May 15, 2009
OWNER OF ESCAPE LOUNGE STUDIOS SENTENCED TO PRISON FOR EVADING TAXES ON PROSTITUTION PROCEEDS
(HOUSTON) – The operator of a prostitution business has been sentenced to prison for tax evasion, acting United States Attorney Tim Johnson announced today.
At a hearing today, United States District Court Judge Melinda Harmon sentenced Randall Bradley Jones to 33 months in federal prison without parole to be followed by a three-year-term of supervised release and further ordered him to pay restitution to the IRS in the amount of $15,000. Jones was convicted of the federal offense after pleading guilty earlier this year.
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., which involved prostitutes performing services at each of six studios in the Houston area 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. The money was placed in envelopes which were then left in a safe located on the premises of each Escape Lounge. Amazing Promotions Group Inc. received the cash in the envelopes from each Escape Lounge and created records, including spreadsheets, of the cash income received from each Escape Lounge. The Houston Police Department (HPD) executed search warrants, at which time 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, were seized. HPD eventually turned the seized records over to the IRS.
Jones pleaded guilty to evading taxes on his 2003 individual income tax year on Jan. 30, 2009 admitting he failed to report the distributions he received from Amazing Promotions Group Inc. in 2003 from the cash the corporation received from the Escape Lounges on his 2003 U.S. Individual Income Tax Return. Jones also admitted that while his 2003 income tax return reflected taxable income of only $140,444, 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 court has permitted Jones to remain on bond pending the designation in the near future of a Bureau of Prisons facility and an order of the court for him to surrender to that facility to serve his sentence.
This case was prosecuted by Charles J. Escher of the Houston office and was investigated by the Internal Revenue Service Criminal Investigation Division.
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