Proposed plea deal may close Colacurcio strip clubs

Three key members of Frank Colacurcio Sr.'s strip-club operation are involved in negotiations with federal prosecutors that could result in pleas to felony charges in exchange for an agreement that would permanently close the four clubs, sources say.

Three sources, all with direct knowledge of the case, said a deal could be struck between the government and the three defendants — club co-owners Steve Fueston, David Ebert and Leroy Christiansen — within a few weeks.

If it happens, it would mean a victory for federal and local law-enforcement officials who for years have been trying to close down Frank Colacurcio Sr.'s operations, long alleged to be fronts for prostitution and money laundering. It would also make good on a promise made by the U.S. Attorney's Office in July, when sweeping indictments against the men were unsealed, that authorities finally had enough ammunition to dismantle the Colacurcio nude-dancing empire.

Under the proposed plea deal, Fueston, Ebert and Christiansen would avoid prison time but be required to pay hefty fines, possibly in the millions, the sources say. They also would also be ordered never to operate strip clubs in Washington again.

As co-owners of the four clubs from Pierce County to Everett, the men's agreement to the order would effectively close down the clubs, say the sources, who each spoke on condition of anonymity because they were not authorized to discuss the case publicly.

The sources said there is no deal for the three defendants to testify against the 92-year-old Frank Colacurcio Sr. and his son, Frank Jr., 48, who are not part of the deal.

Attorneys for the three defendants declined to comment for this story.

Assistant U.S. Attorney Todd Greenberg, who leads the prosecution, also declined to comment.

The Colacurcios and their associates are charged with multiple counts of racketeering and conspiracy to launder money and promote prostitution, which federal agents and police say has been a mainstay of the clubs' business for years. They are scheduled to be tried in January.

The FBI, in conjunction with Seattle police, opened an investigation into the clubs in 2005 after the so-called "Strippergate" scandal, in which Colacurcio secretly funneled campaign contributions to former Seattle City Councilmembers Heidi Wills, Judy Nicastro and Jim Compton as the council was considering Colacurcio's request to add parking spaces at Rick's, a club on Lake City Way Northeast.

The elder Colacurcio and his son pleaded guilty in January 2008 to felony and misdemeanor charges, admitting they reimbursed others to skirt campaign-donation limits. The Colacurcios agreed to each pay $75,000 in criminal and civil penalties.

The Strippergate case revived law-enforcement interest in the Colacurcios and their clubs, prompting the FBI and the other agencies to form a task force in 2005.

The FBI and Seattle police conducted massive raids on the clubs and their management service, Talents West, in 2008, and a year later indicted the Colacurcios and four key employees, including Fueston, Ebert and Christiansen.

Last year, Gil Conte, 76, a longtime Colacurcio friend and business associate and former lounge singer, pleaded guilty to a racketeering-related conspiracy charge. He received no jail time and was required to give up his interest in Sugar's, a strip club in Shoreline.

Prosecutors have already moved to freeze the clubs' assets. Besides Rick's, the group operates Sugar's, Honey's in Everett and Fox's in Parkland, Pierce County.

The indictments revealed that since about March 2008, agents had been listening to the Colacurcios and their cohorts through court-sanctioned wiretaps and bugs planted in the offices of Talents West, a subsidiary that provides dancers at the clubs.

The club owners enriched themselves through a business structure that left the dancers no choice but to resort to prostitution, the indictments allege.

In a nutshell, the clubs allegedly operate by charging the dancers "rent" to work at the clubs and by charging customers admission fees and inflated prices for soft drinks. Liquor is not allowed in the clubs.

The "rent" for dancers can be as high as $130 a shift. And if they come up short, it accumulates as debt, the U.S. Attorney's Office alleges.

The management overtly supported prostitution by installing "VIP" rooms where customers could be entertained more privately, the indictments allege. And the installation of condom machines in each club encouraged prostitution, it says.

Federal prosecutors alleged the men "made millions of dollars exploiting these young women in the Seattle and Tacoma areas."

The indictments allege that the money was laundered by accepting credit cards and ATM transactions as payment from customers. Customers were issued tokens that could be traded for dances or sex acts, the indictments allege. The management allegedly would then take a cut when the dancers turned in their tokens for cash at the end of the night, thus profiting from any sex acts.

The mail-fraud allegations state that the club owners for years mailed in false entertainment-tax statements to the city of Seattle, misstating the club proceeds.

The court has allowed Fueston, Ebert and Christiansen to continue working at the clubs, although they must abide by strict rules.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com