Tawny Costa, who fronted Rascal Flatts scheme, forced to close Phoenix eatery
She fronted an ex-mobster’s failed chain of Rascal Flatts restaurants. Now, an Arizona businesswoman is facing renewed legal scrutiny over her finances and past associations.
Not by the FBI, which investigated her longtime boyfriend and business partner.
Not by the U.S. Attorney’s office, which accused him of engineering a $64 million multi-state fraud.
And not by local police departments, which arrested her on unrelated charges in 2015.
Arizona liquor regulators are taking the lead. They appeared to force the closure of Tawny Costa’s Parma Italian Roots restaurant in Phoenix this month and are now investigating the “legality of her ownership” in a sister restaurant in Scottsdale.
Costa provided false and misleading information on liquor applications about the true ownership of Parma, the money behind it and her involvement in Rascal Flatts and other failed restaurants, according to an Arizona Department of Liquor Licenses and Control investigation.
“Costa engaged in a scheme to deceive,” Detective John Barchak wrote in a 19-page report. “I am identifying a pattern … Costa appears to choose when and where she discloses information, Costa appears to selectively answer or avoid answering simple questions.”
He cited five violations that could prevent Costa from getting a liquor license under Arizona law, including her lack “of good moral character” and her “capability, qualification and reliability.”
Barchak said Costa admitted that she did not pay any state or federal income tax from 2015 to 2019, refused to comply with a subpoena to turn over financial documents and deceived authorities about her relationship with Frank Capri.
Who is Capri? A former soldier in the New York City Mafia. He is also Costa’s longtime boyfriend, her business partner and the father of her two daughters.
Capri is best known for the epic failure of his Toby Keith’s I Love This Bar and Grill restaurant chain, which went under in 2015 amid allegations of fraud and theft. He was also behind the financial ruin of 19 Rascal Flatts restaurant projects that were set up in Costa’s name.
Capri’s real name is Frank Gioia Jr. He was a “made man” in the notorious Lucchese crime family when he flipped to become a government witness in the 1990s.
An investigation by The Arizona Republic that began in 2015 documented Gioia’s transformation into Capri through the Federal Witness Protection Program. It showed how he used his new identity to build himself up as an Arizona real estate mogul and restaurateur and then bilked developers out of tens of millions of dollars.
Capri, 53, of Scottsdale, was arrested Feb. 5 and is being held without bail in an Arizona prison pending trial on fraud, conspiracy and money laundering charges.
Federal authorities accused Capri of using restaurant licensing deals with Toby Keith and Rascal Flatts as a lure to defraud developers across the country. They said Capri enlisted his mother and other associates to funnel money meant to pay for restaurant construction at malls into their own accounts.
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.
Federal authorities do not name Costa in the indictment. They refer to her as a Capri “nominee.”
Costa did not respond to phone calls or detailed text messages last week about Capri or his involvement in her Parma restaurants.
Barchak, however, said Costa’s relationship with Capri “went beyond personal” and overlapped into their shared business interests.
“The deception that Costa exhibited on her application and her longtime relationship with Capri exhibit questionable character,” Barchak said in the report. “Additionally, Costa by her own admission is complicit in the failure of RF (Rascal Flatts) Restaurants.”
An extensive history of restaurants, closures
The investigative report marks the first time any law enforcement agency has publicly called out Costa’s role in Capri’s restaurant schemes.
Between them, Capri and Costa have orchestrated the failure of 64 restaurant projects since 2013 that either closed after opening, were left unfinished or never started; 39 under Capri and 25 under Costa’s name, according to a Republic tally.
In addition to Toby Keith and Rascal Flatts, The Republic found Capri was involved in Costa’s Parmarestaurants and others she operated in Tempe, San Diego, Atlanta and Boston.
Barchak raised serious doubts about Costa’s ownership of Parma, citing financial records and interviews indicating Capri maintained interests in both the Phoenix and Scottsdale restaurants.
Costa opened Parma on Indian School Road near 36th Street in 2019 and operated under an interim liquor license for more than a year.
Costa said on her license application the restaurant was owned by a company called DSK (Double Standard Kitchenetta) II, LLC, and that she was the “sole controlling person and principal.”
But Barchak said Costa refused to turn over “bank statements for checking accounts, revolving charge accounts, outstanding or satisfied loans, or any other financial account” for DSK II.
Barchak’s investigation came ahead of a Dec. 3 hearing by the State Liquor Board on Costa’s permanent license. But just before the hearing began, Costa withdrew her application and closed the restaurant.
A notice glued on Parma’s locked and shuttered front door told a familiar story: A lien filed by the landlord indicating Costa had failed to pay rent.
“Landlord has re-entered and re-taken possession of the premises,” according the Dec. 1 notice. “Tenant remains liable for outstanding rent and other charges.”
The restaurant’s closure does not mean the state has shut down its investigation into Costa. Just the opposite. Liquor regulators are now looking at Parma Scottsdale.
Department of Liquor Assistant Director Jeffery Trillo confirmed investigators are examining Costa’s claims of ownership.
“The aforementioned Parma Italian Roots application case review and associated investigation did reveal new information that caused the Department to pause and consider cross business impacts,” Trillo said in a Dec. 4 email.
“The Department is investigating … the applicant’s other liquor licensed business under the same name in Scottsdale,” he said. “The investigation is ongoing.”
Parma Scottsdale is owned by a company called Grayhawk Brewery, LLC. Although Costa claimed to be the owner of the restaurant on her liquor license application, Barchak found she has only a quarter interest in it.
The remaining 75% is owned by the Barley Irrevocable Trust, which lists Costa as trustee and Capri as the income beneficiary, according to Barchak’s report. The trust is also the majority owner of a bar Costa operates in Boston called Finn McCool.
“The trust states that it is authorized to provide for the health, education, maintenance of Frank Capri’s dependents and a companion of Frank Capri, presumably Costa,” Barchak wrote.
The other person listed on the trust is Capri’s mother, Debbie Corvo.
Corvo was indicted with Capri in the allegedToby Keith and Rascal Flatts fraud schemes. Authorities initially charged her with multiple counts of wire fraud and one count of money laundering.
Corvo is not her real name, but one authorities provided her with when she was enrolled in the Federal Witness Protection Program. Capri’s father, sister and brother-in-law also got new identities through the program, records show.
As part of a plea deal in October, Corvo admitted to posing as the owner of Capri’s penthouse at Kierland Commons. She told authorities she facilitated the condo’s sale for $735,000 and funneled the proceeds to her son.
Capri had purchased the penthouse through a company set up in his mother’s name. Records show the real estate agent who listed the property was Costa.
Barchak said records attached to Costa’s Massachusetts liquor license application indicated that money from the Kierland sale was used to provide a substantial gift to the Barley Irrevocable Trust — and provided funding for Finn McCool.
He said Costa provided Massachusetts regulators with “bank statements from the Barley Irrevocable Trust account and from Debbie Corvo’s bank account to verify the source of funds.”
Costa, meanwhile, has not complied with a March subpoena to turn over trust records to authorities in Arizona, according to the investigative report.
Arizona Republic reporter’s cellphones snatched
Barchak said Costa failed to disclose two prior arrests. He also highlighted her alleged assault last year of a Republic reporter inside her new Phoenix restaurant.
The incident occurred after Costa agreed to be interviewed by Republic dining reporter Priscilla Totiyapungprasert about Parma’s opening.
Costa said in the Dec. 5, 2019, interview that she was the “sole owner” of Parma and Capri was not involved in the day-to-day operation of the restaurant.
When Totiyapungprasert questioned her about Capri, Costa abruptly ended the recorded interview.
Totiyapungprasert told police Costa snatched her cellphones off a table, then pushed and elbowed her, before fleeing the restaurant.
Barchak said the incident “appears to be an act of violence” and said police reports indicated Costa was in a disorderly or intoxicated condition at the time, a violation of state liquor license regulations.
Barchak said Costa, as the restaurant owner, failed to de-escalate the situation and call police. “Instead, Costa allegedly took Priscilla’s phones and engaged in an altercation or tumultuous conduct inside the kitchen,” he said.
Police reports indicate Costa ditched Totiyapungprasert’s phone in the trash of a nearby business.
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One of the officers “recommended that Costa be charged with robbery for taking the property belonging to Priscilla and using physical force by thrashing about and swinging elbows at Priscilla,” Barchak said.
Police turned over the case to the Maricopa County Attorney’s Office for review last year. No charges have been filed. The phones have not been returned.
Costa, through a lawyer, declined to speak to police about the incident. But Barchak indicated the case illustrates Costa’s relationship with Capri and his control over the restaurant.
Barchak said workers at Parma told officers that Capri hired them. The number Barchak listed in the report is the same one Capri has used for years to conduct business, including contacts with The Republic.
One of the workers at Parma told police that “he doesn’t talk to Costa and that he only talks to Frank who is the owner,” Barchak said in his report.
This isn’t the first time Costa has been under scrutiny by authorities.
Barchak said Costa falsely stated on her liquor license applications she had not been “cited, arrested indicted, convicted or summoned into court for violations of any criminal law or ordinance.”
Barchak said she was arrested in Dallas County, Texas, in 2011 and in Scottsdale in 2015. She pleaded guilty to misdemeanors in both cases.
According to Scottsdale police, Costa was charged with failure to obey a police officer after she refused to get out of her car during a traffic stop.
Costa told officers she was afraid of getting out and leaving her child alone in the car, even though there was another adult inside the vehicle. She demanded to call the vehicle’s owner and the father of the child: Capri.
When Capri arrived, he told Costa to get out of the car. She was cited in lieu of arrest, according to court records, Barchak said in his report.
Costa tried to argue that she wasn’t arrested and that the five-year time frame for reporting the incident had expired, Barchak said in his report. Neither was true.
He noted she made the same false statement in Massachusetts liquor application, which she signed about eight months after her arrest.
“Costa’s response to this question is false and misleading,” Barchak said.
Ties to a mobster turned government witness
During a July interview with Costa, Barchak asked when she found out about Capri’s past as Gioia Jr.
“Costa stated that she could not answer that question,” his report said.
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 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 maintains stories about his past are “false and defamatory” but has offered no proof to support his claims. In a 2017 letter, he denied pocketing development money and described the Toby Keith closures as nothing “other than the product of a business failure.”
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. 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.
But Capri already was at work on his next big restaurant failure.
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.
Toby Keith and Rascal Flatts were not named in the indictment, which lists them by the initials TK and RF and refers to them as the “branded restaurants.”
Neither Keith nor Rascal Flatts were involved in the operation of the restaurants. They sold naming rights to Capri or his companies. Rascal Flatts later terminated its licensing agreement as the restaurant projects failed.
Developers paid millions to lure RF Restaurants to malls. They offered up-front cash to offset construction costs in exchange for signing long-term leases. They got vacant buildings, incomplete projects and lawsuits.
The Capri-Costa relationship
Costa has described her relationship with Capri differently depending on who is asking the questions.
She told Barchak they began their relationship in 2013 and it ended sometime in 2019. She said even though they lived together, they weren’t a couple for at least a year.
Barchak said Phoenix police noted in their December 2019 report that Costa’s neighbors in north Scottsdale indicated Costa and Capri were still living together at the time.
In the Dec. 5 interview at Parma, Costa told The Republic she did not not know Capri, only that he “loves the food” at her Scottsdale restaurant.
In 2018, she claimed she didn’t know about Capri’s Mafia past and denied being his girlfriend.
“While they at one point in time had a personal relationship … Ms. Costa is and was not Mr. Capri’s girlfriend,” a lawyer representing Costa wrote in a Jan. 24, 2018, letter to The Republic.
The letter was sent at the same time Costa was involved in the development of Rascal Flatts restaurants.
Costa admitted last year that Capri and a business partner set up and secretly ran Rascal Flatts restaurant projects in her name.
In a series of texts to The Republic, Costa said Capri manipulated her into putting her name on corporation and business records for restaurants from Hawaii to Florida.
She claimed she was inexperienced and naive.
Costa was one of two managers listed on corporation filings for RF Restaurants, the Las Vegas-based company that owned and operated the restaurant projects.
In 2018. Costa took over as manager for Capri’s last remaining Toby Keith restaurant in Foxborough, Massachusetts. She appeared at a public meeting to assure public officials the restaurant was in good hands. It closed for good in 2019.
In 2017, Costa initiated calls to The Republic posing as other people to gather information for Capri. She later acknowledged the ruse and described herself as Capri’s girlfriend and his facilitator.
Costa has similarly given various explanations of her ownership roles in the restaurants. In publications and in interviews she has described herself as the owner of restaurants, including Parma.
When questions have arisen over closures and lawsuits involving those restaurants, Costa has said she is only a manager or a member of the controlling limited liability company.
Barchak summed up Costa’s past conduct, evasive responses and contradictory explanations another way: “She raises more questions to her character.”
Robert Anglen investigates consumer issues for The Republic. If you’re the victim of fraud, waste or abuse, reach him at [email protected] or 602-444-8694. Follow him on Twitter @robertanglen
