A 55-year-old Belmont man who has run a pizza shop near Northeastern University for decades was arrested this week on federal charges that he hid more than $1.6 million in income from his restaurant and rental properties, after an undercover IRS agent posing as a prospective buyer secretly recorded him allegedly threatening violence over fears he was being investigated. Demetrios Pseudoikonomou pleaded not guilty to eight felony counts of presenting false and fraudulent tax returns following his arrest on August 12, 2026.
U.S. Attorney Leah B. Foley and IRS Criminal Investigation Special Agent in Charge Thomas Demeo announced the charges, which were brought following an investigation by the IRS Criminal Investigation Boston Field Office, according to the U.S. Attorney's Office for the District of Massachusetts. Assistant U.S. Attorney Benjamin A. Saltzman is prosecuting the case. Pseudoikonomou made his initial court appearance in federal court in Worcester and was released, with a magistrate setting his bail at $10,000, according to reporting by The Boston Globe. His next court date is scheduled for September 23.
How the Sting Unfolded
The case traces back to 2022, when an IRS agent posed as a prospective buyer interested in purchasing Pseudoikonomou's rental business, according to the Globe's reporting. During a February 2022 meeting, Pseudoikonomou reportedly questioned the undercover agent directly, asking whether he was a police officer or wearing a wire. The outlet reports he told the agent he had received very few checks over the years and could teach him tricks of the trade.
Federal prosecutors say the alleged scheme involved routing restaurant revenue into four separate bank accounts while disclosing only two of them to his accountant, according to the same account. He also allegedly failed to disclose two other bank accounts, including his personal account, and took in rent money through direct Venmo and Zelle transfers that went unreported. Pseudoikonomou told the agent he gave his accountant a printout of everything he wanted him to have, and separately said his accountant reported what he was told but that his tax returns did not include everything, per the Globe's account.
Threats Followed a Police Search
Police executed a search warrant at Cappy's Pizza & Subs on August 4, 2022. According to prosecutors, Pseudoikonomou called the undercover agent afterward and threatened to kill him and send people to his house if he worked for the IRS or was trying to deceive him. He reportedly told the agent that the IRS had shown up at his door and that the agent was the only person he had given information to. At another point, after noticing the agent carrying two phones, Pseudoikonomou allegedly threatened him again and later said he believed the agent had deceived him.
Prosecutors allege Pseudoikonomou underreported pizza receipts by more than $730,000 over four years and underreported rental income by almost $890,000 over five years, for a total of more than $1.6 million in unreported income between 2018 and 2023. Federal investigators say the resulting scheme allowed him to avoid more than $520,000 in federal income taxes, the Globe reported.
A Two-Decade Fixture Near Campus
Pseudoikonomou owns Cappy's Pizza & Subs on Westland Avenue in Boston along with the six-story building above it, which houses student apartments. He graduated from Northeastern University in 2003 with a degree in economics before taking over the restaurant, which sits directly adjacent to campus and relies heavily on student patronage, according to The Huntington News.
The building has weathered turmoil before. A three-alarm roof fire caused by a faulty heating and ventilation unit shut down both the restaurant and the student apartments above it for nearly 11 months in 2011 and 2012, per the same Huntington News account. Years earlier, in March 2008, Pseudoikonomou completed a year of probation and paid $250 in medical restitution following a Suffolk County court disposition tied to a 2007 late-night altercation with student patrons outside the restaurant, according to a separate Huntington News report.
The pandemic hit the business hard as well. In January 2021, Pseudoikonomou said disruptions from remote learning had severely cut into revenue, forcing him to work 18-hour days for far less money, according to The Scope.
Part of a Broader Federal Crackdown
The charges against Pseudoikonomou fit a pattern of federal tax enforcement against Massachusetts business owners in recent years. In September 2024, former restaurant owner John Drivas pleaded guilty to tax fraud after paying employees off the books and concealing more than $1.5 million in state meals taxes. In February 2026, Massachusetts contractor Dennis Condron pleaded guilty to four tax fraud counts for cashing customer checks and withholding gross receipts from his tax preparer, a case Hoodline also covered. And in October 2023, federal authorities in Boston secured a 15-month prison sentence against a local tax preparer in a $2 million scheme, reflecting the same IRS Criminal Investigation activity now behind the Cappy's case.
Under Title 26 U.S.C. § 7206(2), each felony count of aiding the filing of false tax returns carries a statutory maximum of up to three years in prison, one year of supervised release, and a $250,000 fine, according to the U.S. Department of Justice. Pseudoikonomou faces eight such counts. He has pleaded not guilty and remains presumed innocent as his case proceeds toward the September 23 court date.
