SALT LAKE CITY -- The former owners of Teazers Sports Bar & Grill in Ogden have pleaded guilty to charges of filing false tax returns in what federal prosecutors called a five-year tax fraud scheme.
U.S. Attorney for Utah David B. Barlow and Special Agent in Charge Paul A. Camacho of the Internal Revenue Service-Criminal Investigation Las Vegas Field Office made the announcement about the guilty pleas from the North Ogden couple.
Robert Watson, 54, pleaded guilty Sept. 4 to two counts of filing false tax returns -- one a corporate return and one a personal return. He faces a maximum penalty of three years in prison and a fine of $100,000. Marie Watson, 52, pleaded guilty the same day to one count of filing a false personal tax return and also faces a maximum penalty of three years in prison and a fine of $100,000.
Judge Clark Waddoups scheduled sentencing for the Watsons for Jan. 10.
The charges arose out of the Watson's operation of Teazers Sports Bar & Grill, also known as Teazers Club Insomnia, from 2004 through 2008. They subsequently sold the club at 366 36th St. in Ogden.
The couple was charged with filing multiple false tax returns during the five-year span, but pleaded guilty to charges related only to 2007, according to charging documents.
The Watsons failed to report cash income from cover charges assessed patrons at the door and other items in the bar, such as pool tables and video games, according to the indictment. The omissions "caused tax returns to be filed with the IRS that grossly understated their true income," reads a news release issued Monday by the U.S. Attorney for Utah's office.
The Watsons' defense attorney, Rebecca Hyde Skordas, objected to the depiction of her clients' crimes in the news release as a tax fraud scheme.
"They were only charged with filing a false return, not tax evasion," Skordas said. "The penalty for tax evasion is twice that of filing a false return. To call it a tax fraud would be overstating the case."
According to the publicly filed plea documents, Robert Watson could owe the IRS as much as $221,290 in back taxes, and Marie Watson could owe as much as $114,942 accrued over the five-year period. The final restitution amount owed to the IRS will be determined at sentencing, said the news release.
Skordas disputed those numbers, saying she would argue at sentencing the couple owes closer to $100,000 in back taxes total, together.
The federal formula under sentencing guidelines for equating tax liability amounts to taxing defendants twice, and is not the actual amount owed, she said.
"The sentencing guidelines don't relate to what happens in the real world," Skordas said.
The Teazers site is currently vacant, having been sold sometime after 2008, is all Robert Watson would comment on the club's current state.
The new owners renamed it Club 366. But an April 28 statement this year on the Club 366 Facebook page says the club was closing down that day.
"We would like to thank all of you that have supported 366 from the get go," it reads. "Well, as much as hurts to say, and for legal reasons we can't say much, but the time has come for Club 366 to close the doors."
Contact reporter Tim Gurrister at (801)625-4238 or email@example.com. Follow him on Twitter at @tgurrister