South Philadelphia

Tony Luke's Founder and Son Dodged Taxes for a Decade, Feds Allege

The U.S. Attorney in Philly said the owners kept some employees wages on the books and paid the rest in cash off the books.

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The founder of venerable South Philadelphia cheesesteak spot Tony Luke's and his son were federally indicted this week on tax fraud charges, with prosecutors saying they hid about $8 million from the IRS over a period of at least 10 years.

Anthony Lucidonio Sr. ("Tony Luke Sr.") and Nicholas Lucidonio are charged with conspiracy and aiding/assisting false employment tax returns, according to the indictment in U.S. District Court in Philadelphia.

The 23-count indictment alleges that the business had two separate sets of records detailing the businesses' sales at their popular shop at Front Street and Oregon Avenue in South Philadelphia. One record was missing a portion of cash receipts from the cheesesteak shops, keeping that pool of money away from income taxes.

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The most prominent face of the brand, Tony Luke Jr., was not named in the indictment.

The founder of iconic South Philly cheesesteak spot Tony Luke's and his son have been federally indicted on tax fraud charges, with prosecutors saying they hid about $8 million from the IRS over a period a decade.

Federal prosecutors say the Lucidonios gave the incomplete records to an accountant who filed their tax returns, and kept the complete records elsewhere. The practice continued from 2006 until 2016, the document says.

But in 2015, they became worried that a franchising dispute with someone identified only as "Individual A" would lead to the tax scheme becoming public knowledge. So they asked an accountant to amend their corporate tax returns for 2013 and 2014, reporting the full sales. But on those amended returns, the Lucidonios added false expenses to receive fraudulent write-offs, the indictment says.

In a statement, defense attorneys for the pair say they dispute the charges and look forward to defending themselves in court.

"Tony and Nicky have fully cooperated with the government’s investigation since its outset," says the statement from Ian M. Comisky and Walter Weir Jr.

"The Original Tony Luke’s will continue to serve its faithful clientele and provide gainful employment to its employees and their families."

Payroll

The father and son were also accused of payroll tax fraud. Several employees were given a paycheck that was taxed, but did not represent their full wage. The rest of the wage was paid off the books in cash.

The Lucidonios in the indictment only own the Tony Luke's South Philly location. Anthony Lucidonio Jr. (also known as Tony Luke Jr.) owns the franchise company that has locations at the Philadelphia International Airport, King of Prussia and elsewhere.

“Tony Luke’s is an iconic Philadelphia brand, but that is not what matters in the eyes of the law," U.S. Attorney William McSwain said in a news release. "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,” he added.

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