The evening that the Internal Revenue Service raided Pure nightclub at Caesars Palace was the first time in a while that someone entered without tipping the doorman.
At issue, however, was not the longstanding tradition of “tipping” doormen, hosts and cocktail servers, but what happened to that money at the end of the night in what federal agents have referred to as a “currency distribution scheme.”
According to employees, the so-called tips, solicited up front for special services, were pooled and then distributed up the management food chain, and the income, presumably, was not reported to the IRS. Insiders say tens of thousands of dollars in “entry fees” and other tips can be split among club employees most nights.
On Feb. 20, the IRS executed search warrants on Pure nightclub, the corporate headquarters of Pure Management Group and the personal residence of managing partner Steve Davidovici. The IRS also visited LAX at Luxor and interviewed employees. Federal agents reportedly collected documents, credit card receipts, computers, personal planners, bank statements and other financial records.
Not since the 1980s, when the mob still wielded influence on the Strip, had the IRS raided a casino property.
Possible criminal violations, according to the search warrants, include tax evasion, filing false individual tax returns and conspiracy to defraud the government of taxes. Pure, a 36,000-square-foot establishment that can accommodate more than 1,500 people, claims to be the nation’s top revenue-producing nightclub.
— Michael Mishak and intern Michael Lyle