Published Friday, Oct. 5, 2012 | 5:05 p.m.
Updated Friday, Oct. 5, 2012 | 7:05 p.m.
A Las Vegas man who manages a strip club — and is connected to an escort service being investigated for prostitution — will have a trial in December in federal court in connection with an alleged scheme to avoid paying taxes on some $1.8 million in transactions.
Emmanouil Manny Varagiannis, manager of Olympic Garden Gentlemen's Club, who is also connected to the escort service Midnight Entertainers, had an initial appearance on tax evasion charges Friday morning before Magistrate Judge Carl W. Hoffman.
After a hearing that took less than 10 minutes, Varagiannis was released on personal recognizance with supervision and conditions, according to court documents.
His trial is expected to be Dec. 3, according to Sam Holland, special agent and PIO for the IRS criminal investigation in Las Vegas. Court minutes show his next court date will be at 4 p.m. Oct. 19 before Judge Hoffman.
The investigation was conducted by the IRS's Financial Fraud Task Force, Holland said. Las Vegas Metro detectives also were part of the investigation.
Efforts to contact Varagiannis' attorney, David T. Brown, on Friday were unsuccessful.
Hoffman signed an arrest warrant for Varagiannis on Sept. 26 and the 11-page criminal complaint against him was unsealed this afternoon.
According to the complaint, Varagiannis was charged with a count of structuring transactions to evade federal IRS reporting requirements.
Varagiannis is general manager of Olympic Garden Adult Cabaret, a topless club at 1531 Las Vegas Boulevard South.
The complaint, which refers to Varagiannis as "Manny" throughout, said that the investigation into his actions, known as "structuring," began in October 2011.
The complaint notes that structuring is the breaking up of cash transactions of amounts greater than $10,000 into multiple, smaller transactions, either one at a time or at one or more financial institutions in order to evade federal currency transaction reporting requirements.
The complaint says that "Manny" was making structured cash deposits to a Silver State School Credit Union personal account held by him and his wife, Amy Varagiannis, and into three Wells Fargo Bank accounts held in the name of Midnight Inc.
Midnight Inc. is licensed through Clark County to operate an escort entertainment business called Midnight Entertainers.
Records indicate that "Manny" isn't an officer in Midnight Inc., 3300 Pollux Ave., but is listed as a signer of business documents, along with his wife, in that company, the complaint says.
The complaint says that between Dec. 1, 2008 , and Oct. 17, 2011, "Manny" structured cash into the four accounts in excess of $1.8 million, which were spread over 208 transactions. The cash deposits amounted to 79 percent of the total amounts in those accounts.
The complaint said of the 208 deposits, 130 were just over $9,000, but under the reporting limit of $10,000.
Twenty-three deposits were made between $8,000 and $9,000 and 16 deposits were over $7,000. The remaining cash deposits were between $500 and $6,752.
The complaint said on some days several deposits were made, splitting the total cash into separate deposits under the $10,000 reporting threshold.
According to investigators, "escort services primarily and indirectly depend on prostitution as their main source of income." The investigators said Midnight Entertainers receive their incomes on a per-call basis.
Investigators said the entertainer charges a standard fee to come to a customer's location, usually a hotel room or a residence. The money is paid to the escort service.
"It is solely up to the female entertainer to earn tips above and beyond the initial fee," the complaint says. "These tips are usually earned by performing a sexual act at which time the female entertainers are engaging in the illegal act of prostitution."
The investigators say the escort service usually has the female entertainer sign a contract with the business that they will not engage in prostitution, which "provides the escort service plausible deniability ... Even though the company knows the majority of the customers are using the service for the sole purpose of prostitution."
The complaint said the majority of female entertainers working for an escort service have some sort of prostitution-related arrest in their past "and are currently being managed by pimps who work independently of the escort service."
The complaint said that on May 30, Metro and IRS officers set up an undercover operation at a room at New York-New York.
An officer then called Midnight Entertainers to hire a female entertainer, using a phone number on a flier for Midnight Entertainers. An unidentified female told him the cost was $250 for her to show up at the room.
About 20 minutes later, a white female adult, Maria Garza, knocked on the door. The three officers in the room asked how much it would cost to perform sexual acts on all three of them and Garza negotiated a price of $4,000. She was arrested for prostitution, the complaint said.
Investigators said they also set up surveillance at the business office of Midnight Entertainers at 3300 Pollux. They found the business was most active between 7 p.m. and 9 a.m.
Three categories of people were seen entering and exiting: the employees who worked there, female entertainers who came in for short periods of time, mostly at night and in the early mornings, and cab drivers.
The complaint said the number of cab drivers entering and exiting after a few minutes "supports the assertion they are receiving customer referral fees."
According to the complaint, officers did interviews with Varagiannis' employer at Olympic Garden, Dolores Eliades.
The complaint says Eliades told officers Varagiannis collects 60 percent of the earnings from the women who work for Midnight Entertainers and that he was aware the entertainers were having sex for money.
Eliades also told police she observed Amy Varagiannis rubberband the cash after she was done counting it.
She also said that the Varagiannises told her he trains the employees who work at the escort business on how to detect police.
Eliades told police the Varagiannises put $60,000 to $70,000 down on a $900,000 house and that Manny Varagiannis takes money to Greece on an annual trip each year.