Feds say busted escort service owner up to his “old tricks”
Federal prosecutors say Manny Varagiannis is “up to his old tricks” in the escort service business, and they’re seeking the toughest prison term for him Monday when he’s sentenced for tax evasion.
In court papers, Assistant U.S. Attorney Cristina Silva said she is concerned Varagiannis’ claim that he sold Midnight Entertainers, one of the largest prostitution-driven escort services on the Strip, is nothing more than a sham to gain back control of the lucrative company.
A Las Vegas police investigation also revealed that Varagiannis is still deeply involved in Midnight Entertainers through a company he set up called CONE, which provides kickbacks to cab drivers who refer passengers to the escort service, Silva said.
Another company Varagiannis incorporated in June obtained a Clark County business license for CONE on Aug. 20, the investigation found.
The investigation, conducted in September and October with the help of undercover detectives, also documented that Midnight Entertainers is still involved in prostitution, according to the court papers.
Varagiannis, who pleaded guilty in April to felony tax evasion, hid his efforts to create CONE from probation officers preparing his sentencing report, Silva argued.
“Within two months of pleading guilty in the instant offense, the defendant is right back to the same type of business that landed him before this court in the first place,” Silva wrote. “In other words, the defendant is up to his old tricks, but using a new name.”
Varagiannis also claims to work as a consultant for Vegas Limousine Service, known as VLS, according to a police report Silva submitted with her court papers.
Defense lawyer Richard Wright said in court papers that Varagiannis is ashamed and remorseful for under-reporting his taxes and hopes to avoid a prison term.
Wright said his client has not committed any other crimes, and he asked for a sentence of three years probation with “substantial” community service.
Probation officers have recommended a sentence of between 18 and 24 months behind bars.
In his April plea agreement with prosecutors, Varagiannis, 43, admitted that he failed to declare $230,651 in taxes between 2009 and 2011. He agreed to pay the money as restitution to the IRS.
The criminal case, brought by an IRS-led financial crimes task force involving Las Vegas police, is part of a crackdown on the lucrative escort service business, long regarded as a haven for prostitution on the Strip.
Varagiannis, who once served as a general manager of the Olympic Garden strip club, was charged in 2012 with making dozens of cash deposits of less than $10,000 to bank and credit union accounts under his control. Federal laws designed to prevent money laundering require the reporting of all cash transactions exceeding $10,000.
According to a criminal complaint, Dolores Eliades, the daughter of longtime Olympic Garden operator Pete Eliades, cooperated with IRS agents in the investigation.
“Dolores has had conversations with Manny where he stated that he gets 60 percent of the earnings from the girls who work for his escort business,” the complaint said. “Manny told Dolores he was aware of the fact that the girls were having sex with customers for money.”
IRS agents learned during their investigation that Midnight Inc. was doing the same thing Varagiannis is now accused of doing — putting out fliers promising kickbacks to cabdrivers for referrals.
Police conducted an undercover sting at the time that confirmed female entertainers working for Midnight Entertainers were involved in prostitution.
Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow @JGermanRJ on Twitter.
