The owners of the original Tony Luke’s, a popular South Philadelphia cheesesteak restaurant, was charged Friday with multiple counts of tax evasion in a federal case that alleges they hid more than $8 million from the Internal Revenue Service between 2006 and 2016 by keeping a portion of their cash receipts off the books.
Anthony Lucidonio Sr., 82 ‚and his son, Nicholas Lucidonio, 54, have both been charged with conspiracy to defraud the IRS, tax evasion, and aiding and assisting in the filing of false tax returns, said William McSwain, the top federal prosecutor for the Philadelphia area.
As a team, authorities said, they own and operate the original Tony Luke’s at Front Street and Oregon Avenue in Philadelphia.
The restaurant is also the point of origin for the creation of a separate 14-store Tony Luke’s franchise chain led by Anthony Lucidonio Jr., with locations at high-traffic locations like the King of Prussia Mall, the Philadelphia Airport, Lincoln Financial Field and on the boardwalks in Atlantic City and Ocean City, Md., but according to McSwain’s release the chain is not implicated in this investigation.
Anthony Jr. took to Twitter Friday to emphasize the break, which is further explained in this 2017 Philadelphia Magazine profile.
Attorneys for the Lucidonios issued a statement on Friday afternoon that said they “dispute” the charges, and added that the restaurant will stay open will they chart their defense. It reads:
“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. Tony and Nicky have fully cooperated with the government’s investigation since its outset.
“The Original Tony Luke’s will continue to serve its faithful clientele and provide gainful employment to its employees and their families.”
According to the indictment, filed by McSwain’s office Friday after an investigation by the IRS’s Criminal Investigation Division, the Lucidonios hid the money by, among other things, depositing only a portion of Tony Luke’s receipts into its 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.
The defendants also willfully evaded substantial individual income taxes that they owed.
The Indictment also alleges the Lucidonios committed employment tax fraud by paying employees “off the books” in cash.
That scheme worked, McSwain alleged, by paying most employees wages and salaries “on the books” for only a portion of the hours they worked. The defendants would then pay substantial additional cash wages for the remaining hours worked without withholding or paying over to the IRS the required employment taxes, the indictment stated.
That resulted in the filing of fraudulent quarterly employment tax returns with the IRS that substantially understated wages paid and the taxes that were due.
Finally, the indictment charges that the Lucidonios in 2015 amended their most recent tax returns to increase reported sales in the midst of a dispute over franchising rights. But in so doing, the indictment alleges, the Lucidonios, substantially offset the increase in reported sales and the additional taxes that would be due by claiming additional false and fraudulent expenses.
“Tony Luke’s is an iconic Philadelphia brand, but that is not what matters in the eyes of the law,” McSwain said in a press release announcing the charges.
“These are serious allegations and it should go without saying that everyone has an obligation to follow the law. This alleged scheme victimized honest taxpayers in two ways: first, by hiding more than $8 million in revenue from the IRS and second, by avoiding payroll taxes,. And when the defendants thought their scheme might be discovered, they allegedly cooked the books even further to cover their tracks.”
“Collecting and paying over employment tax is an obligation, not a choice,” said IRS Criminal Investigations Special Agent in Charge Thomas Fattorusso. “Anthony Lucidonio and Nicholas Lucidonio willfully chose to ignore this obligation. Their actions not only caused a loss to the government, but it also put their employees at risk of losing future Social Security and Medicare benefits.”
In all, prosecutors have filed 19 counts of aiding and assisting in the filing of false personal and corporate tax returns, and four counts of tax evasion.
If convicted, the Lucidonios could face a maximum sentence of five years in prison for the conspiracy charge and each count of tax evasion, and three years in prison for each false return charge. Each defendant also faces a maximum period of five years of supervised release, a $6,000,000 fine, and a $2,400 special assessment
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