Strip Club Operator Sentenced to Prison for Promoting Prostitution Scheme and Engaging in Tax Fraud

PORTLAND, Ore. – On Wednesday, April 12, 2017, U.S. District Court Judge Michael H. Simon sentenced Lawrence G. Owen, 75, to 30 months in federal prison. The sentence immediately followed Owen’s guilty plea for promoting prostitution at ten Portland-area strip clubs and adult video stores and for conspiring to defraud the Internal Revenue Service (IRS) by concealing $2.6 million in income and evading $728,000 in income taxes owed.

Court documents show that Owen and several family members owned and operated eight strip clubs and two adult video stores. Collectively, these businesses had nineteen private show rooms where customers would pay for private shows with dancers and, with Owen’s knowledge and encouragement, engage in acts of prostitution. From January 2006 through June 2010, dancers engaged in tens of thousands of acts of prostitution at these businesses.

Using a complicated scheme to conceal business revenues and personal income, Owen and his family members cheated the IRS out of $728,000 in income taxes. They established a cash-only policy at area clubs, destroyed daily records of cash receipts, and gave their tax preparer false income numbers. Over a five-year period, Owen and his family concealed $2.6 million in revenue from the IRS by falsifying tax returns or failing to file returns altogether.

"Mr. Owen and his co-conspirators profited from the promotion of prostitution at numerous clubs around Portland. These clubs – and Mr. Owen’s actions – were a blight on the neighborhoods in which they operated," said Billy J. Williams, United States Attorney for the District of Oregon. "Moreover, as a business owner, Mr. Owen had a legal obligation to pay his fair share of taxes. The U.S. Attorney’s Office and the IRS will continue to work together to identify and prosecute business owners and individuals who fail to uphold their legal duty as taxpayers."

In June 2010, IRS agents and local law enforcement executed federal search warrants at the ten area businesses and the conspirators’ homes. Eighty-five boxes of records and $843,000 was seized at the businesses and residences. All seized cash has been forfeited to the United States pursuant to plea agreements with the United States Attorney’s Office. Also pursuant to plea agreements, the net proceeds from a $2.3 million sale of a property in Northeast Portland was placed in trust to pay taxes, penalties, and interest owed to the IRS.

Two of the Owen’s adult stepchildren, Gilbert and Kandace Desmarais, and a manager of several of the strip clubs, Gary Bryant, pleaded guilty to the same charges in May 2015 and March 2016, respectively. All are scheduled to be sentenced in June 2017.

This case was investigated by IRS Criminal Investigations with assistance from the Portland Police Bureau and the Clackamas County Sheriff’s Office, and was prosecuted by Seth D. Uram and Ryan W. Bounds, Assistant United States Attorney’s for the District of Oregon.