New judge takes over cases involving former Pure club owner, VIP host

On the heels of a sensitive FBI investigation, Senior U.S. District Judge Kent Dawson has gotten off the criminal cases involving former Pure Nightclub owner Steve Davidovici and one of his VIP hosts.

Chief U.S. District Judge Robert C. Jones issued brief written orders without explanation on Monday indicating he was taking over both cases.

Davidovici, 48, and the host, Ali Olyaie, 32, both pleaded guilty to filing false tax returns in a
$7 million tip-concealing scheme at the Caesars Palace nightclub. The Internal Revenue Service investigated the scheme, which occurred between 2005 and 2007.

The change in judges comes roughly six weeks after the FBI’s public corruption squad in Las Vegas began investigating ties between Davidovici and Dawson’s 38-year-old son, Brian. Last week, a federal magistrate held a secret hearing tied to both tip cases.

Dawson placed Davidovici on probation June 27 despite a push from prosecutors to send him to prison but later was forced to temporarily hold up the sentence after word surfaced that the judge’s son worked for Planet Hollywood’s Gallery Nightclub, which once was associated with Davidovici.

Olyaie was to be sentenced Aug. 29 before Dawson, but that now is likely to be continued with a new judge on the case.

Dawson eventually concluded that there was no conflict of interest barring him from punishing Davidovici, and he ordered the longtime Strip nightclub operator to start serving three years of probation, including eight months of home confinement.

Attorneys with the Justice Department’s Tax Division in Washington, D.C., then indicated that they were appealing the sentence to a higher court because of “procedural irregularities” on the judge’s part.

In the meantime, the FBI, with the support of the Justice Department’s Public Integrity Section in Washington, began digging deeper into the younger Dawson’s relationship with Davidovici and another well-known Las Vegan, former construction company boss Leon Benzer, the central figure in an FBI probe into the unlawful takeover of valley homeowners associations.

Since the Las Vegas Review-Journal first reported the Dawson investigation on July 8, the FBI and the Justice Department have kept a tight lid of secrecy around it.

U.S. Magistrate Judge Peggy Leen issued a written order disclosing that she held a secret hearing tied to the Davidovici and Olyaie criminal cases last Thursday, but she did not provide details. Leen ordered the hearing temporarily unsealed so that a transcript could be made for the court record.

Both Davidovici’s lawyer, David Chesnoff, and Olyaie’s attorney, Chris Oram, declined comment on Monday.

So did Las Vegas FBI spokesman Patrick Turner and Paul Camacho, special agent in charge of IRS-Criminal Investigation in Las Vegas.

The Justice Department lawyers wanted Dawson to sentence Davidovici to 18 months in prison for his leadership role in the nightclub tip scheme.

But Dawson said at the sentencing that he was ordering probation because he was concerned that Davidovici would not get the care he needed in prison for a serious eye condition, acute optic neuropathy, which threatens to leave him legally blind.

Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135.