Tony Luke's Owners Indicted For Tax Evasion

PHILADELPHIA — Two of the three founders of Tony Luke's cheesesteaks have been hiding millions from the IRS.

United States Attorney William M. McSwain Friday said that Anthony "Tony Luke" Lucidonio Sr., 82, and his son, Nicholas Lucidonio, 54, both of New Jersey are charged with conspiracy to defraud the IRS, tax evasion, and aiding and assisting in the filing of false tax returns.

Anthony Lucidonio Jr., the most visible face of the cheesesteak chain, was not named in the indictment.

The father and son are charged with conspiring to defraud the United States, 19 counts of aiding and assisting in the filing of false personal and corporate tax returns, and four counts of tax evasion.

Each face up to five years in prison for the conspiracy charge and each count of tax evasion, and three years in prison for each false return charge, as well as up to five years of supervised release, a $6,000,000 fine, and a $2,400 special assessment.

They are being represented by Fox Rothschild LLP and Weir & Partners LLP.

The lawyers told Patch the dispute the charges.

"Anthony 'Tony' Lucidonio and Nicholas 'Nicky' Lucidonio – the owners and operators of The Original Tony Luke’s – dispute the criminal charges filed against them on July 24 and look forward to defending themselves in court," attorneys said in a statement to Patch. "Tony and Nicky have fully cooperated with the government’s investigation since its outset."

According to the attorneys, the Original Tony Luke's on East Oregon Avenue in Philadelphia will "continue to serve its faithful clientele and provide gainful employment to its employees and their families."

According to a federal indictment, the father-son duo hid more than $8 million in cash receipts from the IRS by depositing only a portion of Tony Luke’s receipts into business bank accounts, providing incomplete information concerning receipts and income to their accountant, and filing fraudulent corporate and individual tax returns that substantially understated business receipts and income.

Additionally, the two are accused not paying substantial individual income taxes that they owed.

The indictment also alleges that the Lucidonios committed employment tax fraud by paying employees "off the books" in cash.

To evade detection, defendants would pay most employees a portion of their wages and salaries "on the books" based on only a portion of the hours they worked, then would pay substantial additional cash wages for the remaining hours worked without withholding or paying over to the IRS the required employment taxes, authorities allege.

Subsequently, the pair caused their accountant to prepare and file fraudulent quarterly employment tax returns with the IRS that substantially understated wages paid and the taxes that were due.

Additionally, the indictment claims a dispute over franchising rights arose between the two and Anthony Lucidonio Jr. in 2015. At that time, the father and son 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, according to authorities.

But it is alleged that the Lucidonios, in amending their returns, substantially offset the increase in reported sales and the additional taxes that would be due by claiming additional false and fraudulent expenses, thereby continuing their tax fraud scheme.