Greco: Long story short: Your Senator is a sith, he is going to wipe out the whole Jedi order with the help of an ex-jedi named Darth Vader, and the army of the Republic. Who Darth Vader really is, though, few know, and that group does not include me.
Vader's wife was very pregnant when she died 19 years ago. All of a sudden a 19 year old who is very strong in the force and has a distinct resembalance to him in his younger days rolls in from Vader's home planet with his old Master Obi-Wan (Who was the ONLY other person preset at the time his wife died. And to boot, the kid's last name is Skywalker.
So in answer to your question, he knew Luke was his son because his name is Darth Vader, and not Darth Retard.
-Forum post on why Vader knew Luke was his son.