UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
UNITED STATES OF
AMBRICA
Y.
Case
No. 3:15-CR-00073-KI
SUPERSEDING INDICTMENT
LAWRENCE G. OWEN,
GARY BRYAI\T,
18 U.S.C. S 371 - Conspiracy to Use an
Interstate Facility to Promote or Facilitate
Prostitution Offenses ;
Defendants.
18 U.S.C. S 371
United States
- Conspiracy to Defraud the
THE GRAND JURY CHARGES:
GENERAL ALLEGATIONS
At all times relevant to this Indictment:
1.
The defendants and their coconspirators owned, controlled, and/or managed the
following adult entertainment businesses (collectively called "the business.r"), either
strip clubs or adult video/sex toy stores, all of which were located in the metropolitan
area
of Portland, Oregon:
o
The Landing Strip (formerly known as Pop-A-Top), a strip club
o
The Oh! Zone, a strip club
o
Sugar Shack, a strip club
.
Peek-A-Boos (formerly Chantilly Lace), a strip club
2.
o
Video Visions, an adult video/sex toy store
o
Dillingers Pub, a strip club
.
Sugar Shack Too, a strip club
.
Video Visions Plus (alklaVideo Superstore), an adult video, sex toy store
.
Tommy's, a strip club
.
Tommy's Too, a strip club
The defendants and their coconspirators also orvned, controlled, andlor managed a
restaurant called Pelican Buy, located in the same cluster of businesses as Sugar
Shack, Peek-A-Boos, and Video Visions.
3. The defendants and their coconspirators owned and operated the businesses
through a
group of corporations they owned andlor controlled. The following corporations
purportedly owned and operated the following businesses:
Corporation
Pop-A-Top Pub,
Dillingers Pub,
Far Flung,
lnc.
Inc.
Ltd.
Video Super Store,
Gumption,
Utilize,
The Landing Strip
Dillingers Pub
The Oh! Zone
Sugar Shack
Sugar Shack Too
Peek-A-Boos
Ltd.
Inc.
Inc.
Briney Deep,
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Business(es) Owned and Operated
Video Visions
Video Visions Plus
Tommy's
Tommy's Too
Ltd.
Pelican Bay Restaurant
Page 2
4.
The defendants and their coconspirators attracted customers to the strip clubs by
featuring fully nude female dancers.
5.
Many of the businesses had small rooms on their premises. These rooms, called
private show rooms (or just show rooms) were typically furnished with a small couch,
a chair, a table, and a device
for playing music. Collectively, the businesses had 19
private show rooms on their premises.
6.
The defendants placed and operated automated teller machines ("ATMs") in many
of
the businesses. The ATMs were facilities operating in interstate commerce.
7. The IRS is an agency of the United States Department of Treasuryresponsible
for
administering and enforcing the tax laws of the United States and collecting taxes
owed to the United States Treasury.
COT]NT ONE
- Conspiracy to Use an Interstate Facility to Promote or
Facilitate Prostitution Offenses: Lawrence G. Owenl
[18 U.S.C. S 371
1. Beginning
before January 2006 and ending in approximately June 2070, in the
District of Oregon and elsewhere, defendant LAWRENCE G. OWEN did knowingly
and
willfully combine conspire, confederate,
and agree with other persons, both
known and unknown to the Grand Jury, to carry out the following object in
furtherance of the conspiracy:
OBJECT OF THE CONSPIRACY
2.
The defendant and his coconspirators agreed to use facilities in interstate commerce,
to wit automatic teller machines ("ATMs") operating in interstate commerce, with the
intent to promote, to manage, to establish, to carry on, and to facilitate the promotion,
management, establishment, and carrying on of unlawful activity, namely,
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Indictment
Page 3
prostitution oflenses in violation of the laws of Oregon (specifically Or. Rev. Stat.
section 167.0I2), in violation of Title 18, United States Code, Section 1952(a)(3).
MANNER AND MEANS OF THE CONSPIRACY
3.
Defendant LAWRENCE G. OWEN and his coconspirators caruied out their
conspiracy using the following manner and means, among others:
a.
The defendant and his coconspirators allowed nude dancers, commonly
referred to as strippers, to perform at the businesses. The defendant and his
coconspirators typically, but not always, required each dancer to pay
approximately $15 per shift in order to perform. This payment was called a
"stage fee" or "dancer fee" and was always paid in cash.
b.
The strippers would perform 3O-minute "private shows" for customers in the
private show rooms, which the defendants and their coconspirator maintained
for this purpose. To obtain a "private show" a customer had to pay at least
$160.
c.
All
customers paid for private shows in cash. Many customers obtained some
or all of that cash from ATM machines on the premises. The defendant and
his coconspirators knew and intended customers would regularly use cash
from the ATM machines to pay for acts of prostitution.
d.
Of the minimum $160 customers paid for "private shows," $60 went to "the
house," meaning these funds went to the defendant and his coconspirators.
The strippers retained the remainder of the fees paid for the "private shows."
e.
The private shows purportedly involved a stripper performing nude dancing
for the customer and, at most, the stripper and the customer masturbating
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themselves. In reality, the defendant, his coconspirators, many customers, and
many strippers understood and intended that a "private show" would involve a
stripper engaging in one or more acts of prostitution with the customers and,
in fact, the strippers routinely performed acts of prostitution with their
customers during "private shows." In other words, strippers performed sexual
acts on their customers in refurn for the customers having paid the dancers at
least $100 and "the house" $60, often with cash from the
ATMs.
Sometimes,
the strippers negotiated a higher fee for the acts of prostitution than the
minimum $100.
Some of the strip clubs did not have private show rooms on their premises.
Strippers who were working at these strip clubs would walk with their
customers to one of the nearby businesses with private show rooms. For
instance, the Landing Strip did not have private show rooms, so strippers
working there would walk their customers across a parking lot to The OH!
Zone, which had on its premises four private show rooms and a small entry
afea.
o
b'
To conceal the conspiracy and to conceal their knowing facilitation,
promotion, and management of the acts of prostifution at the businesses, the
defendant and his coconspirators required the strippers to sign a typewritten
,
statement, commonly called a dancer slip, each time the stripper performed a
private show. The dancer slip stated the stripper was "leasing this room for
the purpose of performing one-on-one modeling shows" and that her "actions
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will comply with all Oregon State laws"
and
"NO SEX OF ANY KIND, NO
TOUCHING OF ANY KIND!"
OVERT ACTS IN FURTHERANCE OF THB CONSPIRACY
4.
Defendant LAWRENCE G. OWEN and his coconspirators committed the following
overt acts, among others, in the District of Oregon and elsewhere, in furtherance of
the conspiracy and to effect the object of the conspiracy:
a) A coconspirator regularly
refilled the ATMs with proceeds from the operation
of the businesses, each such refilling being a separate overt act.
b) A coconspirator regularly accepted reimbursement for the cash dispensed by
the ATMs by means of electronic fund transfers to their bank account in
Oregon from payment-processing services located outside the State
of
Oregon, each such transfer being a separate overt act.
c) The defendant
and his coconspirators allowed strippers to use the businesses'
private show rooms to perform acts of prostitution on customers, each
allowance of such use being a separate overt act.
d)
The defendant and his coconspirators required each customer involved in a
private show during which a stripper would perform one or more acts of
prostifution onthe customerto pay $60 to "the house" as a fee foruse of the
private show room, the collection of each such $60 payment being a separate
overt act.
e)
The defendant and his coconspirators required the strippers to sign a dancer
slip each time the stripper performed a private show, each such signing being
a separate overt act.
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All in violation of Title 18 U.S.C.
S 371.
COUNT TWO
[18 U.S.C. S 371 - Conspiracy to Defraud the United States]
Paragraphs 1 through 7 of the General Allegations, and paragraphs 3 through 4
of
Count 1 are incorporated herein.
OBJECT OF THE CONSPIRACY
1.
Beginning before January 7,2006 and continuing up to and including June 10,2010,
within the District of Oregon, and elsewhere, defendants LAWRENCE G. OWEN,
GARY BRYANT, and others known and unknown to the grand jury, unlawfully and
knowingly combined, conspired, confederated, and agreed together to defraud the
United States by deceitful and dishonest means by impeding, impairing, obstructing,
and defeating the lawful government functions of the
RS, an agency of the United
States, in the ascertainment, computation, assessment, and collection of revenue, that
is, federal individual income taxes, corporate taxes, and payroll taxes.
MANNER AND MEANS OF THE CONSPIRACY
2.
Defendants LAWRENCE G. OWEN, GARY BRYANT, and others, known and
unknown to the grand jury, carried out their conspiracy using the following manner
and means, among others:
a.
The defendants and their coconspirators established a "cash only" policy at the
businesses, in part to prevent the IRS from calculating the correct amount of gross
receipts for each business and to facilitate the "skimming" of large amounts
of
cash.
b.
The defendants and their coconspirators destroyed or caused to be destroyed daily
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records of cash receipts, including records showing private show receipts and
dancer stage fees.
c. The defendants and their coconspirators each week reconciled or caused to be
reconciled the total cash receipts and cash expenditures for the businesses,
including the total amount of cash derived from private shows and dancer stage
fees.
d.
The defendants and their coconspirators each week delivered or caused delivery
of the accumulated cash receipts of the businesses to the home of one of the
coconspirators.
e.
The defendants and their coconspirators used or caused the use of the cash
receipts of the businesses to make cash payments for most expenses associated
with the daily operation of the businesses, including payroll, in part to prevent the
IRS from calculating the correct amount of gross receipts for each business and
the payroll taxes owed by the businesses.
f.
The defendants and their coconspirators each year gave atax refurn preparer false
information about receipts and payroll expenses of the businesses, concealed from
the tax return preparer all information about the cash receipts from private shows
and dancer stage fees, and provided false information about the number and
identities of the employees of the businesses, intending the tax refurn preparer
would use this false information to prepare corporate, payroll, and individualtax
refurns that would underreport the amount of gross and taxable income of, and tax
due from, the businesses and the coconspirators.
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g.
The defendants and their coconspirators regularly used unreported cash receipts
from the businesses to pay personal expenses;.
h. The defendants and their coconspirators
regularly transported or transmitted, or
caused to be transported and transmitted large amounts of unreported cash
receipts to defendant LAWRENCE G. OWEN at his residence in Mexico.
i.
Coconspirators used receipts from the businesses to make monthly payments on
an approximately $700,000 loan defendant
LAWRENCE G. OWEN used to
invest in the stock market.
j.
Defendant LAWRENCE G. OWEN did not file individual income tax retums in
order to conceal from the IRS his receipt of income from the businesses.
k.
The defendants and their coconspirators created and used a group of corporations
to own and operate the businesses but in reality to conceal from the IRS the true
ownership and control of the businesses and to assist in the concealment and
fraudulent understatement of business receipts, payroll taxes, taxable income, and
tax due.
1.
The defendants and their coconspirators caused approximately $5,068,000 in
taxable business receipts not to be reported to the IRS, causing a total income tax
underpayment of approximately
$ 1,5
09,000.
OVERT ACTS IN FURTHERANCE OF THE CONSPIRACY
3.
In furtherance of said conspiracy and to effect the objects thereof between January 1,
2006, and continuing up to and including June t0,20I0, defendants LAWRENCE G.
OWEN, GARY BRYANT, and others known and unknown to the grand jury,
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committed the following overt acts, among others, in the District of Oregon and
elsewhere:
a.
The defendants and their coconspirators destroyed daily records of the receipts
of
the businesses and directed and/or caused others to destroy daily records of the
receipts of the business, each such destruction of records being a separate overt
act.
b.
Each tax year, the defendants and their coconspirators gave a paid tax return
preparer false information about the receipts of the businesses, each such
occurrence being a separate overt act.
c. For tax years 2006,2007, and 2008, the defendants and their coconspirators filed
federal corporation tax refums, federal individual income tax refurns (except
defendant LAWRENCE G. OWEN),
ffid federal payroll tax returns that, with
respect to the corporation tax returns, substantially underreported the receipts
businesses the corporations purportedly owned and operated,
of
with respect to the
individual income tax returns, substantially underreported income derived from
the businesses, and with respect to the payroll tax returns substantially understated
the payroll taxes due, the
filing of each such false tax return being
a separate overt
act.
A11
in violation of Title 18 U.S.C. S 371.
Dated this
_
of May 2015.
A TRUE BILL.
OFFICIATING FOREPERSON
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Presented by:
BILLY
J.
WILLIAMS
Acting United States Attorney
D
SETH D. URAM, DC # 37 6214
Assistant United
. #00012
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