Mystic Pizza owner John Zelepos, of North Stonington, was sentenced to prison for tax evasion and structuring cash transactions.

Zelepos was sentenced to 12 months and one day of imprisonment, followed by three years of supervised release, and ordered to pay a $25,000 fine, forfeit more than $500,000, and pay back taxes with interest and penalties.

Zelepos diverted approximately $567,435 in cash from Mystic Pizza’s gross receipts, $330,005 of which was deposited into personal bank accounts for him and his family members, according to a release from the office of Deirdre M. Daly, United States Attorney for the District of Connecticut.

Zelepos caused Mystic Pizza to pay a total of $162,168 to two "no-show" employees who performed no work for the restaurant. He then deducted the wages as expenses on his tax return’s Schedule C for the restaurant. Zelepos failed to disclose to his tax return preparer receipt of the diverted cash and the two no-show employees. He has paid $234,407 in restitution for the federal tax loss.

Zelepos also intentionally structured financial transactions to avoid having the bank file Currency Transaction Reports, which federal law requires all financial institutions to file for transactions that exceed $10,000.

In January 2012, pursuant to a court-authorized federal seizure warrant, the IRS seized $63,084.49 from a payroll account Mystic Pizza held at Chelsea Groton Bank. Those funds are being applied to the forfeiture, reducing the remaining forfeiture amount to $459,573.51.

Zelepos was ordered to report to prison on Oct. 30.