The FBI and Strip Clubs?

Strip clubs and gentlemen clubs are popular entertainment venues. However, because the industry primarily deals in cash, the owners, dancers, and customers frequently come under the scrutiny of law enforcement.

In addition to drugs, violence, and prostitution charges filed by local law enforcement agencies, complex investigations targeting organized crime, public corruption, money laundering, human trafficking, tax fraud, and over-billing schemes have been initiated by the FBI at adult entertainment venues to obtain evidence to support allegations that federal laws are being violated.

Many years ago when I heard that two female FBI agents in the Philadelphia Division were investigating a public corruption case involving strip clubs (see L&I Official case file review below), I spoke to my colleagues about the reactions they received from the strip club owners, dancers, and patrons they interviewed. I also asked the agents about their own thoughts and reactions to the people and situations they encountered during the investigation. Their responses intrigued me.

I had always wanted to write a novel, and I knew I had found a concept I could develop into a story of temptation, corruption, and redemption.

Best-selling author Joseph Wambaugh—known as the father of the police procedural—said, “The best crime novels are not about how cops work on cases, but how cases work on cops.”

In my first crime novel, Pay To Play, flawed female special agent Kari Wheeler’s new case has her gathering the evidence to prove that a corrupt city official is accepting bribes and breaking the same adult entertainment laws he’s supposed to enforce. But when Kari enters the seductive world of high-end clubs and sleazy strip joints, she faces temptations too difficult to resist. You can learn more here.

FBI Strip Club Case File Review – Discovered while conducting research for Pay To Play, the following summaries highlight the sensational and sometimes unpredictable FBI investigations involving strip clubs:

Racketeering and Fraud: L&I official – Philadelphia, PA An official in the Philadelphia’s Department of Licenses & Inspections was sentenced to 63 months in prison, as well as a $10,000 fine, for a 13-year-reign of racketeering, extortion and fraud. He was convicted of racketeering for extorting money from topless bars, a check-cashing agency, a nightclub, houses of prostitution and a private businesswoman between 1983 and 1995. The jury also convicted him of defrauding city residents of his loyal services by setting up his mistress as a private consultant who could get permits and zoning quickly for clients that he sent to her. The mistress made more than $700,000 over 10 years and, in return, the L&I official didn’t have to pay her about $30,000 in child support for their two sons. Four ex-lovers of the L&I official who testified for the prosecution and other witnesses portrayed him as an oversexed, middle-aged, city bureaucrat who haunted topless bars and took anything owners gave him, including free sex, even after he became L&I’s chief inspector in the 1990s. Evidence showed that out on the town, he was treated by club owners to free booze, food, $100 bills, couch dances, a pig roast, a picnic for his pals, strippers for a deputy mayor, limo rides and Phillies tickets. In return, club operators could operate outside the law. * This is the case that inspired my crime novel Pay To Play. (Source – Philadelphia Daily News)

Credit Card Fraud & Racketeering: The Gold – Atlanta, Georgia Mafia associate Steve Kaplan’s enormously successful Atlanta strip club was the largest single money maker for the Gambino Crime Family. A small team of FBI and IRS investigators followed a money trail that implicated a Michael “Mickey Scars” DiLeonardo, a Gambino Captain, police officers, strippers, and many of the most recognized professional athletes and celebrities in America. In 2001, the news media covered the four-month-long trial daily. (Source – 322: Mark Sewell – Gold Club, Investigating America’s Most Notorious Strip Club)

Mail Fraud & Prostitution: Colacurcio Strip Clubs  – Seattle, WA In their plea agreements, the defendants admitted they were all part of a scheme to promote prostitution at the four strip clubs they operated in the greater Seattle area. The presiding federal judge noted that the way they ran the clubs meant women who were trying to earn legitimate income as dancers were pressured into prostitution by the club’s financial demands and by the rampant prostitution around them. The indictment further detailed how credit card machines and ATMs were used to facilitate the prostitution and how the proceeds of prostitution were laundered through various bank accounts. The co-owners and associates were indicted for Conspiracy to Commit RICO, Conspiracy to Use Interstate Facilities in Aid of Racketeering–Prostitution, Conspiracy to Engage in Money Laundering, and twelve counts of Mail Fraud. The mail fraud charges stem from the business mailing false reports to the City of Seattle regarding the number of people who entered the clubs and paid a cover charge. Those numbers were purposefully under-reported to evade the admissions tax and to enable the defendants to retain for themselves hundreds of thousands of dollars of unreported income per year. The alleged ringleader died before the case was adjudicated (agents hate it when that happens). His son, who had also been indicted, agreed to forfeit $1.3 million in cash, all interest in the strip clubs and related property worth more than $6 million, and a $1.7 million property from which the corporate offices had been located. Under a plea agreement, he was sentenced to one year and a day in prison. Co-conspirators also entered guilty pleas and were barred from operating any adult entertainment business in Washington State for five years. (Source – Press release USAO-WDWA)

Public Corruption: Operation G-Sting – San Diego, CA & Clark County, NV Operation G-Sting was an FBI probe into bribes and unreported campaign contributions taken by Clark County Commissioners in Clark County, Nevada and city council members in San Diego, California. The scandal was also known as Strippergate, especially in San Diego. These bribes were from lobbyist, representing strip clubs. Two Clark County Commissioners were convicted on public corruption charges and sentenced to prison terms. One received 50 months in prison, a $15,000 fine, and forfeit $60,000 in assets, and the second was ordered to serve 30 months in prison, pay a $7,500 fine, and forfeit $19,000 in assets. They were found guilty of conspiracy and multiple counts of wire fraud and extortion under color of official right for depriving the County and the citizens of their right to the honest services of public officials. The evidence introduced at trial demonstrated that the defendants used their public offices to further the interests of a strip club owner in Las Vegas. They solicited and accepted money, property, and services directly from him and through a co-defendant, another former county commissioner. The evidence showed that members of the conspiracy concealed the payments they received from the club owner and failed to disclose the payments as required by law and their fiduciary duties as county commissioners. Some of the matters which the defendants corruptly influenced include the passage of a Clark County Ordinance that increased the separation between strip clubs from 500 to 1000 feet; the issuance of zoning use permits and liquor license for Jaguars; the controlling and harassing of club owner’s business competitors; and the defeat of a proposed ordinance that would have prohibited all touching between dancers and patrons except hand-to-hand tipping. The club owner pleaded guilty to violating the RICO Act and testified at trial that he devised a scheme to increase the profitability and competitive advantage of his strip clubs in Las Vegas by paying certain local public officials a total of $400,000 or providing them property and services in exchange for their influence over matters that came before them. (Source – Press release USAO-DN)

Racketeering and Extortion: Crazy Horse Too – Las Vegas, NV A former Las Vegas strip club manager was sentenced to 41 months in prison, three years of supervised release, and a $5,000 fine, for extorting monies from patrons at the Crazy Horse Too strip club in Las Vegas through force and violence. He pleaded guilty to Conspiracy to Participate in an Enterprise Engaged in Racketeering Activity. From 1998 to 2006, he was a shift manager at The Crazy Horse Too, a strip club in Las Vegas. Dancers usually collected payments from patrons of the club for dances or other services the dancers provided. If a patron refused to pay a dancer, or if a patron disputed the charges claimed by a dancer, the dancer typically followed the procedure of initially contacting the shift manager or other male employees at the club. On at least two occasions, the defendant sought to extort payment from patrons through explicit or implicit threats of violence, and through actual use of force and physical violence against patrons in which various degrees of bodily injury were caused. He was charged with participating in an enterprise through a pattern of racketeering made up of multiple violent acts of extortion, including his physical attack upon a patron of the club. This attack left the patron a permanent quadriplegic. As part of his plea agreement, the shift manager did not specifically admit to the beating, he conceded that, for purposes of sentencing, the Government could prove that one of his extortions caused permanent and life-threatening injury on a patron and another extortion resulted in serious bodily harm. The parent owner of the club, The Power Company, Inc., pleaded guilty to Conspiracy to Participate in an Enterprise Engaged in Racketeering Activity, and was sentenced in January to five years probation and a $500,000 fine. The Power Company, Inc. was also ordered to pay $10 million in restitution to the injured patron for injuries and damages caused at the Crazy Horse Too, and to forfeit $4.25 million, acquired unlawfully from racketeering activity or unlawful debt collection. The patron was left a quadriplegic as a result of his injuries. (Source – Press Release USAO-DN)

Arson:  Club Onyx – Atlanta, Georgia Three men were convicted of conspiring to commit an arson at Club Onyx, an adult entertainment establishment in Atlanta. According to the evidence presented in court, the men conspired to burn down Club Onyx, an adult entertainment club that was a direct rival of Platinum 21. Platinum 21 was operated by a two of the defendants and the third person worked security. Crucial evidence included an internal surveillance system that was not destroyed by the blaze showed a male figure moving about the club after it had been locked and alarmed by management. The jury saw video evidence of the individual starting the fire and then hurrying beyond the range of the cameras and out of the building. The men had devised a plan to burn Club Onyx, which had been causing a severe impact on Platinum 21’s business after they determined that action was necessary to shut Onyx down so that Platinum 21 would continue to keep its profit levels. The security person was paid $5,000 to do the burn, which he executed just after the last employees had left the building. The owners of Club Onyx spent nearly $1 million to rebuild and had to keep the club shuttered for over six months. All three defendants faced a minimum mandatory term of five years in custody and a maximum term of 20 years in custody. (Source – Press release USAO-NDG)

Recent Cases:

Man Convicted of Obtaining Money by Threat From Strip Club in Chicago Suburb

Dodge County Strip Club Owner & Former Manager Charged with Federal Offenses

South Carolina Club Owners Sentenced To More Than Three Years In Prison For Money Laundering And Drug Conspiracy