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Strip-club owner charged in $12 million cash stash

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Michael G. Wellek, accused of tax evasion, owns this Elk Grove Village topless bar and two others, authorities say.

A suburban topless-bar honcho was slapped with federal charges Thursday after he was accused of stiffing the IRS of millions of dollars in taxes while hoarding $12 million in cash in an Elk Grove Village warehouse.

Federal authorities say Michael G. Wellek, 63, owned and operated three strip clubs -- Heavenly Bodies in Elk Grove Village, Skybox in Harvey and Cowboys in Markham -- where he cashed in for years but allegedly tried to keep the Internal Revenue Service from collecting its share.

Wellek has long been investigated by the IRS for the cash-driven businesses and has long contested the agency's 2003 seizure of the $12 million he held at the warehouse, arguing in part that the government shouldn't hold more money than he's liable for paying in penalties.

At least one of Wellek's clubs is known for free food and cheap drinks, bringing in most of its business from its exotic dancers.

In the warehouse, a room was set aside for cash, where investigators found piles and piles of bags and boxes stuffed with virtually every denomination, according to those with knowledge of the seizure.

Each bag or box was marked by date and by the bar that brought in the cash at these businesses largely driven by exotic dances. At Heavenly Bodies, "2 dances for $20 in the back room is a good time. 5 songs for $50 in a more private setting gets you a lot of good attention," according to one customer's report on Yelp, an online business-review site.

Wellek is accused of failing to file any personal income tax returns from 1989 to 1999 and then dodging, lying and obstructing IRS agents for years as they pursued their investigation. Wellek had argued he had an OK to report the income when he deposited it, rather than when it was earned, according to court records. The cash, he contended, was brought there for counting and was to be deposited later.

The government didn't buy that argument, saying Wellek didn't disclose the practice. The feds wrote in a 2004 filing: "The United States has presented conclusive evidence that Mr. Wellek failed to file returns ... all the while maintaining $12 million in cash hidden in a warehouse."

In one instance, the search of the warehouse revealed Wellek had failed to report $3.5 million in income in 2000, according to court records.

"Clearly, Mr. Wellek was attempting to prevent the IRS from learning of his true income, and thus his actual tax liabilities," U.S. Department of Justice lawyers wrote in 2004.

Wellek's lawyer, Terry Ekl, said his client now has only an "ownership interest," in the three clubs and is still in a civil dispute concerning the $12 million.

On the criminal side, however, Ekl said resolution of the two charges is near.

"I anticipate he will plead guilty to the charges," Ekl said Thursday.

He faces up to three years in prison for each charge.

One Yelp commenter spoke of the best way to get strippers' attention at Wellek's clubs, and it indeed involved doling out the greenbacks: "To get noticed, walk up to the stage and make it rain."

Another complained about Heavenly Bodies: "Some of the girls don't really know how to ... hold a conversation. I would only go to this place for group gatherings for the free food and cheap drinks. Not so much for the strippers."