PHILADELPHIA (KYW Newsradio) — The owners of iconic South Philly cheesesteak staple Tony Luke’s pleaded guilty on Monday in District Court to charges including conspiracy and tax evasion relating to a scheme to evade payroll taxes for 10 years, according to a statement from U.S. Attorney Jennifer Arbittier Williams.
Anthony Lucidonio, Sr., 84, of Philadelphia and Nicholas Lucidonio, 56, of New Jersey, who were indicted in July 2020, are accused of hiding more than $8 million in cash receipts and underreporting payroll taxes due between 2006 and 2016, and filing a false tax return in an attempt to cover it up.
The government claims to have lost between $550,000 and $1.5 million as a result of the scheme, according to court documents.
A summary of evidence at Monday’s hearing described an elaborate strategy to avoid withholding employment taxes for the IRS, wherein the defendants paid employees partially in cash under the table and withheld taxes only from a portion of the employees’ hourly wages paid by check.
Related Jawncast: The owners of Tony Luke’s cheesesteaks pleaded guilty to conspiracy and tax evasion.
According to the government, the process — which included requiring employees to endorse and return their paychecks to management in exchange for envelopes of cash — allowed the defendants to underreport the hours each employee worked, in turn duping the cheesesteak's accountant into underreporting employee wages paid and, therefore, the payroll taxes due to the IRS.
“Their actions not only caused a loss to the government, but it also put their employees at risk of losing future Social Security and Medicare benefits,” IRS criminal investigations agent Thomas Fattorusso said at the time of the defendants’ indictments.
Both men will face up to five years in prison when sentenced later this year.
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