Tuesday, April 16, 1996 | 11:59 a.m.
The owner of Club Paradise, an upscale adult nightclub on Paradise Road, has been charged with criminal tax fraud for allegedly holding a hidden interest in two sex-oriented bookstores in the Midwest.
Salvatore "Sam" Cecola was named in a 22-count indictment that also accused a reputed member of "The Outfit," or Chicago organized crime, of similar tax violations. Cecola, a Las Vegas resident, called the charges a "misunderstanding."
He was arrested Friday at his Barrington, Ill., residence and appeared in federal court, where he was released on a personal recognizance bond, or the promise to appear for future hearings.
"I pay a lot of money in taxes, but obviously they think I should be paying more," Cecola said from Illinois. "I think it's a misunderstanding."
The government charged Cecola, 51; reputed mobster Frank Panno, 63; John Spudeas, 60; Spero Palladinos, 67; and Raymond Magray, 49, of skimming money from adult bookstores in Illinois, Wisconsin and two in Las Vegas.
Panno and Palladinos are suspected of holding an interest in A-Action Adult Books & Videos, 1016 S. First St., and Venus Unlimited, 1500 S. Main St., in Las Vegas. Cecola, Panno, Spudeas and Palladinos are accused of being hidden owners of Ogden Books Inc. in Illinois and Odyssey Video in Wisconsin.
Prosecutors allege they have evidence that the men created a duplicate set of cash register tapes and destroyed original records, concealing the true gross receipts.
The men also are charged with issuing incorrect IRS W-2 forms that allegedly reflected only a portion of what they paid employees.
But Cecola accused authorities of being politically motivated, suggesting that they pursued criminal charges after failing to shut down the bookstores through zoning restrictions.
Cecola denied having a partial ownership in the Midwest bookstores, explaining that the federal agents assumed he would be a secret partner because he knows the bookstores' owners.
The Club Paradise owner is charged with five counts of subscribing to false tax returns and faces up to 20 years in prison and a $1.5 million fine.
The alleged hidden owners of the Las Vegas bookstores -- Panno and Palladinos -- face up to 17 and 32 years respectively and more than $1 million in fines.
The indictment has caught the attention of Metro Police's Organized Crime Bureau, which has conducted its own investigations of Cecola and Club Paradise, 4416 Paradise Road.
"We don't have anything going right now, but we will be watching the case (to) see what happens in connection with his liquor license," Sgt. Walt Quering said.
Police officials discouraged the County Commission when it granted Cecola a liquor license, referring to his association with Panno, Quering said.
Club Paradise replaced what Cecola called an eyesore, the Pussycat Theater. The owner defines the establishment as a celebrity club that includes regular entertainment by former casino showgirls.