A Toms River man and his law partner pleaded guilty in federal court Tuesday to charges they failed to report nearly $700,000 in payroll and personal income when they owned Mulligan's Bar and Restaurant in Farmingdale, officials said. 

Dale Orlovsky, 66, of Toms River, and Donald Grasso, 65, of Brielle entered guilty pleas before U.S. District Judge Joel A. Pisano in Trenton, admitting their roles in a conspiracy to evade taxes, according to a release from the office of U.S. Attorney Paul J. Fishman. 

Grasso and Orlovsky, charged separately, allegedly failed to report $518,242 in cash payroll to themselves and restaurant employees between 2003 and 2005, the release says. 

Grasso, during said years, failed to report $89,000 in gross income. Orlovsky, during the same period, withheld $85,000 in gross income from the IRS, the release says. 

"Substantial amounts of cash were removed from the cash receipts of Mulligan's and not reported in sales reports that were used as the basis for reporting income for federal income tax purposes," the release says. 

The men used the unreported cash to pay themselves and several employees, the release says. 

Grasso and Orlovsky failed to report $125,892 in cash payroll in 2003, $199,363 in 2004, and $192,987 in 2005, the release says.  

Grasso also filed false federal individual income tax returns for the same calendar years by failing to report $62,000 in gross income in 2003, $23,000 in 2004, and $4,000 in 2005, the release says.  

Orlovsky filed false federal individual income tax returns for the same calendar years by failing to report $58,000 in gross income in 2003, $23,000 in 2004, and $4,000 in 2005, the release says.

The conspiracy to evade taxes count, which both men plead guilty to, is punishable by up to five years in prison and a fine of the greater of $250,000 or twice the gross pecuniary gain by the defendant or loss by the victims, the release says. 

Sentencing for both men is scheduled for Aug. 30, 2012, the release says.