| Crime |

Brenda Stewart, Denver Players/Sugar owner & ex-escort, indicted for tax evasion, racketeering

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This week, Brenda Stewart was indicted on charges related to tax evasion, racketeering, money laundering and more in relation to Denver Players/Sugar, a notorious escort business.

A former escort known to her staff as "Katrina Carter" or simply "Carter," Stewart potentially faces decades in jail and six-figure fines. It's a steamy story Westword's been following for years.

As reported by Jared Jacang Maher, Denver Players/Sugar became the hottest provider of super-hot companions in 2004 after the industry's previous leader, Colorado Companions, went down due to the growing meth addiction of Gary Haney, its owner. At that time, the operation was owned by onetime professional skier Scottie Ewing, whose so-called Sugar House catered to area swingers.

Stewart purchased Denver Players/Sugar in 2005 under the company name Phoenix Media and Consulting, LLC, and the enterprise quickly grew thanks to the largesse of high-profile, big money clients with powerful urges. As Maher wrote in the 2008 post "IRS Making Local Escorts Hot and Bothered:"

At any given time, twenty or more women were employed by Denver Players/Sugar as escorts in cities throughout the Front Range, and in Aspen and Vail. The now defunct website www.denversugar.com featured online profiles for women like "Juvel," described as a "sensual Latina with a sexy accent... slender with silky sweet skin and gorgeous long legs." The going rate for one hour of "all-inclusive companionship" was $300 or more. The company had a reputation as one of the most professional and fair-minded toward escorts in the industry, often advertising its status as "female owned and operated" in recruitment ads published in various publications, including Westword.

But attracting the top escorts meant that Denver Players/Sugar attracted the top patrons, which could make this IRS investigation about much more than back taxes.

Indeed, Denver Players/Sugar was raided in 2008 by representatives of the Denver Police Department and the Internal Revenue Service -- and rather than arresting anyone, officers and agents seized computers and files. Moreover, Maher wrote, "several subcontractors who worked for Denver Players/Sugar in capacities ranging from web design, photography, and even tanning salons have been served with warrants demanding they turn over records of past financial dealings with the company. Sources who were questioned by the IRS say the investigation was explained to them as a federal tax-evasion case going before a grand jury. The Denver branch of the U.S. Attorney's office has confirmed to 9News that they were working with the IRS on the 'ongoing criminal investigation.'" Two years later, that inquiry has borne fruit. The Brenda Stewart indictment alleges that she evaded taxes on her "prostitution business" beginning in 2005 through 2007, didn't provide tax forms for her employees, and personally didn't bother to file a return in 2006. She's also accused of racketeering, for attempting to "distribute the proceeds of her unlawful activity" using wire communication facilities; witness tampering, for ordering that the firm's websites be deleted after search warrants were served; and money laundering.

Stewart faces potential five-year sentences for each count of tax evasion and racketeering -- and there are 28 of the latter. She could also receive a twenty-year jolt for witness tampering and money laundering, with fines of $250,000 and $500,000, respectively, per count. Number of money laundering charges: 39.

Page down to read the entire indictment, as well as to get more details in a release from the U.S. Attorney's Office:


DENVER -- Brenda L. Stewart, age 35, of Denver, Colorado, was indicted by a federal grand jury in Denver late yesterday on charges of tax evasion, use of interstate communication facilities in aid of racketeering, witness tampering, and money laundering related to her prostitution business, United States Attorney John Walsh and IRS -- Criminal Investigation Special Agent in Charge Christopher Siegerson announced. A summons was issued for Stewart to appear in U.S. District Court in Denver for her initial appearance on November 30, 2010, at 1:30 p.m. before U.S. Magistrate Judge Craig B. Shaffer.

According to the indictment, the first tax evasion count alleges that beginning on January 1, 2005, and continuing through April 17, 2006, Stewart did willfully attempt to evade and defeat payment of income tax due to the United States for the calendar year 2005. Stewart earned income from her prostitution business known as Denver Sugar/Denver Players, first through working as a prostitute and later through purchasing and then operating the Denver Sugar/Denver Players business.

The second tax evasion count alleges that beginning on January 1, 2006, and continuing through April 16, 2007, Stewart did willfully attempt to evade and defeat income tax due to the United States for calendar year 2006.

Both counts allege that Stewart created a company called Phoenix Media and Consulting LLC. She used this company to open a bank account to receive and distribute money from her prostitution business. Stewart used some of the receipts from the business to pay the purchase price of $150,000 from the previous owner. She also did not provide a majority of the employees with Forms 1099 or other required tax documents. Stewart filed a false 1040 individual income tax return for 2005, and she failed to file an individual tax return for 2006.

According to the use of interstate commerce facility in aid of racketeering counts, Stewart did use a facility in interstate commerce, namely wire communication facilities, with intent to distribute the proceeds of her unlawful activity -- namely the prostitution offenses. She is also accused of using an interstate commerce facility in aid of racketeering with the intent to promote, manage, and facilitate prostitution offenses by maintaining and causing the maintenance of websites for her businesses.

On January 25, 2008, search warrants were executed at Stewart's home and the "in-call" prostitution address. The witness tampering allegation is that on January 28, 2008, after the search warrants were executed, Stewart corruptly asked the person she paid to maintain her business websites to permanently delete those websites.

The money laundering counts in the indictment allege that Stewart did knowingly conduct and attempt to conduct financial transactions affecting interstate commerce by transferring funds from a Phoenix Media and Consulting LLC account at Community Banks of Colorado into the defendant's personal account, knowing the proceeds were from the use of interstate commerce facilities in aid of racketeering activity. The transactions were designed, the indictment states, to conceal and disguise the nature and source of the proceeds of the unlawful activity.

Lastly, the indictment includes a forfeiture allegation, which states that upon conviction of one or more of the offenses listed above, Stewart will be required to forfeit the traceable proceeds of her illegal activity, including over $110,000 in U.S. currency.

If convicted of tax evasion, the defendant faces not more than 5 years in federal prison, and a fine of not more than $250,000. If convicted of use of an interstate communication facility in aid of racketeering, Stewart faces not more than 5 years imprisonment, and up to a $250,000 fine, per count for each of the 28 counts. If convicted of witness tampering, the defendant faces not more than 20 years imprisonment, and up to a $250,000 fine. If convicted of money laundering, Stewart faces not more than 20 years in federal prison, and a fine of up to $500,000, per count for each of the 39 counts.

"The success of this investigation is attributable to our partnership with the Denver Police Department and the United States Attorney's Office," said Christopher M. Sigerson, Special Agent in Charge, IRS Criminal Investigation, Denver Field Office. "Each agency fulfills a unique role and IRS CI's mission in this regard is to follow the money trail to financially disrupt and dismantle these organizations."

This case was investigated by the IRS - Criminal Investigation with assistance from the Denver Police Department.

The defendant is being prosecuted by Assistant U.S. Attorney Matthew Kirsch.

The charges in the indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.

More from our Follow That Story archive: "Untangle the Judge Nottingham sex-for-hire story with some required Westword reading."

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