Steve Davidovici, a longtime executive on the lucrative Strip nightclub scene, pleaded guilty in federal court Tuesday to filing a false tax return.
Davidovici, 48, acknowledged under-reporting his income on his 2006 tax return and owing the IRS $141,306 while he co-owned the Pure nightclub at Caesars Palace.
Mikel Hasen, 47, the former head doorman at Pure, also pleaded guilty to filing a false 2006 tax return. Hasen acknowledged that he owes the government between $80,000 and $200,000.
The money both defendants hid from the government was from their share of an employee "tip pool," according to the plea agreements.
U.S. District Judge Kent Dawson set June 27 sentencing hearings for the two men, who each could face up to three years in prison. Both men, who are free on their own recognizance, have agreed to pay restitution to the IRS.
Davidovici was a key target in a four-year IRS investigation of the cash-flowing nightclub industry. He is the former managing partner of a company, Pure Management Group, that once ran Pure at Caesars and LAX at the Luxor.
IRS agents executed search warrants in February 2008 in the investigation looking for evidence of a "currency distribution scheme" among nightclub executives and employees that hid income from the government.
Two former VIP hosts at Pure, Ali Olyaie and Richard Chu, pleaded guilty in the case last year to filing false 2006 tax returns. They are waiting to be sentenced.
The IRS investigation, which focused on the tipping and cash handling policies, prompted state gaming regulators to conduct an industrywide review to tighten up the business dealings between casinos and their nightclub partners.
Paul Camacho, special agent in charge of IRS Criminal Investigation, said the latest guilty pleas send a strong message to the community at tax time.
"Don't underestimate our ability to follow the money," Camacho said. "Just because you're dealing in cash, don't think you're invisible to the IRS."
Camacho would not say whether the nightclub investigation is continuing.
Davidovici declined comment, but his lawyer, David Chesnoff, issued a statement explaining Davidovici's remorse.
"Steve Davidovici takes full responsibility for the mistakes he made in completing his tax return more than five years ago," Chesnoff said. "From the beginning, Mr. Davidovici has been willing to repay whatever amount he legitimately owed in back taxes.
"We are pleased to have reached a settlement with the government. Mr. Davidovici wants to repay his tax debt and move forward."
Davidovici now owns the Sugar Factory, which has four candy stores in Las Vegas and a restaurant at Paris Las Vegas.
Trial lawyers with the Justice Department's Tax Division in Washington, D.C., negotiated the plea agreements.
Contact reporter Jeff German at firstname.lastname@example.org or 702-380-8135.