IRS: Strip club owner didn't show us everything

[ILLMAS]

suburban strip club owner was charged Thursday with criminal tax offenses seven years after Internal Revenue Service agents seized $12 million in cash he had stashed in a warehouse.

Authorities began investigating Michael Wellek in 2000 after he had gone 11 years without filing a personal income tax return, according to the charges. Despite operating profitable "gentlemen's clubs" in Elk Grove Village, Harvey and Markham, Wellek told the IRS he never paid taxes from 1989 through 1999 because he didn't earn any income, authorities alleged.

His attorney, Terry Ekl, said he anticipates that Wellek, 63, of Libertyville, will plead guilty to both counts he was charged with — obstructing the IRS in collecting taxes and filing a false tax return for 2000.

Ekl said Wellek still owns the three clubs, Heavenly Bodies in Elk Grove Village, Skybox in Harvey and Cowboys in Markham.

In 2003, IRS agents found bags holding $12 million in cash in an Elk Grove Village warehouse controlled by Wellek. Each bag was marked with a date and the name of the club from where the money had come.

The seizure of the cash came to light in 2004 after Wellek filed a federal lawsuit seeking the return of the $12 million. U.S. District Judge Amy St. Eve turned down the request. Wellek later challenged the government's seizure of all $12 million, contending he owed less to the government, but St. Eve concluded that an IRS levy of more than $11 million was "appropriate under the circumstance."

In court filings, prosecutors contended that the $12 million was the "fruits of the crime" and couldn't be used to pay taxes he owed the IRS. But a federal appellate court disagreed on that point.

Prosecutors alleged that in 2000, Wellek made more than $2.1 million in income from two of the strip clubs but that he reported making only $115,769 to the IRS.

When the IRS began investigating Wellek, he made false statements to federal agents, claiming he had no personal income from 1989 through 1999, authorities charged. In 2002, he underreported the gross receipts of the three clubs by at least $1.45 million. Wellek paid $3.1 million in taxes on the revenue from the clubs in 1999 but actually owed more, prosecutors said.

Wellek was also slapped with a $1.2 million fine for fraud by the IRS in 2004. His challenge still is pending in U.S. Tax Court.

If convicted, Wellek could face up to six years in prison, authorities said.

A spinoff of the federal investigation led to charges against 15 individuals, including 14 former Chicago or suburban police officers, who didn't report income they earned moonlighting as security guards at Wellek's clubs.

FYI I have never visited any of these establishment so I really don't know how these establishments can rack up so much money.

[RitaB]

In 2003, IRS agents found bags holding $12 million in cash in an Elk Grove Village warehouse controlled by Wellek. Each bag was marked with a date and the name of the club from where the money had come.

This really cracked me up (as did your brilliant thread title).

Ok, seriously, if you're going to cheat, you might want to rethink that habit of labeling your bags of money. Or put "Gift from Mom" or something.