Obama Pardons Former Studio 54 Owner, Baseball Hall Of Famers On Tax Charges – Forbes

U.S. Treasury agents load boxes of files and records from New York nightclub Studio 54 into trucks to transfer to government offices, Thursday, Dec. 14, 1978. Co-owner of the nightclub Ian Schrager was arrested earlier today for cocaine possession during an Internal Revenue Service (IRS) search of the disco’s books. (AP Photo)

He loved the nightlife. He got to boogie. He just didn’t get around to paying his taxes. And for that, in 1980, Ian Schrager, a former co-owner of the storied Studio 54 disco, was sentenced to jail time following a conviction for federal tax evasion. This year, however, Schrager got a second chance when he was granted a presidential pardon.

The now 70-year old Schrager opened Studio 54 in 1977 with his partner (and fellow tax felon) Steve Rubell. Studio 54 became an instant hit with stars and wannabe stars who clamored to get in. Guests who made it beyond the famed velvet ropes included Elton John, Andy Warhol, Elizabeth Taylor, Mick Jagger, Michael Jackson, Cher, David Bowie, and even President-elect Donald Trump.

All of those clubbers translated into cash – lots of cash. Supposedly, the club brought in $7 million in its first year ($28 million in today’s dollars). Schrager’s partner, Rubell, bragged that “only the Mafia made more money.” Potential customers were listening, and so were the feds. In December of 1978, Studio 54 was raided. Officers found cash stashed inside the club, including dollars hidden in the ceiling. During the raid, Schrager was allegedly found with 24.67 grams of cocaine. Six months later, Rubell and Schrager, together with studio manager Richard DeCourcey, were charged with conspiring to avoid $2.5 million in corporate income taxes; Schrager was also charged on information with a misdemeanor drug offense.

The case didn’t go to trial. Rubell and Schrager pleaded guilty to evading corporate and personal income taxes; the government dropped the charges of conspiracy and obstruction of justice. Following the pleas, the pair faced up to 10 years in prison, plus fines.

On January 18, 1980, Rubell and Schrager were each sentenced to three and a half years in prison plus fines. At sentencing, Federal Judge Richard Owen told the pair, “Your crime, I conclude, is one of tremendous arrogance. You assumed you achieved your success on your own and you owed nothing to fellow citizens and the economic system.” He went on to tell Rubell, “You fail to appreciate the true nature of the seriousness of a tax charge.”

In response, Schrager told the judge, “I was able to meet with luck and meet with some success. I made some stupid mistakes. The mistakes I made I never will make again. I hope I can lead a productive life.”

Final call at Studio 54 was referred to “The End of Modern-day Gomorrah” and featured such luminaries as Diana Ross, Ryan O’Neal, Richard Gere, Jack Nicholson, and Sylvester Stallone. Shortly after, Rubell and Schrager went to prison. While in prison, the club was sold for $4.75 million ($13.84 million in today’s dollars).