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UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

UNITED STATES OF AMBRICA Case No. 3:15-CR-00073-KIY. SUPERSEDING INDICTMENT

LAWRENCE G. OWEN, 18 U.S.C. S 371 - Conspiracy to Use anGARY BRYAI\T, Interstate Facility to Promote or Facilitate

Prostitution Offenses ;Defendants.

18 U.S.C. S 371 -

Conspiracy to Defraud theUnited States

THE GRAND JURY CHARGES:

GENERAL ALLEGATIONS

At all times relevant to this Indictment:

1. The defendants and their coconspirators owned, controlled, and/or managed the

following adult entertainment businesses (collectively called "the business.r"), either

strip clubs or adult video/sex toy stores, all of which were located in the metropolitan

area of Portland, Oregon:

o The Landing Strip (formerly known as Pop-A-Top), a strip clubo The Oh! Zone, a strip club

o Sugar Shack, a strip club

. Peek-A-Boos (formerly Chantilly Lace), a strip club

o Video Visions, an adult video/sex toy store

o Dillingers Pub, a strip club

. Sugar Shack Too, a strip club

. Video Visions Plus (alklaVideo Superstore), an adult video, sex toy store

. Tommy's, a strip club

. Tommy's Too, a strip club

2. The defendants and their coconspirators also orvned, controlled, andlor managed arestaurant called Pelican Buy, located in the same cluster of businesses as Sugar

Shack, Peek-A-Boos, and Video Visions.

3. The defendants and their coconspirators owned and operated the businesses through agroup of corporations they owned andlor controlled. The following corporations

purportedly owned and operated the following businesses:

Corporation Business(es) Owned and OperatedPop-A-Top Pub, lnc. The Landing StripDillingers Pub, Inc. Dillingers PubFar Flung, Ltd. The Oh! Zone

Sugar ShackSugar Shack TooPeek-A-Boos

Video Super Store, Ltd. Video VisionsVideo Visions Plus

Gumption, Inc. Tommy'sUtilize, Inc. Tommy's TooBriney Deep, Ltd. Pelican Bay Restaurant

Superseding Indictment Page 2

4. The defendants and their coconspirators attracted customers to the strip clubs byfeaturing fully nude female dancers.

5. Many of the businesses had small rooms on their premises. These rooms, calledprivate show rooms (or just show rooms) were typically furnished with a small couch,a chair, a table, and a device for playing music. Collectively, the businesses had 19

private show rooms on their premises.

6. The defendants placed and operated automated teller machines ("ATMs") in many ofthe businesses. The ATMs were facilities operating in interstate commerce.

7. The IRS is an agency of the United States Department of Treasuryresponsible for

administering and enforcing the tax laws of the United States and collecting taxes

owed to the United States Treasury.

COT]NT ONE

[18 U.S.C. S 371 - Conspiracy to Use an Interstate Facility to Promote orFacilitate Prostitution Offenses: Lawrence G. Owenl

1. Beginning before January 2006 and ending in approximately June 2070, in the

District of Oregon and elsewhere, defendant LAWRENCE G. OWEN did knowingly

and willfully combine conspire, confederate, and agree with other persons, both

known and unknown to the Grand Jury, to carry out the following object in

furtherance of the conspiracy:

OBJECT OF THE CONSPIRACY

2. The defendant and his coconspirators agreed to use facilities in interstate commerce,to wit automatic teller machines ("ATMs") operating in interstate commerce, with theintent to promote, to manage, to establish, to carry on, and to facilitate the promotion,

management, establishment, and carrying on of unlawful activity, namely,Superseding Indictment Page 3

prostitution oflenses in violation of the laws of Oregon (specifically Or. Rev. Stat.

section 167.0I2), in violation of Title 18, United States Code, Section 1952(a)(3).

MANNER AND MEANS OF THE CONSPIRACY

3. Defendant LAWRENCE G. OWEN and his coconspirators caruied out their

conspiracy using the following manner and means, among others:

a. The defendant and his coconspirators allowed nude dancers, commonly

referred to as strippers, to perform at the businesses. The defendant and his

coconspirators typically, but not always, required each dancer to pay

approximately $15 per shift in order to perform. This payment was called a

"stage fee" or "dancer fee" and was always paid in cash.

b. The strippers would perform 3O-minute "private shows" for customers in theprivate show rooms, which the defendants and their coconspirator maintained

for this purpose. To obtain a "private show" a customer had to pay at least

$160.

All customers paid for private shows in cash. Many customers obtained some

or all of that cash from ATM machines on the premises. The defendant and

his coconspirators knew and intended customers would regularly use cash

from the ATM machines to pay for acts of prostitution.

Of the minimum $160 customers paid for "private shows," $60 went to "the

house," meaning these funds went to the defendant and his coconspirators.

The strippers retained the remainder of the fees paid for the "private shows."

The private shows purportedly involved a stripper performing nude dancing

for the customer and, at most, the stripper and the customer masturbating

c.

d.

e.


ob'

themselves. In reality, the defendant, his coconspirators, many customers, and

many strippers understood and intended that a "private show" would involve a

stripper engaging in one or more acts of prostitution with the customers and,

in fact, the strippers routinely performed acts of prostitution with their

customers during "private shows." In other words, strippers performed sexual

acts on their customers in refurn for the customers having paid the dancers at

least $100 and "the house" $60, often with cash from the ATMs. Sometimes,

the strippers negotiated a higher fee for the acts of prostitution than the

minimum $100.

Some of the strip clubs did not have private show rooms on their premises.

Strippers who were working at these strip clubs would walk with their

customers to one of the nearby businesses with private show rooms. For

instance, the Landing Strip did not have private show rooms, so strippers

working there would walk their customers across a parking lot to The OH!

Zone, which had on its premises four private show rooms and a small entry

afea.

To conceal the conspiracy and to conceal their knowing facilitation,

promotion, and management of the acts of prostifution at the businesses, the

defendant and his coconspirators required the strippers to sign a typewritten ,

statement, commonly called a dancer slip, each time the stripper performed a

private show. The dancer slip stated the stripper was "leasing this room for

the purpose of performing one-on-one modeling shows" and that her "actions


will comply with all Oregon State laws" and "NO SEX OF ANY KIND, NO

TOUCHING OF ANY KIND!"

OVERT ACTS IN FURTHERANCE OF THB CONSPIRACY

4. Defendant LAWRENCE G. OWEN and his coconspirators committed the followingovert acts, among others, in the District of Oregon and elsewhere, in furtherance of

the conspiracy and to effect the object of the conspiracy:

a) A coconspirator regularly refilled the ATMs with proceeds from the operationof the businesses, each such refilling being a separate overt act.

b) A coconspirator regularly accepted reimbursement for the cash dispensed bythe ATMs by means of electronic fund transfers to their bank account in

Oregon from payment-processing services located outside the State of

Oregon, each such transfer being a separate overt act.

c) The defendant and his coconspirators allowed strippers to use the businesses'private show rooms to perform acts of prostitution on customers, each

allowance of such use being a separate overt act.

d) The defendant and his coconspirators required each customer involved in aprivate show during which a stripper would perform one or more acts of

prostifution onthe customerto pay $60 to "the house" as a fee foruse of the

private show room, the collection of each such $60 payment being a separate

overt act.

e) The defendant and his coconspirators required the strippers to sign a dancerslip each time the stripper performed a private show, each such signing being

a separate overt act.


All in violation of Title 18 U.S.C. S 371.

COUNT TWO

[18 U.S.C. S 371 - Conspiracy to Defraud the United States]

Paragraphs 1 through 7 of the General Allegations, and paragraphs 3 through 4 of

Count 1 are incorporated herein.

OBJECT OF THE CONSPIRACY

Beginning before January 7,2006 and continuing up to and including June 10,2010,

within the District of Oregon, and elsewhere, defendants LAWRENCE G. OWEN,

GARY BRYANT, and others known and unknown to the grand jury, unlawfully and

knowingly combined, conspired, confederated, and agreed together to defraud the

United States by deceitful and dishonest means by impeding, impairing, obstructing,

and defeating the lawful government functions of the RS, an agency of the United

States, in the ascertainment, computation, assessment, and collection of revenue, that

is, federal individual income taxes, corporate taxes, and payroll taxes.

MANNER AND MEANS OF THE CONSPIRACY

Defendants LAWRENCE G. OWEN, GARY BRYANT, and others, known and

unknown to the grand jury, carried out their conspiracy using the following manner

and means, among others:

a. The defendants and their coconspirators established a "cash only" policy at the

businesses, in part to prevent the IRS from calculating the correct amount of gross

receipts for each business and to facilitate the "skimming" of large amounts of

cash.

b. The defendants and their coconspirators destroyed or caused to be destroyed daily

1.

2.


records of cash receipts, including records showing private show receipts and

dancer stage fees.

c. The defendants and their coconspirators each week reconciled or caused to be

reconciled the total cash receipts and cash expenditures for the businesses,

including the total amount of cash derived from private shows and dancer stage

fees.

d. The defendants and their coconspirators each week delivered or caused deliveryof the accumulated cash receipts of the businesses to the home of one of the

coconspirators.

e. The defendants and their coconspirators used or caused the use of the cash

receipts of the businesses to make cash payments for most expenses associated

with the daily operation of the businesses, including payroll, in part to prevent the

IRS from calculating the correct amount of gross receipts for each business and

the payroll taxes owed by the businesses.

f. The defendants and their coconspirators each year gave atax refurn preparer falseinformation about receipts and payroll expenses of the businesses, concealed from

the tax return preparer all information about the cash receipts from private shows

and dancer stage fees, and provided false information about the number and

identities of the employees of the businesses, intending the tax refurn preparer

would use this false information to prepare corporate, payroll, and individualtax

refurns that would underreport the amount of gross and taxable income of, and tax

due from, the businesses and the coconspirators.


g. The defendants and their coconspirators regularly used unreported cash receiptsfrom the businesses to pay personal expenses;.

h. The defendants and their coconspirators regularly transported or transmitted, orcaused to be transported and transmitted large amounts of unreported cash

receipts to defendant LAWRENCE G. OWEN at his residence in Mexico.

i. Coconspirators used receipts from the businesses to make monthly payments onan approximately $700,000 loan defendant LAWRENCE G. OWEN used to

invest in the stock market.

j. Defendant LAWRENCE G. OWEN did not file individual income tax retums inorder to conceal from the IRS his receipt of income from the businesses.

k. The defendants and their coconspirators created and used a group of corporationsto own and operate the businesses but in reality to conceal from the IRS the true

ownership and control of the businesses and to assist in the concealment and

fraudulent understatement of business receipts, payroll taxes, taxable income, and

tax due.

1. The defendants and their coconspirators caused approximately $5,068,000 in

taxable business receipts not to be reported to the IRS, causing a total income tax

underpayment of approximately $ 1,5 09,000.

OVERT ACTS IN FURTHERANCE OF THE CONSPIRACY

3. In furtherance of said conspiracy and to effect the objects thereof between January 1,2006, and continuing up to and including June t0,20I0, defendants LAWRENCE G.

OWEN, GARY BRYANT, and others known and unknown to the grand jury,


committed the following overt acts, among others, in the District of Oregon and

elsewhere:

a. The defendants and their coconspirators destroyed daily records of the receipts of

the businesses and directed and/or caused others to destroy daily records of the

receipts of the business, each such destruction of records being a separate overt

act.

b. Each tax year, the defendants and their coconspirators gave a paid tax returnpreparer false information about the receipts of the businesses, each such

occurrence being a separate overt act.

c. For tax years 2006,2007, and 2008, the defendants and their coconspirators filed

federal corporation tax refums, federal individual income tax refurns (except

defendant LAWRENCE G. OWEN), ffid federal payroll tax returns that, with

respect to the corporation tax returns, substantially underreported the receipts of

businesses the corporations purportedly owned and operated, with respect to the

individual income tax returns, substantially underreported income derived from

the businesses, and with respect to the payroll tax returns substantially understated

the payroll taxes due, the filing of each such false tax return being a separate overt

act.

A11 in violation of Title 18 U.S.C. S 371.

Dated this _

of May 2015.

A TRUE BILL.

Superseding IndictmentOFFICIATING FOREPERSON

Page 10

Presented by:

BILLY J. WILLIAMSActing United States Attorney

DSETH D. URAM, DC # 37 6214Assistant United

. #00012


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