PHILADELPHIA, PA — United States Attorney Jennifer Arbittier Williams announced that Anthony Lucidonio, Sr., 84, of Philadelphia, PA, and Nicholas Lucidonio, 56, of New Jersey, pleaded guilty Monday before United States District Court Judge Gerald McHugh to charges related to their conspiracy to defraud the United States for the purpose of impeding, impairing, or obstructing the Internal Revenue Service in the assessment and collection of employment taxes. The defendants, who were indicted in July 2020, are owners of Tony Luke’s, a cheesesteak and sandwich restaurant located in South Philadelphia. In pleading guilty, the defendants admitted to participating in a tax fraud scheme to evade payroll taxes between 2006 and 2016.
According to evidence summarized at this week’s hearing, the defendants paid a significant number of their employees and 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. 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 return of the endorsed payroll checks, defendants 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 substantially understate the wages paid to the employees, and subsequently, the payroll taxes due to the United States.
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 as a result of the defendants’ 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 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.”
“While they successfully misled their accountant, they could not do the same when it came to the IRS,” said IRS Criminal Investigation Special Agent in Charge Yury Kruty. “Cases like this underscore the expertise IRS Special Agents possess and their ability to track down unreported wages paid to employees… Anthony Lucidonio Sr. and Nicholas Lucidonio have taken a step in the right direction by admitting their guilt and accepting responsibility for their actions.”
The case was investigated by the Criminal Investigative Division of the Internal Revenue Service, and is being prosecuted by Trial Attorney John N. Kane of the Tax Division of the Department of Justice, and Assistant United States Attorney Richard P. Barrett.
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