Judge Excuses Strip Club’s Owed Taxes, Citing Mob Control
January 27, 2010
From the New York Law Journal:
The estate of a businessman held to be responsible for taxes on a once-prosperous Manhattan strip club does not have to pay more than $4 million in back taxes because the club became so thoroughly infested by organized crime that it was unmanageable, a state administrative law judge has determined.
While the late Frank A. Marchello was properly held by the New York State Department of Taxation and Finance as being a responsible officer for the V.I.P. Club, Administrative Law Judge Winifred M. Maloney concluded that Marchello was thwarted, through no fault of his own, in carrying out his corporate duties by mob influence that one federal prosecutor said had “bled the club dry” financially.[…]
Gambino crime family figures Salvatore “Fat Sal” Scala and Thomas “Monk” Sassano muscled their way into club operations and began collecting “protection payments” ranging from $2,500 to $15,000 every two weeks from Aslan and co-manager Jon Vargo, the decision said.
In addition, between five and seven associates of Scala and Sassano were on the club’s payroll at any one time. The associates did nothing but hang around and run up food and drink tabs that they did not repay.[…]
In all, Judge Maloney calculated that at least $4 million was siphoned from the club through extortion and other payments related to organized crime between the club’s opening in 1996 and 2002, when it collapsed financially.
Probably not a tax avoidance scheme others should attempt. The full interesting article here.