Owners of The Original Tony Luke’s cheesesteak shop plead guilty to tax fraud

Prosecutors say the cheesesteak shop owners bilked the IRS out of between $550,000 and $1.5 million.

The Original Tony Luke's in South Philly.

The Original Tony Luke's in South Philly. (Google Maps)

Owners of the iconic South Philadelphia cheesesteak shop Tony Luke’s pled guilty to tax fraud Monday in federal court. The U.S. Attorney’s office says the father and son team cheated the IRS out of between $500,000 and  $1.5 million in payroll taxes between 2006 and 2016.

Anthony Lucidonio, Sr., 84, and his 56-year-old son Nicholas had an “off-the-books” deal with some of their employees, according to prosecutors. They issued official payroll checks to their workers with deductions, but underpaid some of them. Employees would sign their paychecks over to their managers and in exchange, get an envelope full of the correct amount of cash.

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“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 Jennifer Arbittier Williams in a statement. “Tony Luke’s is an iconic brand in our region, but that is no excuse or explanation for the fraud these defendants perpetrated.”

The charges relate to the cheesesteak shop on Oregon Avenue in South Philadelphia known as The Original Tony Luke’s, not the franchise shops owned by Tony Lucidonio, Jr. The elder son split from his family’s business in 2015 and filed a lawsuit, according to the Inquirer. Fallout from that rupture resulted in Monday’s guilty plea.

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