Ambler restaurant owner admits to bilking COVID bailout programs out of nearly $1 million after her business closed

For decades, Giuseppina Leone earned her living serving up Northern Italian fare to diners in Montgomery County from Ristorante San Marco, the white-tablecloth dining spot complete with a piano bar that she ran with her husband in Ambler.

Now, she’s hoping to avoid serving time in federal prison.

The 61-year-old former restaurateur, known as Josephine to regular customers, pleaded guilty Thursday to federal fraud charges tied to nearly $1 million she obtained from government-backed coronavirus relief funds aimed at helping struggling restaurants stay afloat.

While others used the money to keep their businesses open and staff employed, Leone told a federal judge, Ristorante San Marco remained closed for almost all of the pandemic and that she’d struck a deal to sell the business even before the coronavirus crippled the local restaurant industry.

“Is everything you’ve said today the truth?” U.S. District Judge Gerald A. McHugh asked Leone during a hearing Thursday in federal court in Philadelphia. Leone, seated quietly next to her lawyer, responded with a simple “yes.”

Leone’s guilty plea to three counts of wire fraud — each carrying a maximum prison term of as much as 20 years — came one week after federal prosecutors charged her with defrauding the federal Paycheck Protection loan program and a separate pot of federal funds specifically designed to bail out struggling restaurants.

Last year, the Inspector General’s Office for the U.S. Small Business Administration estimated that more than $64 billion issued through the PPP loan program went to recipients who were not eligible to receive it or spent it on unauthorized expenses.

Federal prosecutors in Philadelphia have charged dozens of defendants in recent years with bilking the program out of millions.

Leon’s attorney, Michael J. Engle, said in court that his client did not strike a plea deal with prosecutors but wanted to admit her guilt and face the consequences as quickly as possible anyway.

“Mrs. Leone has accepted responsibility for her conduct in this matter,” Engle said afterward. “We will be preparing to address a variety of sentencing issues with the court at the appropriate time.”

According to court filings, even before the spread of the coronavirus triggered shutdown orders for restaurants and businesses across the state, Leone and her husband had reached an agreement to sell Ristorante San Marco, its historic 1860s stucco building, and the 2.5-acre plot it sat on for $1.6 million.

Though that sale wasn’t finalized until more than a year later, the restaurant announced in March 2020 that the pandemic would force its temporary closure and the suspension of takeout service.

“We value our employees’ health and our community too much, hence the discussion to close temporarily until further notice,” the Leones posted on the restaurant’s Facebook page at the time. “We look forward to serving the community again real soon.”

But Ristorante San Marco never reopened. And yet, three times during the next 14 months Leone applied to the government for funds to keep it running.

Between April 2020 and February 2021, she received $158,000 in PPP loans, aimed at ensuring business owners continued to pay their workers during the extended shutdown.

In May 2021, she sought nearly $700,000 from the Restaurant Revitalization Fund — a pot of money approved by Congress to specifically help restaurant owners cover pandemic-related losses.

Prosecutors say none of that money went toward paying the restaurant’s staff or to cover its operating expenses, as was required. Instead, Assistant U.S. Attorney Angella N. Middleton said in court filings, Leone transferred the funds to other bank, credit card and investment accounts in her name.

The restaurant’s sale was finalized for $1.3 million less than a month after the restaurant received its final injection of government cash. Its former home along Bethlehem Pike now houses Tresini, an upscale Italian eatery run by chef Brad Daniels.

Leone did not respond to requests for comment Thursday after her guilty plea. McHugh, the judge, scheduled her sentencing date for Sept. 5.