Couple who own Envy nightclub in Warehouse District are accused of underreporting sales and other tax crimes.
The owners of the shuttered and embattled Envy nightclub in Minneapolis went to court Friday over tax-evasion charges accusing them of underreporting their sales by more than $240,000 in three months.
The criminal complaints against James S. Beamon and Susan K. Beamon thrust into the criminal justice system a couple whose business practices long had bedeviled city officials and creditors alike.
The husband and wife each were charged with 11 counts of filing false income tax returns, failing to file sales tax returns and failing to remit sales taxes at the club. It was long a trouble spot in the Warehouse District for police with disturbances and other problems.
The crux of the tax case began last year, court papers say, when employees tipped the Minneapolis Police Department’s licensing division that Envy managers were “skimming” not only cover charges, but also from several cash-only bars within the nightclub. The Minnesota Department of Revenue began investigating, scrutinizing the books in 2012.
“The Beamons had the audacity to claim last year that their club was being targeted because the city didn’t like their clientele,” Hennepin County Attorney Mike Freeman said Friday.
“No, they were targeted because they were a wealthy couple who were not paying their income taxes and their business used two sets of books so they could pay less in sales taxes and pocket the difference. It’s criminal behavior. Furthermore, it’s not fair to other businesses that pay their sales tax, and it is not fair to all the hardworking Minnesotans who pay their income taxes every year.”
Attempts Friday night to reach the Beamons, who live in Brooklyn Park, were not successful.
According to the complaints, filed July 31 in District Court:
The last year for which the couple filed an income tax return was in 2009, when they claimed an adjusted gross income (AGI) of negative $8,464. They filed that return in 2011.
The city licensing division had obtained a 2010 unfiled tax return showing a joint AGI of $595,369.
On Aug. 30, 2012, investigators searched the nightclub at 401 First Av. N. and found an accurate set of books that reported each day’s total sales at the club in previous months. During the search, numerous records, cash and computers were seized.
For April, May and June 2012, the records showed the club had sales of $328,182. But the Beamons had reported sales of only $87,853 in filings with the state. That’s a discrepancy of $240,329, prosecutors allege.
Based on the actual sales numbers uncovered by investigators, the club should have paid $33,468 more in sales taxes.
The complaint alleges that James Beamon also opened three business savings accounts, depositing nearly $100,000 total in 2011 and 2012. More than a half-million dollars was deposited into other accounts as well in 2011 and 2012, court papers say.
The Beamons underreported sales by at least $73,000 for each of the months from April to June 2012 and underpaid their taxes by more than $10,000 each of those months, resulting in the $33,468 in unpaid sales tax liability, court papers say.
The Beamons did business under the name Grand Group Entertainment. The couple, released without bail, are set for hearings on Oct. 14 for James Beamon and Nov. 1 for Susan Beamon.