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Inside Vegas - Steve Miller

Steve Miller is a former Las Vegas City Councilman. In 1991, the readers of the Las Vegas Review Journal voted him the "Most Effective Public Official" in Southern Nevada. Visit his website at:

IRS investigates businesses
paying extortion to cab
and limo drivers

INSIDE VEGAS by Steve Miller
June 15, 2009

LAS VEGAS - In 2007, a local business owner who depends on attracting tourists to his off-Strip location, wrote a two page letter to the Fraud Division of the Internal Revenue Service.

In it he complained of being extorted out of thousands of dollars in cash by limo, taxi, and van drivers who have access to the front entrances of Strip hotels. At the time, he told the IRS of having to pay the drivers between $30 and $70 dollars per passenger, or his business would be boycotted.

The IRS did not immediately respond to the letter.

In the meantime, some drivers have gone high tech with personal push to talk phones. When a lead driver hits the direct connect button on his phone, hundreds of other drivers can hear his broadcast telling about what business is paying the most, or not paying at all. The cab or limo company dispatcher is left out of the loop. Drivers who do not subscribe to direct connect will soon be informed by other drivers waiting for passengers in queues at the airport, hotels, and all over town. In other words, a boycott takes only minutes to organize.

The City of Las Vegas, Clark County, state Taxi Authority and Transportation Services Administration officials have for years had strong laws on their books to prevent the practice that all local government agencies opted not to enforce.

Transportation company owners are also acutely aware that their equipment is used in the practice, but have told INSIDE VEGAS that they do not pay their drivers a living wage or benefits, and the illegal practice supplements driver's pay so they can "put shoes on their children." However, none of the owners we spoke to volunteered to pay a living wage and benefits as a way of discouraging a scam that rips off tourists, and discourages new businesses from locating in our city.

The all cash scam also deprives state and federal coffers of millions in unpaid taxes.

City Council members and County Commissioners have turned a deaf ear to complaints as have state Taxi Cab Authority members, and state Transportation Administrators. It's as if the transportation company owners -- who are well known for their generosity around political campaign time -- don't want the practice to end.

Malfeasance is the proper word that describes the lack of action being taken by government officials.

Since 2007, the bounty was raised to $100 per passenger. This occurred when casino bosses learned that their front doors were being used to solicit hotel patrons to strip clubs and other businesses that pay bribes. They demanded their cut.

In the meantime, casino owners are still in the dark about the practice and have not investigated, though their own casino bosses are now extorting their hotel's door men.

Targeted businesses include swinger's clubs, gun stores that rent machine guns for target practice, escort services, massage parlors, restaurants, divorce attorneys, flower shops, tux and bridal gown rental stores, wedding chapels, check cashing services, and of course, strip clubs.

Instead of being able to make a profit by upping the payoffs to $100 to encourage transportation drivers to deliver customers to their doors exclusively, according to the June 11, 2009 Wall Street Journal; "Strip clubs in Las Vegas have long paid bounties to cab drivers who deliver customers, but Rick's (Cabaret) didn't grasp the payments' importance when it bought the former Scores strip club in September. By February, its Las Vegas club was registering only $257,000 in sales. Moving to reclaim its share of the slumping tourist trade, Rick's boosted its payments to as much as $100 a customer from the usual $30. By April, it was notching nearly $1.9 million in monthly sales in Las Vegas. The club still lost money that month, because it paid the cabbies about $1 million, but the loss was smaller than in previous months."

Participating strip clubs are now realizing that the pay outs total more than they're taking in! The scam is backfiring on the clubs and businesses that out bid their competitors.

Rick's Cabaret revealed paying transportation providers $1 million over a one month period. Another club owner told INSIDE VEGAS he paid out $113,000 in one week during Spring Break. How can any business survive with this much secret outlay of cash -- especially when they can't write it off? Somebody ends up paying the bill, and that's usually our tourists and the taxpayers.

Last week, the IRS finally made their move. On June 10, all Vegas strip clubs received an official letter from the IRS;

However, most club owners do not, or have not, kept the records that are requested. If they didn't keep records including the names of drivers, they may have broken the law. This fear, and the knowledge that their clubs may be under surveillance could cause them to curtail paying future bribes.

But there are several business owners who have kept meticulous records, and I'm told the IRS will find hundreds of 1099 forms signed by transportation drivers quite interesting, along with video tapes of the drivers receiving their bribes.

A 1099 is an IRS form that states how much was paid to an independent contractor. When a business pays an independent contractor, no taxes or benefits are withheld. The taxes are supposed to be paid by the independent contractor himself, either quarterly or at the end of the year when income taxes are prepared.

It will be interesting to learn how many business owners and transportation drivers complied with this requirement. And it will be even more interesting to see how many of those involved turn government witness to avoid prosecution for Income Tax Evasion!

And to those who complain that everyone deserves to make a decent living, I ask them to put themselves in the place of a small business owner who, in these tough economic times, must pay drivers to deliver customers to his door, or be boycotted by an entire transportation industry. Or imagine being a tourist who gets gouged by a business in order to cover the bribe paid to the person who drove him there.

Not only is this practice illegal and harmful to our town, it's un-American!


Steve Miller is a former Clark County Regional Transportation Commissioner

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