By DANIEL HERATY
DEARBORN – The owner of two area gentleman’s clubs was sentenced to one year and one day in prison Aug. 4 for taking more than $500,000 from both businesses.
Farmington Hills resident Nicholas Faranso was sentenced by U.S. District Court, Eastern District Judge John O’Meara after pleading guilty to conspiring to defraud the United States and three counts of filing a false tax return Jan. 12. Faranso was also sentenced to two years of supervised release and ordered to pay $6,000 in restitution to the Internal Revenue Service.
According to court documents, Faranso, who owns BT’s Executive Club, 14417 Michigan Ave., and Tycoon’s in Detroit, used a computerized system to track sales from 2001 to 2004. The system allowed Faranso to remove some of the total amount from the point of sales systems, making it appear the clubs were making less money than they actually did.
During the same period, Theodore Kramer, a computer software salesman who sold Faranso the equipment in 2001, came in to the businesses to run the programs and removed a large amount of the actual sales from the systems. Faranso then reported the reduced numbers to his accountant. In 2004 alone, he claimed BD’s made about $1.2 million when it made in excess of $1.4 million.
Kramer pled guilty to one count of conspiracy in November 2010.
Faranso also paid for expenses out of petty cash, and was issued checks at the end of the month in the amount equal to the receipts from the purchases. The checks were logged as reimbursement, making it appear that Faranso paid for the items out of pocket. He then claimed the purchases twice as business expenses.
He also told the managers of the clubs to set aside about $1,000 in cash per day from the daily receipts to pay personal expenses, and required club employees to pay Faranso to work there.
(Daniel Heraty can be reached at [email protected].)