It’s been a tumultuous week for Pure Management Group. Uniformed agents from the Internal Revenue Service, as part of a criminal investigation, raided the nightlife operator’s headquarters on February 20, seizing documents and computers.
The following day, February 21, IRS agents made a four-hour visit to LAX nightclub, inside the Luxor Hotel and Casino, and there herded employees to the vacant and enclosed second floor. The IRS declined to elaborate on what sparked the investigation.
Such secrecy is typical procedure of a criminal investigation, says Greta Hicks, a former IRS manager who advises businesses on IRS policies and procedures.
“Usually investigations are quiet,” she says. Neither PMG nor any of its members have been accused of, nor charged with, any criminal activity.
Pure operates eight establishments in town, including the former Tangerine space, Coyote Ugly and the Venus Pool at Caesars, employs more than 1,000 people and has become part and parcel of Las Vegas’ nightlife allure.
Unlike other cash-based businesses perpetually on the IRS’ radar, such as strip clubs and taxi services, nightclubs are for the most part inside Las Vegas’ hotels and casinos, and are therefore directly tied to this city’s most valuable asset: gaming establishments.
“Casinos could be held responsible for what goes on in their nightclubs, in a knowing situation,” says Nevada State Gaming Board Chairman Dennis Neilander.
That is, a casino can be held liable for any illegal activities of its tenants—and its license jeopardized—if it was aware of the activities taking place, says Neilander.
Gordon Absher, vice president of public affairs for MGM Mirage, says, “We are concerned. We are watching very closely. We are monitoring the IRS situation inside our property.”
Absher says they do not micromanage their tenants, because they seek to work with only professionals. “We expect them to operate in a professional way,” he says.
Neilander says that the gaming board has been made aware of the IRS’ investigation into PMG.
It’s only natural for the IRS to keep tabs on cash-based businesses, says Hicks, but it takes an impetus of some sort to ignite a criminal investigation. “There are times when an individual—an informant or whistle-blower—talks, and it goes straight to investigation,” she says. “The individual can get money for that.”
“Pure Management Group is fully cooperating with the IRS investigation and looks forward to a quick and satisfactory resolution,” states a press release from PMG.
Diana Nielsen, a public information officer for the Las Vegas field office of the IRS Criminal Investigations Department, says she does not anticipate resolution to come any time soon.
Illustration by Benjamen Purvis