Ex-Pure nightclub co-owner sentenced to probation in tip scheme

A serious eye condition kept Steve Davidovici, the longtime nightclub operator at the center of a $7 million tip-concealing scheme on the Strip, from being sent to prison on Wednesday.

U.S. District Judge Kent Dawson sentenced Davidovici, 48, to three years of probation and eight months of electronically monitored home confinement.

Dawson also ordered Davidovici, a former co-owner of Pure nightclub at Caesars Palace, to pay the Internal Revenue Service $141,306 in restitution.

Federal prosecutors, who had sought an 18-month prison term for Davidovici, formally objected to the sentence after Dawson handed it down in a packed courtroom. Some four-dozen Davidovici family members and friends were on hand to support the convicted nightclub icon.

Earlier, Dawson told Justice Department attorneys Christopher Maietta and Joseph Rillotta and defense lawyer David Chesnoff that he was concerned Davidovici would not get the care he needs in prison for his eye condition, acute optic neuropathy, which threatens to leave him legally blind.

"I don't want to be the person who decides whether he has his sight or not," Dawson said.

Prosecutors argued that Davidovici deserved to go to prison because he controlled the tip scheme, which they say involved $7 million over a 30-month period between 2005 and 2007.

But Chesnoff urged Dawson to give Davidovici probation and home confinement, arguing it was appropriate given his client's repentance and health concerns.

"No one with a heart and blood running through their veins will be critical of you," Chesnoff told Dawson.

Davidovici read a statement to Dawson, apologizing for his actions and telling the judge he is "embarrassed" that he let down his family.

"Your honor, believe me. I know I have learned my lesson," Davidovici said.

Afterward, Chesnoff said, "Judge Dawson showed the kind of reasonableness and independence that is the hallmark of our justice system."

Maietta and Rillotta declined comment.

But Paul Camacho, special agent in charge of IRS-Criminal Investigation in Las Vegas, which led the long-running tip probe, said in a statement that Davidovici is now a felon who let "greed consume" him.

"The vast majority of taxpayers do not need a criminal conviction to convince them that as Americans paying your fair share of taxes is what good citizens do," Camacho said. "It's important for honest taxpayers to know the IRS will aggressively pursue tax cheats in any industry, especially those who believe they can go undetected."

Davidovici pleaded guilty in March to filing a false 2006 tax return. He acknowledged that he failed to report $403,732 in tip income in 2005 and 2006 and owed the IRS $141,306 in taxes.

His plea came more than four years after IRS agents began investigating allegations Pure executives, VIP hosts and doormen evaded hundreds of thousands of dollars in taxes. The investigation led to tougher regulatory control over the way the cash-rich nightclubs do business within the casino industry.

Three former Pure hosts and the ex-head doorman also have pleaded guilty to filing false 2006 tax returns in the sweeping scheme.

Dawson on Wednesday sentenced the doorman, Mikel Hasen, 47, to one year and a day behind bars and ordered him to pay $99,566 in restitution. He is to surrender to federal authorities on Sept. 28.

Prosecutors, who had sought 18 months in prison for Hasen, told Dawson that Hasen hid $471,120 in tip income from the IRS, the most of anyone in the scheme.

Former VIP host Kelly Doll, 31, pleaded guilty last week, acknowledging that he concealed $220,000 from the IRS in 2005 and 2006. He is to be sentenced on Sept. 24.

Two other former hosts, Richard Chu and Ali Olyaie, pleaded guilty last year. Chu was placed on three years of probation last month, and Olyaie is waiting to be sentenced.

On Wednesday, Dawson appeared to struggle with Davidovici's sentence, telling the courtroom he had a difficult decision to make.

He said Chesnoff and the prosecutors had presented a "mixed picture of the defendant's character" in their presentencing papers.

Chesnoff described Davidovici as a charitable, hardworking nightclub visionary with impeccable integrity and community-minded spirit. He presented letters of support from more than 50 friends, family members and business associates, including prominent casino executives and attorneys.

Maietta and Rillotta portrayed Davidovici as a selfish, vindictive schemer who had tried to intimidate witnesses in the case. They said he wasn't totally reformed and was trying to get special treatment with the help of his friends in high places.

Dawson said he was impressed with the letters he received, but Davidovici's standing in the community didn't figure into his consideration to keep the nightclub operator out of prison.

Davidovici's health was the biggest factor, the judge said.

After it became clear in court that Dawson was leaning toward probation, prosecutors asked him to hold off sentencing Davidovici for at least six months until his eye condition was properly assessed.

But Dawson denied the request, saying it appeared to him that Davidovici's eye problems were the result of stress brought on by his criminal case.

The judge, who said he had spoken to the ophthalmologist overseeing Davidovici's treatment at UCLA Medical Center, expressed concern that Davidovici was "destroying himself physically because of these proceedings."

Davidovici has informed Dawson that he is getting out of the nightclub business and now runs the Sugar Factory, an upscale confectionery that employs about 1,000 people at four Strip casinos.

Contact reporter Jeff German at jgerman@reviewjournal.com or 702-380-8135.