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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Pennsylvania

FOR IMMEDIATE RELEASE
Wednesday, April 1, 2015

Delaware County Nightclub Owners Plead Guilty To Tax And Fraud Charges

PHILADELPHIA – Romeo Callueng, 45, and Susan Callueng, 43, of Woodlyn, PA, pleaded guilty on March 26, 2015 to tax evasion and fraud in connection to a health care benefit program.  The Calluengs, who owned the “Club 27” nightclub at 27 Bank Street in Philadelphia, were receiving assistance from Medicaid and LIHEAP (Low Income Heating and Energy Assistance Program) despite making substantially more than the maximum income eligibility.  Each defendant pleaded guilty to one count of fraud and four counts of tax evasion for evading income taxes in 2006, 2007, 2008, and 2009.

 

The Calluengs listed Club 27 for sale through a realtor in 2009. Undercover IRS agents met with the realtor in 2009, posing as buyers. They were provided income statements that had been prepared by defendant Susan Callueng, in which the defendant asserted that the club had profits of about $400,000 per year in 2007 and 2008, and almost $300,000 for the first eight months of 2009 (an annualized rate of about $450,000). The undercover agents then met with both the defendant and her husband. Both Romeo Callueng and Susan Callueng explained to the agents, in consensually recorded conversations, that they did not report all their income to “Uncle Sam” and that they preferred cash registers to the POS system because of the lack of records. Romeo Callueng explained to the undercovers that “it’s book number one and book number two.”  He told the agents that they kept track of their income, but they did not record it, because “you want to hide as much as you can.”

 

During a meeting with both of the Calluengs, Romeo Callueng explained to the undercover agents that his wife could teach them how to run the business so that they would not be “throwing red flags” to “Uncle Sam.” Defendant Susan Callueng was asked about the income statements that she had prepared, and asked what portion is “off the books.” She replied, “Everything is off.” She then opined that “everybody in this business is off the books.” She stated that they report a “bare minimum” of income to the Department of Labor in order to avoid putting a “red flag up there.” She also told them that she destroys the records related to receipts because she does not want records to be available. The defendants paid their employees and their expenses out of cash, in order to avoid making excessive deposits and to avoid generating records of their expenses which could trigger government attention.

 

The defendants had also applied for and received both LIHEAP and Medicaid. On the applications for these benefits, defendants claimed income varying from $100 each per week to $700 per week, significantly below the actual profit they earned from Club 27. The income that they were actually earning from Club 27 greatly exceeded the maximum income for eligibility for either of these federally funded programs. In order to apply for these benefits, the defendants were required to submit proof of their income. They attached letters on Club 27 letterhead, purportedly signed by the manager of the Club. However, the manager never signed those letters.

 

U.S. District Court Judge Mark A. Kearney scheduled a sentencing hearing for June 26, 2015.  Each defendant faces a maximum possible statutory sentence of 25 years in prison with an estimated advisory sentencing guideline range of 18 to 24 months, plus restitution to the IRS, a possible fine of up to $1.25 million, a $500 special assessment, and three years of supervised release.

 

The case was investigated by the Internal Revenue Service Criminal Investigations and the Office of Inspector General for the Department of Health and Human Services.  It is being prosecuted by Assistant United States Attorney Nancy Rue.

 

Download indictment_-_rossid.pdf

Topic: 
Financial Fraud
Updated September 4, 2015