For Adult Tax Cheats Only

Having covered both sports and the restaurant industry in a former life, I wasn't far along into my current post as editor-in-chief at Accounting Today when I realized that auditing and tax stories don't generally contain reams of humor-filled prose.

Let's face it, you won't see a whole lot of auditors and taxwriters elbowing their way for a shot at open mike night at Caroline's or the Comedy Store. Oh, we occasionally get tidbits and even CDs from CPAs who try their hand at entertainment, but I can safely say most of them will never be waiting in Jay Leno's "green room."

But, as they're fond of saying in the news business, "This just in..."

Seems that executives at one of New York's most popular, ahem, gentlemen's clubs have been arrested on charges of evading more than $3.1 million in taxes.

The trio were part of Scores, the flesh mecca, which has, over the years, become as famous for the mammoth tabs that some of the patrons have accrued -- including several that were comfortably into six figures -- as for its well-endowed entertainers and regular celebrity clientele.

Try explaining a $129,000 credit card charge to your T&E department as some hapless patron tried to do several months ago.

Now forgive me, but that's funny!

By contrast, I once was taken to the accounts payable woodshed for a $1,400 dinner tab in Chicago, complete with an angry note from a business manager who sarcastically asked if this "was really necessary?"

And in case anyone was wondering, that bill was sans any "entertainment" charges.

But now for the rest of the story.

In any event, the three surrendered last week to the Manhattan district attorney's office following their indictments on charges that included filing false business records.

Apparently, the investigations began after repeated customer complaints of overcharges to their credit cards, including one customer from St. Louis who filed suit over a $241,000 charge.

Can you imagine the reaction of his wife if she fielded a follow-up call from the DA's office on that report?

Again, that's funny!

While investigators couldn't substantiate the price gouging -- which I later found out from customers begins with a $30 cover charge -- they uncovered what was termed a "massive and flagrant tax evasion" scheme on the part of the club's owners and managers.

The scam involved the executives funneling money into three dummy corporations, which they identified as "consulting companies" and the fake companies would subsequently pay the executive's personal expenses including a new Mercedes and $185,000 toward the construction of a New Jersey mansion.

For filing purposes, the dummy companies claimed more deductions than income, so therefore they literally paid no taxes.

The defendants face up to four years in prison if convicted on any of the charges.

I can only imagine the risqué headlines plastered across the New York tabloids that will be sure to follow this vignette.Who said you can't find humor in a tax story?