There’s something about strip clubs that make them go hand-in-hand with tax evasion. Michael Wellek owned three such clubs in the Chicagoland area. Back in 2003, the IRS seized $12 million from a warehouse owned by Mr. Wellek. And that’s where the story stayed, more-or-less, in 2005 when I first reported on it.
Sometimes, though, there’s a reason that the story goes on ice. In this case, Mr. Wellek began cooperating with the IRS. Five years later, it was announced that he would soon plead guilty; one month later, he did.
Last week, Mr. Wellek found out his sentence. He received one year at ClubFed, and must pay $363,000 in restitution above the $5.5 million he’s already paid. If he hadn’t cooperated its almost certain he would have received years at ClubFed rather than a year.
If you become the owner of a business–especially an owner of a strip club–remember that cash income is just as taxable as checks and credit cards. If you decide to stash the cash you’re likely to find yourself stashed at ClubFed.