Denver Sugar/Denver Players did big business in 2004 and 2005, attracting some high-profile clientele, who were charged $300 an hour. Ewing received roughly one-third of those fees, according to the U.S. Attorney's Office. In May 2005, Ewing arranged to sell the business to a previous employee -- who was supposed to pay him back in hard-to-track prostitution proceeds. But then the Denver Police Department and the IRS started taking a long, hard look at the local escort scene.
"The law is clear on the issue of taxable income," Christopher Sigerson, special agent in charge of the IRS criminal investigation, said in Department of Justice release announcing the plea. "No matter what the source of income, all income is taxable."
Ewing, who now runs Sugar House on West Alameda Avenue, will be sentenced on December 27. Look below to read the U.S Attorneys Office release on Ewing's plea:
SCOTTIE EWING PLEADS GUILTY TO TAX EVASION IN CONNECTION WITH THE SALE OF DENVER SUGAR/DENVER PLAYERSDENVER -- Scottie J. Ewing, age 40, of Denver, Colorado, pled guilty this morning to one count of tax evasion in connection with the sale of the Denver Sugar/Denver Players prostitution business, United States Attorney John Walsh and IRS Criminal Investigation, Denver Field Office Special Agent in Charge Christopher M. Sigerson announced. The guilty plea was tendered before U.S. District Court Judge Marcia S. Krieger. Judge Krieger is scheduled to sentence Ewing on December 27, 2010 at 9:30 a.m. Scottie Ewing waived his right to indictment, and was thus charged by Information on May 25, 2010.
According to the stipulated facts contained in the plea agreement, throughout 2004 and continuing until May 2005, Ewing operated a prostitution business known as both Denver Sugar and Denver Players. In January 2004, Ewing filed articles of organization with the Colorado Secretary of State for an entity called Sindicate Media and Consulting, LLC. Sindicate was used to conduct business operations for Denver Sugar/Denver Players. Ewing also used Sindicate to hide the source and true amount of his income from the IRS.
Customers of Denver Sugar/Denver Players were charged $300/hour. Ewing received roughly one-third of these fees, and the individual prostitutes received approximately two-thirds. The defendant was also aware that cash income was difficult for the IRS to track and intentionally failed to report such income to the IRS.
In approximately May 2005, Ewing arranged to sell the business to a previous employee of the company. The terms of the sale agreement required the new purchaser to assume control of the business in May 2005, and pay Ewing approximately $150,000 in cash for the business. The parties agreed that the source of these payments would be future cash receipts from the Denver Sugar/Denver Players business. Ewing received payments, primarily in cash, but also through two personal checks, through May 2006. He also gave the purchaser advise about how to run certain aspects of the business, including the creation of a front company. Ewing also agreed the company could use the existing phone lines.
During 2005, Ewing had an adjusted gross income of approximately $284,166, which included receipts from the operation and the sale of the business. The income also included capital gains based on the sale of real estate. After applicable deductions, Ewing had a tax liability for 2005 of $52,883. Also, Ewing did not timely file returns for tax years 2001-2006. Ewing's total tax liability for 2004 is $20,365 and for 2006 is $4,366.
"The law is clear on the issue of taxable income; no matter what the source of income, all income is taxable," said Christopher Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office.
This case was investigated by the Internal Revenue Service Criminal Investigation and the Denver Police Department.
Ewing is being prosecuted by Assistant U.S. Attorney Matthew Kirsch.
