Original Tony Luke's Owners Get Prison For Tax Fraud: Feds

PHILADELPHIA — Two owners of the Original Tony Luke's in South Philadelphia will spend more than a year in prison after admitting in federal court to tax fraud.

Authorities said Nicholas Lucidonio, 57, and Anthony Lucidonio Sr., 84, were sentenced to 20 months in prison each. They were also sentenced to three years of supervised release.

The two pleaded guilty in May 2022 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 Lucidonios owned and operated Tony Luke’s, a cheesesteak and sandwich restaurant located in South Philadelphia. From 2006 to 2016, they hid from the IRS more than $8 million in cash receipts by, among other things, depositing only a portion of the cash they received into Tony Luke’s business bank accounts and providing incomplete information to their accountant, which caused their accountant to file false tax returns that substantially underreported business receipts and income.

The Lucidonios also committed employment tax fraud by paying employees “off the books” in cash. To evade detection, they paid most employees a portion of their wages “on the books.” The Lucidonios then paid the remainder of their wages in cash without withholding federal income tax, Social Security and Medicare taxes or paying those to the IRS. They did not report these cash wages to their accountant, which caused the accountant to prepare and file false quarterly employment tax returns with the IRS.

When a dispute over Tony Luke’s franchising rights arose between the Lucidonios and another individual in 2015, the Lucidonios became concerned that their tax fraud scheme would be revealed, so they directed that the prior year’s tax returns be amended to increase reported sales. The Lucidonios continued to hide their ongoing payroll tax scheme.

As a result of their tax fraud scheme, the Lucindonioscaused a loss of $1,321,042 to the United States.