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Denver Players Escort Case Goes to the Feds; Judge, Mayor-elect Implicated; “False!” he Cries

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DENVER – from www.thedenverchannel.com — Denver police are refusing to say why they turned over an investigation of a prostitution ring to federal authorities to prosecute on tax charges instead of filing their own charges.

According to the Denver Post, police obtained a list of client names, phone and credit card numbers.

The list from the former escort service Denver Players allegedly contains the names of some of the most powerful people in Denver. Former federal judge Edward Nottingham resigned in 2008 after being implicated as a client in the same escort service.

A former owner of the club released client records to 7NEWS that appear to show Denver Mayor-elect Michael Hancock [pictured] — his name misspelled Handcock — booking three visits with escorts using his personal cellphone number. Hancock has denied any involvement.

Denver police Lt. Matt Murray said prosecuting prostitution cases is difficult because of the quality of the evidence and the resources needed to investigate what could amount to a petty offense, but he declined to talk about the case, citing an ongoing federal investigation.

The owners of the escort service, Brenda Stewart and Scottie Ewing, are charged with failure to pay income taxes for prostitution proceeds.

Stewart owned Denver Players when the IRS indicted her for tax evasion, racketeering, witness tampering and money laundering. Ewing owned the escort service before he sold to Stewart.

In April, Stewart’s attorney filed a motion that she would plead guilty to the first count, tax evasion. A court date has been set for July.

from www.denverpost.com – For months starting in 2006, police investigated the Denver Players and Denver Sugar escort services, obtained a list of client names, phone and credit-card numbers and relied on an informant who told them about thousands of dollars in payments for sex.

But despite the records police had, and the hours of surveillance and undercover work they did on the case, only the former owner and suspected madam of the businesses were prosecuted by federal authorities.

For three years since Denver Players was shut down and federal tax charges filed against its owner, speculation has run rampant about who might be in the little white book containing customer names, now in the possession of federal authorities.

Mayor-elect Michael Hancock has been forced to defend himself against the claim of Denver Players’ previous owner that Hancock’s name and cellphone number are in the book kept by that owner through 2005. Hancock has vigorously denied any connection to Denver Players and said he has no idea how his cell number would be in the client log.

Had police pursued cases against customers of the brothel, or even the women who served them, the client records might have been made public by now. But Denver police never arrested prostitutes or their customers, and city spokeswoman Nancy Kuhn said police never forwarded a case to the Denver city attorney’s office for prosecution.

Instead, the case went to federal prosecutors, who charged Brenda Stewart, an accused madam of the business, and Scottie Ewing, a former owner, for a sometimes easier charge to prove: not paying income taxes for prostitution proceeds.

Denver police Lt. Matt Murray declined to say why the department never sought prosecution of johns or prostitutes in the Denver Players case, citing the ongoing federal prosecution.

But generally, Murray said prosecuting johns and prostitutes is difficult because of the quality of the evidence and the resources required to investigate what could amount to a petty offense.

“It’s easier to prosecute for tax evasion than the actual crime itself,” Murray said. “We can prove no taxes were paid and sometimes it is the easiest, most effective way to prosecute.”

Tax charges, while hardly titillating for a curious public, are far more serious than misdemeanor pandering or prostitution cases. So if the goal is shutting down a criminal enterprise, they can be much more effective than filing several, or even dozens of, misdemeanor cases.

Notorious gangster Al Capone ultimately went to prison on tax-evasion charges. Hollywood Madam Heidi Fleiss also served time in federal prison for not paying her taxes.

Murray says usually the person running the escort service is the ultimate target because arresting them means closing down a business that is exploiting people.

“If you have a narcotics case, do you want to arrest everybody pulling away from a crack house or take down the person selling inside?” he said. “You want to take down the person up the chain.”

Federal prosecutors declined to charge customers or prostitutes because Denver Players and Denver Sugar were local operations and the prostitutes did not cross state lines to engage in sex acts, which would be a violation of the federal Mann Act.

“In this case we focused on matters involving interstate commerce or violations of tax law, not street crime,” said Jeff Dorschner, spokesman for the Colorado U.S. Attorney’s office. “As a result of this investigation, we prosecuted two people who were involved in federal tax evasion.”

Ewing is serving six months of home detention after reaching a plea deal. He was ordered to pay a fine of nearly $80,000. Stewart is expected to plead guilty to tax evasion charges in July.

Karen Steinhauser, an adjunct law professor at the University of Denver and former Denver prosecutor, said going after prostitutes and johns can be tough because many of the witnesses needed to prove those cases lack credibility.

Unless an agreement to trade sex for money is caught on tape or by an undercover officer, juries have to rely on the word of a prostitute who may have been granted immunity in order to convict a customer. Prostitution investigations may also be considered a low priority for a big-city police department with bigger cases to work on, especially since johns and prostitutes typically only face misdemeanor or petty offense charges.

Police began watching Denver Players and Denver Sugar in 2006. It’s not known whose names might be in the book now held by federal prosecutors.

Steinhauser said a person’s name and phone number on a client list would not be sufficient evidence to charge someone with a crime anyway. Documents can be manipulated and identities stolen.

“I think the proof problems are very difficult short of having a video showing a particular person and knowing who that is and showing what they did,” she said. “How do you prove that money was exchanged? Who is going to testify to that?”

As for the names in the book, one leaked almost immediately — Edward Nottingham, then chief U.S. District Court judge. Police and prosecutors have never publicly confirmed that Nottingham was a client of the service, and the judge has always declined to comment, but he stepped down from the bench shortly after the revelations. For others, the evidence will likely never be made public, as none of the people in the book will ever face charges for that incident, federal authorities have said.

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