Gresham Strip Club Operators Sentenced to Prison for Tax Fraud

Three members of a family who ran two strip clubs - one in Gresham and one in Portland - were sentenced to prison Tuesday for tax fraud. George Kiraz and his sons - David and Daniel - were convicted in May of tax fraud.

The family operated Cabaret Lounge II at 17544 STark Street in Gresham and Cabaret Lounge at 503 West Burnside Street in Portland.

From 2007 through 2010, the two clubs collected more than $1.5 million in cover charges and dancer stage fees, all in cash. Prosecutors showed that the family maintained two sets of books - one with the real numbers and one without.

David was sentenced to three years in federal prison and 3 years’ supervised release as was George. Daniel was sentenced to 12 months and one day in federal prison. The judge also ordered the defendants to pay restitution of $511,754 to the IRS and $137,654 to the Oregon Department of Revenue.

"These sentences are significant sanctions for serious crimes,” said Billy J. Williams, United States Attorney for the District of Oregon. "Business owners who deal extensively in cash have the same legal obligation to pay their fair share of taxes as does everyone else. The U.S. Attorney’s Office and IRS will continue to work together to identify and prosecute those who cheat the tax system.”

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