PHILADELPHIA – United States Attorney William M. McSwain announced that two owners of a popular cheesesteak restaurant were charged with conspiracy to defraud the IRS, tax evasion, and aiding and assisting in the filing of false tax returns.
According to the Indictment, Anthony Lucidonio Sr., 82, and his son, Nicholas Lucidonio, 54, both of New Jersey, owned and operated Tony Luke’s, a cheesesteak and sandwich restaurant located in South Philadelphia. The Indictment alleges that from 2006 to 2016, the defendants hid from the IRS more than $8 million in cash receipts by, among other things, depositing only a portion of Tony Luke’s receipts into business bank accounts, providing incomplete information concerning receipts and income to their accountant, and filing fraudulent corporate and individual tax returns that substantially understated business receipts and income. The defendants also willfully evaded substantial individual income taxes that they owed.
The Indictment also alleges that the Lucidonios committed employment tax fraud by paying employees “off the books” in cash. To evade detection, defendants would pay most employees a portion of their wages and salaries “on the books” based on only a portion of the hours they worked. The defendants would then pay substantial additional cash wages for the remaining hours worked without withholding or paying over to the IRS the required employment taxes. They caused their accountant to prepare and file fraudulent quarterly employment tax returns with the IRS that substantially understated wages paid and the taxes that were due.
It is further alleged that when a dispute over franchising rights arose between the two defendants and another individual in 2015, the Lucidonios became concerned that their tax fraud scheme would be revealed, so they directed that the prior year’s tax returns be amended to increase reported sales. But it is alleged that the Lucidonios, in amending their returns, substantially offset the increase in reported sales and the additional taxes that would be due by claiming additional false and fraudulent expenses, thereby continuing their tax fraud scheme.
“Tony Luke’s is an iconic Philadelphia brand, but that is not what matters in the eyes of the law. 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,” said U.S. Attorney McSwain. “And when the defendants thought their scheme might be discovered, they allegedly cooked the books even further to cover their tracks.”
“Collecting and paying over employment tax is an obligation, not a choice,” said IRS Criminal Investigations Special Agent in Charge Thomas Fattorusso. “Anthony Lucidonio and Nicholas Lucidonio willfully chose to ignore this obligation. 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.”
The defendants are charged with conspiring to defraud the United States, 19 counts of aiding and assisting in the filing of false personal and corporate tax returns, and four counts of tax evasion. If convicted, the defendants face a maximum sentence of five years in prison for the conspiracy charge and each count of tax evasion, and three years in prison for each false return charge. Each defendant also faces a maximum period of five years of supervised release, a $6,000,000 fine, and a $2,400 special assessment
An Indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The case was investigated by Special Agents of the IRS Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney Paul L. Gray and Assistant Chief John N. Kane of the Department of Justice Tax Division.