According to the U.S. Attorney's Office for the Eastern District of Pennsylvania. Tony Luke's, a popular Cheesesteak destination in Philadelphia, is now in the spotlight as Father and son co-owners Nicholas Lucidonio and Anthony Lucidonio Sr., also known as "Tony Luke," are sentenced for a decade-long federal tax evasion scheme, according to the U.S. Attorney's Office for the Eastern District of Pennsylvania.
Neglect in Reporting Cash Receipts to the IRS
The owners neglected to report cash receipts amounting to over $8 million to the Internal Revenue Service (IRS) between 2006 and 2016. The duo not only failed to deposit all of the business's cash into its bank account but also engaged in payroll tax fraud by paying a significant portion of employees' income in cash "off the books," as the U.S. Department of Justice stated.
Most employees received part of their wages on the books to avoid being caught. At the same time, the remainder was paid in cash, without the necessary deductions like federal income tax, Social Security, and Medicare taxes submitted to the IRS.
Inaccurate Tax Returns and Underreported Income
The Lucidonios did not inform their accountant about the cash wages, hiding millions of dollars and resulting in a decade of inaccurate tax returns with significantly underreported income. Following a guilty plea in 2022, 57-year-old Nicholas Lucidonio and 84-year-old Anthony Lucidonio Sr., who owned and operated Tony Lukes, have been officially sentenced to 20 months in prison each, followed by three years of supervised release. The IRS Criminal Investigation uncovered the tax fraud scheme, with some help getting tipped off identifying the issue.
"For a decade, these successful restaurateurs boldly cooked the books, cheating the government and honest taxpayers alike," said U.S. Attorney Jacqueline Romero, emphasizing that tax fraud is a serious crime with significant consequences, and those who commit it will be held fully accountable, as demonstrated by the investigation and prosecution.
Tony Luke's Franchising Rights Dispute Sparking the Tax Fraud Scheme
The problem came to light in 2015 during a dispute between Lucidonios and another person regarding Tony Luke's franchising rights, where the Lucidonios worried their tax fraud scheme might be revealed amid the dispute. As a precaution, they had the previous year's tax returns revised to reflect higher reported sales, according to the DOJ.
Luke Jr.'s Exclusion in the Indictment
The indictment did not include Luke Jr., the public face of Tony Luke, who separated from his father and brother in 2015, leading to a public court battle over franchising agreements and recipe ownership. He now owns additional Tony Luke's restaurants in various states.
Tax Scheme Causing a Million Dollar Loss to the U.S.
According to the DOJ, the two men persisted in concealing their payroll tax scheme, causing a loss of $1,321,042 to the U.S. After serving their sentences, the father and son were under three years of supervised release.
