Feds indict CT strip club owner; allege money crimes associated with prostitution operation
A federal grand jury has indicted the owner and two employees of the Electric Blue strip club in Tolland on charges they conspired to commit an array of financial crimes associated with an alleged prostitution operation at the business located near the UConn campus.
Accused of offenses running from money laundering to the illegal hiring of aliens were owner Kenneth Denning, 67, of Holland, Mass.; bookkeeper Joshua Baker, 41, of Willimantic; and bouncer William Mayo, 41, of Manchester.
Federal prosecutors said the three participated in an alleged operation in which customers paid as much as hundreds of dollars for sexual encounters with nude dancers in the strip club’s warren of private rooms and semi-private cubicles, some of which were monitored by security cameras.
The club also arranged to deliver strippers to locations outside the club for sexual encounters, according to the indictment.
Demming is accused in one count of the indictment of fraudulently collecting a $150,000 forgivable economic assistance loan, under the federal government’s $349 billion COVID-era CARES act program, for asserting on his application that his business did not “present live performances of a prurient sexual nature.”
The indictment charges that Denning oversaw club operations; that Baker managed it in addition to keeping the books and that Mayo, besides working as bouncer, was primarily responsible for hiring dancers, “many of whom were not legally authorized to live or work in the United States.”
The club was subdivided into “multiple” small private rooms, called “VIP rooms” or “Champagne rooms,” as well as a “lap dance room” with “semi-private stalls.” Customers arranging encounters paid fees that could reach $150 for access to the rooms and then negotiated an additional fee with a dancer, according to the indictment.
In addition, customers paid a cover charge to get into the club, according to the indictment.
As a customer convenience, there were automated teller machines placed throughout the club, which added an interstate commerce element to the indictment.
“Many customers at the Electric Blue obtained some or all of the cash used to pay for entrance fees to the semi-private and private rooms and for commercial sex acts from dancers from ATMs on the premises. The defendants and their co-conspirators knew and intended that customers would regularly use cash from the ATMs to pay for commercial sex acts,” the indictment says.
Federal prosecutors said Baker or another club employee would collect the cash received by the club and put it in a safe in Denning’s office. The money was used in part to “fund Denning’s personal expenditures, including trips to casinos where Denning spent large sums of money.”
Denning and Baker are accused of tax crimes for underreporting receipts in 2020, 2021 and 2022 by as much as $5.7 million, resulting in an IRS underpayment of more than $2 million.
All three men are charged with interstate promotion of prostitution, with carries a five-year sentence, and unlawful employment of aliens, which carries a six-month sentence.
Denning and Baker face another five years on tax chargers and up to 20 years for money laundering.
Denning alone faces an additional 20 years or more for a financial transaction crime that involves allegations that he deposited $21,700 in prostitution profits at the Mohegan Sun casino, as well as crimes associated with his personal tax returns and the COVID era loan fraud.
The U.S. Attorney’s office said an army of investigators were involved in the case, including U.S. Homeland Security Investigations, the Criminal Investigation Division of the Internal Revenue Service, the Connecticut State Police, the Liquor Control Division of the Connecticut Department of Consumer Protection, the Massachusetts State Police, the Willimantic Police Department and Manchester Police Department.
