LAS VEGAS -- On the Las Vegas Strip, it is a familiar, if unpleasant, juxtaposition -- families with strollers warily slipping past the outstretched hands of the ubiquitous smut peddlers. The kids are curious about the colorful handbills pitching college coeds direct to your hotel room.
It might seem like a long way from the skanky women on rolling billboards to the classiest zip codes in Nevada -- Lake Las Vegas, Spanish Trail -- but not really. The so-called escort companies rake in millions per year, allowing their owners to live in luxury, under a veneer of respectability.
"There are several criminal enterprises here in Las Vegas and it is no secret they are living large," said IRS Special Agent Paul Camacho.
Agent Camacho, chief of criminal investigations in Las Vegas, says he continues to amaze his fellow tax cops around the country when he tells them about the cases he works here and the over-the-top excess.
Camacho has already turned up the heat on the big money pool parties, on tax crimes in topless joints, on $1,000-a-bottle nightclubs. Now, he has a new partner -- Metropolitan Police Department's vice squad. Their new target is the big time pimp. Not street level mack daddies, but millionaire escort operators -- the ones who really spend money.
"They are living in nice neighborhoods, driving nice cars. It's been fruitful for them," said Camacho. "It's like taking the kids to Disneyland, putting them in Disneyland and tell them don't go on the rides. These folks are going to go on the rides and Vegas is their Disneyland."
For decades, vice officers have conducted room stings in which escorts, or "entertainers," show up at hotels and offer sex for money. Police say it is rare when an escort is not a hooker, but while the working girls are typically taken to jail, the companies that send them out are unscathed, claiming they have no knowledge of what their independent contractors do once the bedroom door closes.
If Metro ever wants to make a dent in the street smut, it needs to land a gut punch on the companies. There are hundreds listed in Las Vegas, but all can be traced back to the same handful of guys -- millionaire pimps whose lavish spending is seen by the IRS as a form of money laundering.
"It's often amusing when we see people who think they can one-up us -- put their assets in someone else's name. We started with Al Capone and we haven't seen anything new. The hiding, concealing, thinking they are one step ahead of us, dealing in cash or hiding it, that's where we get you. That's what we do: relentlessly follow the money," said Camacho.
If the IRS can nail the big-name pimps, it has the power to hit where it hurts by seizing the houses, cars, and jewelry. But how to make it stick? Camacho and Metro both declined to discuss long-term strategy, but if, for example, the busted escorts were to testify that they kicked back most of their trick money to the companies, such a pattern of unreported income could be the lynchpin of federal indictments.
The IRS does not like to tout it's reward program, but people who provide information about large scale tax evasion can be awarded a percentage of the illegal take. In the case of escort companies, that could amount to millions of dollars.
The flip side is that anyone who helps the tax criminal hide money, such as realtors or car dealers or jewelers, can also be charged. For example, the recent indictment of 28 people in an oxycontin smuggling ring. Most of those indicted had little to do with the actual smuggling. They just helped spend or hide the money.
"The transactions weren't to large, under $10,000, but for those transactions alone, they're looking at five-year felonies and we charged 28 people. When we go after a criminal enterprise, we go after the big people and all the tentacles," said Camacho.
The escort services are highly adaptable. They have won many First Amendment battles related to the handbill solicitors on sidewalks. So far, no one has been able to punish the owners for the crimes committed by the escorts themselves. But the IRS has investigative and prosecutorial tools that are not available to Metro.
