Tony Luke's founder, son Nicholas, plead guilty in federal tax fraud case
(Photo by Ricky Carioti/The Washington Post via Getty Images)
PHILADELPHIA - Federal officials have announced that two owners of Tony Luke’s, a famous Philadelphia cheesesteak restaurant, have pleaded guilty in a tax fraud scheme.
Tony Lucidonio Sr., or Tony Luke Sr., and Nicholas Lucidonio entered their guilty pleas on Monday, admitting to participating in a plot to evade payroll taxes between 2006 and 2016, according to officials.
Authorities say evidence summarized in a Monday hearing showed that the duo paid a significant number of their employees partially ‘off-the-books.’
"To avoid withholding and paying over to the IRS employment taxes of the ‘off-the-books’ amount, defendants gave their employees paychecks that reflected a portion of the employees’ hourly wages with the required taxes withheld," read a release from the U.S. Attorney’s Office in the Eastern District of Pennsylvania. "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 had their employees endorse their checks and return them in exchange for envelopes containing cash, officials said. That process allowed the Lucidonios to understate the hours each employee worked, and caused the company’s accountant to understate wages paid and payroll taxes owed to the federal government.
In a memorandum filed with the court, government officials said they intended to prove at the Lucidonios’ sentencing hearing that the government lost between $550,000 and $1.5 million as a result of the scheme.
"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 Arbittier 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."