A federal judge this week sentenced local bar owner Michael Weiss to one year of house arrest for improperly reporting the earnings of one of his nightclubs.
Judge Jan DuBois on Tuesday ordered Weiss to three years of probation, with the first 12 months spent under house arrest with an electronic ankle monitor.
Weiss must also pay a fine of $30,000 within the next month and complete 300 hours of community service.
Weiss, who co-owns Woody’s with his brother and serves as president of the board of Voyeur, was indicted in January on three counts of tax fraud stemming from his involvement with the Palmer Social Club, an after-hours club on Spring Garden Street.
The indictment stated that Weiss underreported the club’s earnings on its 2004 and 2005 tax filings by $1.6 million. Weiss pleaded guilty in June to corrupt endeavor to impede the due administration of the tax code.
The judge dismissed two counts of aiding and abetting the preparation and filing of false tax returns.
During the sentencing hearing this week, DuBois also imposed a $562,000 fine against the club, of which Weiss’ father, Barnett Weiss, is president and director. The club was placed on five-years’ probation and must pay the IRS back taxes since 2004 that it did not pay because it was deemed a tax-exempt nonprofit, a status the club agreed to give up this week.
Tom Bergstrom, attorney for Weiss and the club, called the sentences “very fair.”
Bergstrom noted that the change in tax status may affect the club’s ability to function as an after-hours locale, although he said such details will need to be worked out.
Bergstrom said he also needs to determine the specifications of Weiss’ house arrest. DuBois said Tuesday that Weiss would be permitted to leave his home to work, seek medical treatment, attend religious services, shop for necessities and complete his required community service. Weiss is also permitted to leave his house for another reason if the plan is pre-approved by his probation officer.
Weiss owns several businesses and restaurants in San Diego, and Bergstrom said the order does not appear to preclude him from traveling to California to attend to business, although he needs to further evaluate that stipulation.
Weiss could have faced 10-16 months in prison, but the judge elected to sentence him outside of those guidelines.
Attorneys for both sides took part in a lengthy discussion prior to the sentencing on if Weiss’ crime constituted an “abuse of trust.” The judge, citing a dearth of prior case law, granted Bergstrom’s motion to remove the violation.
DuBois told Weiss he was “fortunate” the government produced no evidence he had taken the $1.6 million personally, an aspect that he said factored into the sentence.
“A lot has been suggested, but nothing’s been proven,” DuBois said. “A lot of people want to know what happened to that $1.6 million, at least this person does, but I’ve seen no evidence that you took the $1.6 million, you weren’t charged with tax evasion and that’s not what you pled guilty to.”
Bergstrom offered the same view in his final remarks before the sentencing.
“We can’t run from the elephant in the room: What happened to the money?” he said. “I don’t know. But those are not the charges. There’s not a shred of evidence that Michael Weiss took that money. The truth is Michael Weiss doesn’t owe the government a dime.”
Assistant U.S. Attorney Floyd Miller noted that when investigators executed a search warrant of Weiss’ Cherry Street apartment in January 2007, they found $300,000 in cash. However, the cash was not confiscated, as there was no proof it was connected to wrongdoing.
DuBois said he also took note of the community support he saw for Weiss, including the full gallery at the sentencing hearing.
The judge said he received dozens of letters of support from Weiss’ friends, community and business leaders in Philadelphia and California, and political leaders including a Philadelphia City Councilmember, many of whom cited Weiss’ commitment to donating money and energy to LGBT and HIV/AIDS causes.
Such sentiments were echoed during the hearing by the witness testimony of Tre Rios, general manager of Voyeur; Weiss’ neighbor and friend Joe Vilano; San Diego LGBT activist and city commissioner Nicole Murray Ramirez and Tom Bender, a friend of Weiss who is blind and HIV-positive and who testified that Weiss frequently assists him in paying his mortgage and other expenses.
“He’s involved in every facet of community life,” Bergstrom said. “He’s dedicated, he’s generous and he focuses on those who are ill and poor. That’s what he does.”
DuBois told Weiss his community involvement and his clean record factored into his decision.
“Sentencing is difficult, particularly in a case like this,” he said. “You’ve been generous with your money and generous with your time and supported causes that may have been otherwise overlooked. In imposing this sentence, I had to consider both the good things you’ve done and the bad things you’ve done.”
Jen Colletta can be reached at [email protected].