or his companies to pay at least $65 million in civil judgments. It is unclear how many judgments were paid or settled.
Federal authorities don’t name Toby Keith or Rascal Flatts in the indictment, which lists them by the initials TK and RF and refers to them as the “branded restaurants.”
Authorities said Capri might have been the owner, but the businesses were not actually in his name.
“Despite Capri’s control and ownership of the various businesses, he is not formally listed as the owner on relevant incorporation and trust documentation associated with the businesses,” according to the indictment. “The majority of the businesses are listed in the name of Capri’s mother … or other nominees with ties to Capri.”
Court records show part of the deal Gioia made with federal prosecutors when he agreed to turn state’s evidence included new identities for his family.
A report prepared by private investigators as a part of a 2007 Maricopa County court case detailed Capri’s entry into the witness protection program along with his father, mother, sister and brother-in-law.
According to the indictment, Capri in 2011 directed Boomtown employees to begin fabricating construction records for the Toby Keith restaurants in order to pull out money for what are known as tenant improvements.
Boomtown employees referred to the bogus paperwork as “arts and crafts,” according to the indictment.
“Between March 2012 and November 2014, Boomtown entered into approximately 24 lease agreements that entitled Boomtown to approximately $64,802,029.66 in T.I. funds for the construction of the (Toby Keith) restaurant locations,” federal prosecutors said in the indictment.
“After obtaining the T.I. fund deposits, Capri diverted money for his personal use including to make payments to Corvo and other family members,” prosecutors said.
Boomtown quickly became insolvent, authorities said.
“Boomtown was not able to cover costs and as a result, there were frequent construction delays on every project during which time Capri would not pay rent to property developers,” prosecutors said in the indictment. “Capri would not pay to continue operating opened (Toby Keith restaurants) including taxes, and often stopped paying ongoing construction and maintenance costs.”
In a 2017 letter to The Republic, Capri denied pocketing development money and described the Toby Keith closures as nothing “other than the product of a business failure.”
Capri also was behind the financial ruin of 19 Rascal Flatts restaurant projects, The Republic reported in 2019.
Capri’s name does not appear on corporate documents tied to the Rascal Flatts restaurants. But working from behind the scenes, he oversaw hiring, firing, employee payments, permits, construction schedules and collection of development fees.
Secretly recorded audiotapes of Capri’s phone calls provided a vivid picture of his role. In the profanity-laced recordings obtained by The Republic, Capri threatens and intimidates developers in an attempt to squeeze cash out of the Rascal Flatts projects.
Capri used Tawny Costa, his longtime girlfriend and the mother of two of his children, to front the projects. Costa and Burka were listed as managers on corporation filings for RF Restaurants, the Las Vegas-based company that owned and operated the restaurant projects.
Costa admitted in March to serving as Capri’s front for the Rascal Flatts projects.
In a series of texts to The Republic, Costa said Capri and Burka set up and secretly ran the restaurant projects in her name. She said they manipulated her into putting her name on corporation and business records for restaurants.
“They came to me after months of arguing over operating agreements and wanted to put me as manager so that neither of them had full control,” she said in one of the March 13 texts.
“They told me I would have no liability,” she said. “Obviously I was younger and had less business experience than I do (now) and they took advantage of that.”
Federal authorities do not name Costa in the indictment. They refer to her as a Capri “nominee.” They said concealing Capri’s involvement in the project allowed Burka and Costa to negotiate agreements with developers.
“Capri and others provided inflated financial projections to property developers in order to negotiate favorable lease agreement contracts with high T.I. allowances for the construction,” the indictment states.
Capri and others created fictitious general and subcontractor entities “and attempted to legitimize these entities by incorporating them and creating contact information to further conceal the fraudulent nature” of the scheme, the indictment said. Capri and others went so far as to use a stamp machine to create notary and signature stamps in a further attempt to legitimize the fraudulent paperwork, prosecutors said.
The indictment does not list the amount of losses suffered by developers. Because the Rascal Flatts projects were smaller in scope than the Toby Keith projects, authorities said, the amounts involved were smaller.
Burka told The Republic in March that he wasn’t involved in the finances of the project and blamed Costa.
“I was not an active person in the business,” he said. “She handled everything. All the operations and the dollars.”
Burka claimed his name was invoked without his knowledge and his signature was forged on documents, including a contract. He acknowledged making phone calls to mall owners and meeting them to initiate projects. But he said he was not involved in the day-to-day management or construction of projects.
More:How the band Rascal Flatts got involved with a mobster in Witness Protection
Costa pointed the finger at Burka. In the March texts, she described Burka as a “con artist.” Costa said she had proof to support her claims, including original licensing agreements and emails, but she declined to provide them to The Republic.
Costa maintained she had no interest or ownership in the projects.
“I do not have nor have I ever had any interest or ownership in any Rascal Flatts project,” she said in a March email. “I had no involvement, contact, or contractual obligation to any developer in any RF project nor am I responsible for any of the obligations of the owners of said company.”
The Republic in 2017 documented Gioia’s transition to Capri, from gangster to witness to businessman.
Gioia was a third-generation mobster. Mafia historians call him one of the most important government witnesses ever to testify against the mob.
His cooperation with law enforcement led to the conviction of more than 70 Mafia figures in the 1990s and 2000s. He helped clear several unsolved murders, including the shooting of an off-duty police officer.
Gioia became a “made man” in 1991 and has testified about his past as a murderer, drug dealer, gun runner, arsonist, loan shark, stickup artist and enforcer.
Gioia was arrested in 1993 on federal drug charges. He was facing 30 years to life in prison when he got word the mob was plotting to kill his father. He contacted the FBI, told agents he was willing to talk and signed a deal to cooperate with the government.
The FBI and the U.S. Department of Justice for years have declined to answer questions about Capri or the trail of financial destruction that followed him out of the Witness Protection Program.
Capri, in his 2017 letter to The Republic, maintained stories about his past are “false and defamatory” but offered no proof to support his claims.
The Arizona U.S. Attorney’s Office in 2019 launched a criminal case against Capri’s former lawyer at Boomtown.
Gregory McClure took a plea deal after being indicted on charges he stole $1.3 million from the company.
As part of a cooperative agreement, McClure was charged with a single count of money laundering, and authorities agreed not to prosecute him for any other offenses related to Boomtown.
His sentencing date was repeatedly pushed back last year and is now scheduled for sometime in March, court documents show.
McClure is referred to by initials in the Wednesday’s indictment, which describes his position with the company and says he agreed to divert funds from Boomtown into various accounts controlled by Capri.
McClure assisted Capri in transferring ownership of any financially viable Toby Keith restaurants to a holding company, the indictment said.
McClure was a 10% owner in the Rascal Flatts restaurants, according to authorities. They said after McClure was caught embezzling money and left the Boomtown, he agreed to help Capri substitute a new “nominee” and backdate ownership paperwork.
Capri’s trial is currently scheduled for April 7.
Follow Robert Anglen on Twitter: @robertanglen