According to the indictment, Pendergrass failed to report about $3 million of additional income from 1999 through 2002, including money allegedly skimmed from cash receipts in some of his stores located throughout Tennessee.
Also charged in the case were attorneys Alan Saturn and Alan Mazer, who allegedly aided Pendergrass in concealing proceeds from a land sale that the IRS said was made to circumvent two federal tax liens filed in Davidson County for obligations pertaining to 1996 through 1998. The liens totaled more than $500,000.
The investigation also nabbed a former IRS agent, James Hammonds, who was charged with one count of conspiracy to defraud the U.S. government and eight counts of aiding and assisting in the preparation of false income tax returns.
Pendergrass had employed the former IRS agent, who worked for the agency’s criminal investigation division, to prepare his tax returns.
Hammonds also allegedly helped Pendergrass prepare fraudulent balance sheets for a number of his adult enterprises, as well as false financial statement that were submitted to the IRS.
U.S. Attorney James Vines and Cleve Daniels, special agent in charge announced the indictments for the IRS Nashville field office.
According to the indictment, Pendergrass owned, or was involved in, various adult bookstores in the Clarksville, Nashville and Chattanooga areas that operated under business names including Southern Secrets, Midnite Video, Broad Street Video, The Outer Limit of Nashville, Video Express, I-40 Bookstore and Galerie Erotique.
No trial date has been set.
Pendergrass is not the only adult bookstore proprietor to draw the unwanted attention of the IRS. In February, XBIZ reported that Eddie Wedelstedt, who owns Goalie Entertainment — the parent corporation for nearly 60 retail stores across the country — was sentenced to a 13-month prison stint for federal tax evasion.
