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Jan. 30, 2009

MAN WHO RAN PROSTITUTION BUSINESS PLEADS GUILTY TO TAX EVASION

(Houston) - Randall Bradley Jones has pleaded guilty before U.S. District Judge Melinda Harmon to one count of tax evasion, acting United States Attorney Tim Johnson announced today.

According to the plea agreement filed in the record of the case, Jones operated a prostitution business in Houston through his solely-held corporation named Amazing Promotions Group Inc. The plea agreement states that part of the prostitution operation involved prostitutes performing services at six studios in the Houston area, each of which was named Escape Lounge. The prostitutes at the Escape Lounge studios received cash from their customers and gave a portion of the cash to the house by putting the cash in envelopes and placing the envelopes in a safe located on the premises of each Escape Lounge. Amazing Promotions Group Inc. received the envelopes with the cash from each Escape Lounge and created records of the cash income received. Houston Police Department (HPD) officers executed search warrants and seized the corporate records of Amazing Promotions Group Inc., including the spreadsheets setting forth the amount of cash given to the house by the prostitutes in the envelopes. HPD eventually turned the seized records over to the Internal Revenue Service.   

In his plea agreement with the United States, Jones pleaded guilty to tax evasion admitting he failed to report on his 2003 U.S. Individual Income Tax Return the distributions he received from Amazing Promotions Group Inc. in 2003 from the cash received from the Escape Lounges. Jones admitted that while his 2003 income tax return reflected taxable income of only $140,444, he knew his true taxable income for 2003 was approximately $667,000. Jones further admitted in the plea agreement that for purposes of determining relevant conduct in this criminal case, the total individual and corporate income tax loss to the IRS is $665,962. 

The crime of tax evasion under Title 26, United States Code, Section 7201, carries a maximum penalty of five years of imprisonment, a fine of $250,000 or both, costs of prosecution and three years of supervised release. 

Judge Harmon set sentencing for May 1, 2009.

This case was prosecuted by Charles J. Escher of the Houston office and was investigated by the IRS – Criminal Investigations.

 

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