Secrecy shrouds new developments in Pure tax case

In court papers, Ali Olyaie's lawyer describes the former Pure Nightclub host as a hard-working family man who made a big mistake participating in a massive tip-concealing scheme.

Olyaie, 32, is one of five defendants, including former Pure co-owner Steve Davidovici, who pleaded guilty to filing false 2006 tax returns in the $7 million scheme. He owes the Internal Revenue Service about $29,000 for that tax year.

Senior U.S. District Judge Kent Dawson was prepared to sentence Olyaie last week in what was considered a routine case. But the sentencing didn't take place.

The case, it turns out, has become anything but routine.

It is part of a much larger story playing out in federal court - and behind closed doors - involving the government's concerns about ties between Davidovici, the longtime nightclub operator, and Dawson's 38-year-old son, Brian.

The judge placed Davidovici on probation June 27 despite a strong push from prosecutors to send him to prison, but later was forced to temporarily hold up the sentence after word surfaced that his son worked for another nightclub once associated with Davidovici.

At a July 9 hearing, Dawson concluded that he had no conflict of interest, and he ordered Davidovici to start serving three years of probation, including eight months of home confinement.

The next day, attorneys with the Justice Department's Tax Division in Washington, D.C., filed notice that they were appealing the sentence.

In the meantime, the FBI in Las Vegas, with the support of the Justice Department's Public Integrity Section in Washington, launched a separate criminal investigation into the younger Dawson's relationship with Davidovici and another well-known Las Vegan, former construction company boss Leon Benzer, the central figure in an FBI probe into the unlawful takeover of valley homeowners associations.

Since the Las Vegas Review-Journal first reported the Dawson investigation on July 8, the FBI and the Justice Department have kept a tight lid of secrecy around the case. Officials are not talking.

At the same time, strange things, some concealed from the public, began to occur in Olyaie's case.

Secrecy has been part of the case in the past. When Olyaie pleaded guilty in March 2011, his agreement with the Justice Department was ordered sealed, suggesting it contained information gleaned from Olyaie that prosecutors did not want disclosed in the investigation of the Pure tip scheme at Caesars Palace.

But the level of secrecy rose again in the aftermath of the disclosure of the FBI corruption investigation involving the judge's son.

Olyaie's scheduled sentencing July 11 did not appear on the daily electronic court calendar. When it came time for it to take place, only the judge and the federal probation officer assigned to the case showed up in court, according to the minutes.

Justice Department attorneys Christopher Maietta and Joseph Rillotta later informed Dawson that they thought the sentencing was set for July 13, the court minutes show.

Olyaie's lawyer, Chris Oram, indicated he thought the prosecutors had obtained a continuance.

The prosecutors ended up filing for a continuance, but not until after the hearing on July 11. In their motion, they said they needed more time to investigate the same potential conflict of interest issues on Dawson's part that were present in the Davidovici case.

The next day, Dawson issued a minute order continuing Olyaie's sentencing to July 31.

But on Monday, the judge held a secret hearing in the case, according to the electronic court docket.

Then, he issued an order on Tuesday instructing the court reporter to give Davidovici's lawyer, David Chesnoff, a transcript of the hearing. Chesnoff had requested the transcript, the judge wrote.

The court reporter was ordered not to disclose the contents of the transcript to anyone other than the parties directly associated with the case.

Later on Tuesday, Dawson issued an order without explanation putting off Olyaie's sentencing again, this time until Aug. 29.

What transpired at the hearing to cause another delay remains a mystery.

Neither Chesnoff nor Oram would comment.

Last month, prosecutors wanted Dawson to sentence Davidovici to 18 months in prison for his leadership role in the tip scheme.

But Dawson said he was ordering probation because he was concerned that Davidovici would not get the care he needed in prison for a serious eye condition, acute optic neuropathy, which threatens to leave him legally blind.

In giving notice they were appealing the sentence, prosecutors told Dawson that they believed there were "procedural irregularities" on his part.

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