PHILADELPHIA, PA — In a case that has rocked the culinary world of South Philadelphia, the owners of a well-known cheesesteak restaurant, Tony Luke’s, have been sentenced to prison for a decade-long conspiracy to defraud the Internal Revenue Service.
U.S. Attorney Jacqueline C. Romero announced on Thursday that Nicholas Lucidonio, 57, and Anthony Lucidonio Sr., 84, both of New Jersey, were each handed down sentences of 20 months in prison.
Court documents revealed that the Lucidonios, from 2006 to 2016, hid more than $8 million in cash receipts from the IRS. They did this by depositing only a fraction of the cash they received into the restaurant’s business bank accounts and providing their accountant with incomplete information, leading to the filing of false tax returns that significantly underreported their business receipts and income.
Adding to their fraudulent activities, the Lucidonios also paid their employees “off the books” in cash, evading federal income tax, Social Security, and Medicare taxes. They did not report these cash wages to their accountant, resulting in the filing of false quarterly employment tax returns with the IRS.
The tax fraud scheme began to unravel in 2015 when a dispute over Tony Luke’s franchising rights arose between the Lucidonios and another individual. Fearing exposure, the Lucidonios attempted to amend the prior year’s tax returns to increase reported sales, while still concealing their ongoing payroll tax scheme.
Their decade-long deception resulted in a loss of $1,321,042 to the United States.
“For a decade, these successful restaurateurs boldly cooked the books, cheating the government and honest taxpayers alike,” said U.S. Attorney Romero, noting that tax fraud is a crime with significant consequences.
IRS Criminal Investigation Special Agent in Charge Yury Kruty echoed her sentiments, warning that IRS agents work tirelessly to investigate tax and financial crimes.
In addition to their prison terms, U.S. District Judge Gerald A. McHugh ordered both defendants to serve three years of supervised release.
The case was investigated by the IRS Criminal Investigation unit and prosecuted by Acting Section Chief John Kane of the Justice Department’s Tax Division and Criminal Division Chief Richard Barrett of the Eastern District of Pennsylvania.
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