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Press Release

Portland Area Strip Club Operators Found Guilty of Conspiracy

For Immediate Release
Office of Public Affairs

A federal jury sitting in Portland, Oregon found three family members who ran two strip clubs in the Portland area guilty of conspiracy to defraud the United States and charges relating to the filing of false tax returns after a six day trial, Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division and U.S. Attorney Billy J. Williams of the District of Oregon announced.

David G. Kiraz, his father George D. Kiraz, and David’s brother Daniel Kiraz, ran two Portland-area strip clubs – Cabaret Lounge I at 503 W Burnside Street and Cabaret Lounge II at 17544 SE Stark Street – and engaged in a scheme to defraud the United States by filing false federal income tax returns with the Internal Revenue Service (IRS), according to the evidence presented at trial. In addition to finding the three guilty of conspiracy to defraud the United States, the jury found David Kiraz guilty of three counts of filing false tax returns, George Kiraz guilty of three counts of aiding and assisting in the preparation and filing of false tax returns, and Daniel Kiraz guilty of one count of aiding and assisting in the preparation and filing of false tax returns.

“The Kirazes engaged in a long-running conspiracy to defraud the U.S. Treasury and today, a jury held them accountable for their crimes,” said Acting Assistant Attorney General Ciraolo.  “The department is committed to investigating and prosecuting individuals and entities who violate our nation’s tax laws and will seek incarceration, fines and restitution to send a clear message to other potential offenders.”

The evidence at trial showed that from 2007 through mid-2011, the strip clubs collected cash through both cover charges from customers and stage fees from dancers.  In addition to stage fees, the dancers were routinely required to pay fines for various etiquette infractions. The defendants maintained a set of books at the Cabaret clubs which recorded the sales, lottery and ATM fees but not the stage and door fees. The defendants maintained a second set of books, which tracked all of the cash receipts including the stage and door fees, at the home of David Kiraz. A video played in court showed a 2010 meeting between George Kiraz and an undercover IRS agent posing as a prospective buyer of the strip clubs.  The IRS undercover agent was given a copy of the Kirazes’ second set of books, including the stage and door fees, at that meeting.

Further evidence presented to the jury proved that the business activity of the strip clubs was reported each year on the individual income tax return of David Kiraz.  The defendants gave their tax return preparers the false financial records maintained at the strip clubs, intentionally causing the return preparers to create tax returns for David Kiraz that did not report substantial amounts of cash obtained through cover charges, stage fees and fines.  Their actions resulted in underreporting of taxable income of more than $1.5 million and caused a tax loss of more than $500,000 for tax years 2007 through 2010.

The date for the sentencing hearing before U.S. District Judge Robert E. Jones for the District of Oregon in Portland has not yet been set.  Each defendant faces a statutory maximum sentence of five years in prison on the charge of conspiracy to defraud the United States and three years in prison on the charges of filing false tax returns or aiding and assisting in the preparation and filing of false tax returns.  They also face supervised release and a maximum fine of $250,000 on each count.

This case was investigated by special agents with IRS-Criminal Investigations and prosecuted by Trial Attorney Leslie Goemaat of the Justice Department’s Tax Division and Assistant U.S. Attorneys Seth Uram and Quinn P. Harrington for the District of Oregon.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Updated February 5, 2025

Topics
StopFraud
Tax
Component
Press Release Number: 16-620