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Strip Club Owners Sentenced to Prison for Evading $650,000 in taxes

A father and two sons who operated a strip club were sentenced to prison Tuesday for evading $650,000 in taxes.

David Kiraz, his father George D. Kiraz and David’s brother Daniel Kiraz operated two strip clubs in the Portland, Oregon area, named Cabaret Lounge I and Cabaret Lounge II. From 2007 to 2010, the Kirazes’ strip clubs earned more than $1.5 million in cash door charges and dancer stage fees, according to a press release from the Department of Justice.

The Kirazes maintained two sets of books, tracking these charges and fees in one set of books that was stored at David Kiraz’s residence, and omitting the receipts in a second set of books that the Kirazes provided to their return preparers, intentionally causing them to prepare and file false income tax returns for David Kiraz that failed to report between $330,000 and $460,000 in door and stage fees each year. 

The IRS discovered the scheme when an undercover IRS agent posed as a buyer for the clubs and the owners revealed the second set of books, explaining how their scam worked. The jury found the three men guilty of conspiracy to defraud the United States, and guilty of filing false tax returns.

“These sentences are significant sanctions for serious crimes,” said U.S. Attorney Billy J. Williams for the District of Oregon. “Business owners who deal extensively in cash have the same legal obligation to pay their fair share of taxes as does everyone else.  The U.S. Attorney’s Office and IRS will continue to work together to identify and prosecute those who cheat the tax system.”

David Kiraz, 34, of Happy Valley, Oregon, was sentenced to 36 months in prison, George Kiraz, 56, of Portland, was sentenced to 36 months in prison, and Daniel Kiraz, 32, of Portland, was sentenced to serve 12 months and one day in prison for hiding $1.5 million in income from the IRS and evading more than $650,000 in income taxes. 

George and David Kiraz were also ordered to serve three years of supervised release and pay more than $650,000 in restitution to the IRS and the Oregon Department of Revenue. Daniel Kiraz was ordered to pay more than $125,000 in restitution.

Posted in The Takedown

Tags: IRS, tax criminals, tax, strip clubs

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