Tony Luke’s owners plead guilty to payroll tax scheme

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Tony Luke’s owners Anthony Lucidonio, Sr., 84, of Philadelphia, and his son Nicholas Lucidonio, 56, of New Jersey, pleaded guilty to tax fraud charges on Monday in U.S. District Court in Philadelpia.

The father (Tony Luke, Sr.) and son, who were indicted in July 2020, are owners of Tony Luke’s, a well-known cheesesteak stand in south Philadelphia. In pleading guilty, the defendants admitted to participating in a scheme to evade payroll taxes between 2006 and 2016.

Not charged was family member Tony Luke Jr. who has been the public face of the business.

Several years ago Tony Luke, Jr. got into a family battle with the two defendants who, after a legal squabble, ended up with the original South Philadelphia location (Original Tony Luke’s) with Tony Luke, Jr. gaining the other locations. Tony Luke’s has a location at the Acme store in Hockessin as well as other stands in the region that include sports stadiums, Philadelphia International Airport, casinos, and the Pentagon in northern Virginia.

According to prosecutors, the Lucidonios paid a number of their employees “off-the-books.” The two were charged with giving their employees paychecks that reflected a portion of the employees’ hourly wages with the required taxes withheld.

However, the wages the defendants paid and reported in this fashion represented only a portion of the true hours the employees worked. The Lucidonios then directed their employees to endorse their paychecks and give them back to the defendants and their restaurant managers.

In exchange for the return of the endorsed payroll checks, the father and son provided their employees envelopes containing cash. This process allowed the defendants to understate the hours each employee worked. The scheme caused Tony Luke’s accountant to understate wages paid to the employees, and payroll taxes due.

According to a plea memorandum filed with the court, the government intends to prove at the defendants’ sentencing hearing that the government lost between $550,000 and $1.5 million.

“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,” said U.S. Attorney Jennifer Williams. “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.”

Tony Luke’s is the second well-known Philadelphia restaurant to face allegations related to wages.

Several years ago, regional chain Chickie’s and Pete’s paid out more than $8 million to settle allegations of pocketing more than half of an employee tip pool. Chickie’s and Pete’s has operated a concession area at Frawley Stadium-Judy Johnson Field, home of the Wilmington Blue Rocks.