Portland strip club owner pays $600K in restitution for 2016 conviction

PORTLAND, Ore. (KOIN) – Three men who were found guilty of committing tax fraud for the Portland and Gresham strip clubs they operated paid more than $600,000 in restitution on Sept. 23, the U.S. Attorney’s Office for the District of Oregon said Monday. 

David Kiraz, George Kiraz, and Daniel Kiraz were ordered to pay $657,243 in 2016 for the amount they owed to the Internal Revenue Service and the Oregon Department of Revenue. 

The Kirazes were found guilty of submitting false tax returns for 2007-2010. 

David Kiraz, of Happy Valley, owns the Cabaret Lounge on West Burnside Street in Portland and Cabaret Lounge II on Southeast Stark Street in Gresham. 

According to a 2015 indictment, George Kiraz, David’s father, and Daniel Kiraz, David’s brother, helped operate and manage the strip clubs. 

The three were convicted in 2016 of not reporting cash earnings from their strip clubs. 

The indictment says the crimes began around January 1, 2007 and continued through April 15, 2011. 

The Kirazes had pocketed the cash earned from house fees, door charges, food and beverage sales and lottery sales, and not reported it on their taxes, according to court documents.

“One of the defendants personally picked up the door charge cash and the house fee cash and removed this cash from the business so the defendants could use this cash for their personal benefit,” the indictment states. 

The family members were accused of destroying any daily records of the door charge cash and the house fee cash. However, court documents say David Kiraz kept track of it all in a profit and loss spreadsheet he kept on a personal computer at his home. 

The books kept at the businesses did not include their cash payments, prosecutors alleged.

The Kirazes reported their business activity on David Kriaz’s personal income tax return and only provided their tax preparer with a two-page business financial summary that they compiled from their manipulated records, federal investigators said.  

The U.S. Attorney’s Office said from 2007 through 2010, the two strip clubs collected more than $1.5 million in cash for cover charges and dancer stage fees. It was taxable income that caused a combined state and federal tax loss of more than $649,000. 

In 2016, David and George Kiraz were sentenced to three years in federal prison and three years of supervised release. Daniel Kiraz was sentenced to one year and one day in federal prison. 

Before the Clerk of the Court for the District of Oregon received a $608,217 payment from the Kirazes on Sept. 23, the U.S. Attorney’s Office said the family members had paid less than 10% of their original restitution order. 

“Today’s restitution payment is the culmination of many years of dogged effort made by our agency and by our partners at the U.S. Attorney’s Office. This is a success we can all share in, as the funds secured today will be used for the benefit of our communities,” said Special Agent in Charge Bret Kressin, from the IRS’s criminal investigation team. 

The U.S. Attorney’s Office handled the enforcement of the Kirazes’ restitution order.