Tony Luke's Owners Admit To Tax Fraud Conspiracy: Feds

PHILADELPHIA — Two owners of the Original Tony Luke's in South Philadelphia admitted to conspiring to commit tax fraud, federal authorities said.

United States Attorney Jennifer Arbittier Williams said Anthony Lucidonio Sr., 84, of Philadelphia, and Nicholas Lucidonio, 56, of New Jersey, pleaded guilty to charges related to their conspiracy to defraud the United States for the purpose of impeding, impairing, or obstructing the Internal Revenue Service in the assessment and collection of employment taxes.

The father and son, who were indicted in July 2020, own the popular cheesesteak restaurant that spawned a separate chain owned by Anthony Lucidonio Jr., who was not named in the indictment.

In pleading guilty, the father-son pair admitted to participating in a tax fraud scheme to evade payroll taxes between 2006 and 2016.

Authorities said the two paid a significant number of their employees and partially "off-the-books."

To avoid withholding and paying over to the IRS employment taxes of the "off-the-books" amount, they gave their employees paychecks that reflected a portion of the employees’ hourly wages with the required taxes withheld.

However, the wages they paid and reported showed only a portion of the true hours the employees worked.

The Lucidonios then told their employees to endorse their paychecks and give the checks back to them and their restaurant managers.

In exchange for return of the endorsed payroll checks, defendants provided their employees envelopes containing cash.

This allowed the Lucidonios to understate the hours each employee worked.

The scheme caused Tony Luke’s accountant to substantially understate the wages paid to the employees, and subsequently, the payroll taxes due to the United States, authorities said.

Authorities plan to prove at the Lucidonios' sentencing hearing that the government lost between $550,000 and $1.5 million through the scheme, according to federal officials.

"This tax fraud scheme victimized honest taxpayers in two ways: first, by hiding the restaurant’s revenue from the IRS and second, by avoiding employee payroll taxes," Williams said. "Tony Luke’s is an iconic brand in our region, but that is no excuse or explanation for the fraud these defendants perpetrated. We will continue to work with our law enforcement partners to investigate and prosecute these types of crimes."