Two law partners and former restauranteurs face sentencing in August for tax fraud.

Dale Orlovsky, 66, of Toms River, and Donald Grasso, 65, of Brielle, pleaded guilty to tax evasion conspiracy Thursday in a Trenton federal courtroom.

The pair admitted skimming hundreds of thousands of dollars from Mulligan's between 2003 and 2005, reducing the amount of business income reported to the Internal Revenue Service; pocketing some of the proceeds without reporting it; and using some of it to pay workers under the table, with the understanding that they would also hide it from the IRS.

Prosecutors with the U.S. Attorney's office say that Grasso and Orlovsky failed to report $125,892 cash payroll in 2003, $199,364 in 2004, and $192,987 in 2005. In the same time frame, Orlovsky admitted omitting gross personal income amounting to $85,000 while Grasso confessed to hiding $87,000.

The count to which they pleaded carries a maximum term of five years in prison and either a maximum $250,000 in fines or twice the amount they gained.

[The original version of this story contained inaccuracies. Click here to read our retraction.]