A Detroit-based strip club owner has pleaded guilty to using computer software program to delete the club's sales and under-report the income at his two strip clubs to cheat the government on his taxes.
On Jan. 12, Nicholas J. Faranso, Farmington Hills, pleaded guilty before U.S. District Court Judge John Corbett '’Meara in the Eastern District of Michigan to one count of conspiracy to defraud the U.S. government, the Justice Department and the Internal Revenue Service (IRS). He now faces up to a five year prison term. The sentencing has been scheduled for July 14, 2011.
According to court documents, Faranso owns two strip clubs in Michigan: BT's in Dearborn and Tycoon's in Detroit, which used a computerized point of sales system to produce guest checks and electronically track and record sales. In 2001, Faranso bought a computer software program called Journal Sales Remover from Theodore Kramer, a self-employed computer software salesman, and thereafter, till 2004, Faranso used the software to remove a portion of the actual sales from the computerized point of sales systems and make it look as if the clubs generated less income than they actually did.
At Faranso's request, Kramer would periodically visit the clubs and run the software to remove a substantial amount of the actual sales from the computerized sales systems and the reduced sales figures would be handed over to the accountant by Faranso.
According to the complaint, Faranso had used the software to evade paying tax by more than $500,000 to the government.
Kramer has already pleaded guilty to one count of conspiracy on Nov. 17, 2010.