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Las Vegas escort service boss pleads guilty to tax evasion

The operator of a large Las Vegas escort service pleaded guilty in federal court Wednesday to a felony charge of evading $230,651 in taxes.

Emmanouil “Manny” Varagiannis, who also once served as a general manager of the Olympic Garden strip club, was originally indicted in November 2012 in a scheme to unlawfully structure roughly $2.4 million in transactions to evade financial reporting requirements.

The new charge is the result of a plea agreement worked out between his lawyer Richard Wright and Assistant U.S. Attorney Cristina Silva.

Varagiannis, who ran Midnight Entertainers, admitted in the agreement that he failed to declare the $230,651 in taxes between 2009 and 2011.

He has agreed to pay the money as restitution to the Internal Revenue Service and forfeit two homes he bought during the structuring scheme.

Senior U.S. District Judge Philip Pro set a July 21 sentencing date for Varagiannis, who is free on his own recognizance. Varagiannis is a citizen of Greece and faces possible deportation after he serves his sentence.

The criminal case, brought by a financial crimes task force run by the IRS, is thought to be the first in a crackdown on the lucrative escort service business, long regarded as a haven for prostitution on the Strip.

Between January 2009 and August 2012, the original indictment alleged, Varagiannis made dozens of cash deposits of less than $10,000 to bank and credit union accounts under his control. Federal laws designed to prevent money laundering require the reporting of all cash transactions exceeding $10,000.

Federal authorities have said Varagiannis was not listed as an officer of Midnight Entertainers, but he and his wife, Amy, were the signers on all of the company’s business accounts. His wife has not been charged in the case.

The company provided female outcall “entertainers” directly to the hotel rooms of tourists on the Strip.

According to a criminal complaint in the case, Dolores Eliades, the daughter of longtime Olympic Garden operator Pete Eliades, cooperated with IRS agents in the investigation.

“Dolores has had conversations with Manny where he stated that he gets 60 percent of the earnings from the girls who work for his escort business,” the complaint said. “Manny told Dolores he was aware of the fact that the girls were having sex with customers for money.”

The complaint, written by Las Vegas police Detective Robert Whiteley, who is assigned to the financial crimes task force, said escort services “depend on prostitution as their main source of income.”

IRS agents learned that Midnight Inc. put out a flier promising kickbacks to cabdrivers who referred customers to the escort service, according to the complaint.

Police conducted an undercover sting during the financial investigation uncovering direct evidence that female entertainers working for Midnight Inc. were involved in prostitution, the complaint alleged.

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