Tax Update Blog: Permalink

« Previous · Tax Update Blog Home · Next »

Taking it off (the tax return) at Minnesota strip club

September 24, 2008

If you own a strip club, the action on stage probably palls after you've seen the show a few hundred times. Your mind starts to wander. Federal prosecutors say that Lawrence F. Kladek's mind wandered towards tax evasion using the IRS as an ATM, almost literally. From Startribune.com:

Federal officials said Kladek had the ATM put into the King of Diamonds in 1999. But this wasn't just an ordinary ATM.

The way it normally works, when a customer withdraws cash from an ATM, money is transferred from a customer's bank account into an account used to replenish the ATM. In this case, investigators say, every time customers withdrew cash at the club, money was transferred from their bank accounts into a separate account that IRS investigators say Kladek kept secret from his income tax preparers.

Federal officials say Kladek then used the secret account to pay for about $1 million in personal expenses and investments.

The government claims Mr. Kladek refilled the ATMs with money skimmed from his strip club receipts, and that about $2 million of cash income was hidden this way. If the government proves its allegations, Mr. Kladek likely will have to farm out management of his club for awhile.

Link: Indictment.

Tags: tax crime.

      Bookmark: del.icio.us • Digg • reddit