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Man who ran adult websites, strip clubs sentenced to Six Years for unpaid taxes

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Michigan – from www.freep.com – A Farmington Hills man who made millions in the adult entertainment industry is going to prison for six years for unpaid taxes, the U.S. Attorneys office announced today.

Francis Sharrak, 44, of Farmington Hills, also was ordered to pay $4.2 million in restitution – the taxes he owed — to the Internal Revenue Service as part of his punishment.

Authorities said despite knowing that he owed taxes, Sharrak lived large, spending large sums of money gambling and buying and leasing high-end vehicles, including a Mercedes and a Corvette.

According to court records, from 1997 to 2005, Sharrak earned millions of dollars by running and promoting adult websites, spamming millions of e-mail addresses, and consulting for adult entertainment dance clubs, including two in Ohio.

U.S. District Judge Cleland sentenced Sharrak on Monday, more than a year after a federal jury convicted him in 2010 of tax evasion and three counts of failing to file tax returns.

In 2003, records show, Sharrak filed his 1997 through 2001 tax returns, reporting more than $3.7 million in income with $1.4 million in taxes owed to the IRS. He also submitted an offer to the IRS to settle his tax debt for an amount that was far less than what he owed, but it was rejected.

Sharrak then failed to file tax returns for the years 2003 through 2005, during which he received more than an additional $1.4 million in income, records show.

According to court records, the IRS tried to collect Sharrak’s tax, but Sharrak derailed those attempts by hiding his assets and making false statements to IRS agents.

At the same time, knowing he owed taxes, Sharrak continued to pay himself in cash from the adult entertainment clubs he ran, gambled at casinos with large sums of money drawn from those same accounts, and used financial accounts he controlled that were in the names of nominees to pay his bills, records show.

Authorities said he also leased and purchased high-end vehicles in other people’s names, which included a 2003 Mercedes Roadster, a 2003 Pace Arrow Motor Home, and a 2001 Chevrolet Corvette.

His current tax debt exceeds $4 million.

“Sharrak cheated the American public out of $1.4 million. He did this on purpose, by concealing his assets and lying to IRS agents. Sharrak blatantly wasted the time of IRS agents and taxpayer dollars,” said Special Agent in Charge Erick Martinez of the IRS.

“A federal jury of his peers found him guilty and the judge has now held him fully accountable.”

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