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Karl A. Racine
Office of the Attorney General for the District of Columbia
 

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Attorney General Karl Racine Secures Convictions Against Strip Club Owner Related to Alleged CBE Fraud

Tuesday, November 7, 2017
Defendant Claimed District Residency & Was Awarded Preference Points

Contact:
Rob Marus, Communications Director: (202) 724-5646; [email protected]
Marrisa Geller, Public Affairs Specialist: (202) 724-5448; [email protected]


WASHINGTON, D. C. – Attorney General Karl A. Racine today announced that Stadium Club owner Keith Forney has been found guilty of five counts of failure to file certain tax forms in a case related to Certified Business Enterprise (CBE) fraud. Office of the Attorney General (OAG) prosecutors alleged that Forney falsely claimed to live at addresses in the District of Columbia, one of which he actually used as a rental property. His use of the addresses afforded him unfair advantage over competitors in bidding for contracts with the District government.

“Tax fraud hurts all of our residents, and CBE fraud hurts our city by taking business away from bona fide local businesses owned by District residents,” Attorney General Racine said. “The integrity of the CBE program is at risk when preferential designations are awarded to an entity based on misrepresentations by individuals for fraudulent financial benefit. Our office will continue to pursue and vigorously prosecute those who try to defraud our city.”

OAG prosecutors alleged that Forney used his rental property address on his tax forms to obtain resident-owned business (ROB) status from the District’s Department of Small & Local Business Development (DSLBD). The ROB status is a component of CBE certification, a longstanding District government program that encourages District government dollars to go to small and local businesses owned by District residents and members of minority or other disadvantaged groups.

Attorney General Racine said that, according to trial testimony, Forney never resided at the addresses, and actually rented one of them out to tenants for profit. The trial jury handed down guilty verdicts on five counts regarding Forney’s failure to file unincorporated business income tax returns showing the rent he received from the tenants. Forney faces consecutive penalties of 180 days in jail or a $1,000 fine, or both, for each of the counts. Forney’s ROB status was previously revoked by DSLBD.

The jury was unable to reach a unanimous verdict on five other counts against Forney for fraud and false statements; those charges remain pending. Forney also currently faces separate charges from the U.S. Attorney’s Office for the District of Columbia related to fraudulent business practices, election fraud, and campaign finance violations.

Attorney General Racine thanked OAG prosecutors who worked on the case. “Tax cases are document-heavy, time-consuming, and rarely go to trial -- but OAG Criminal Section prosecutors Bayly Leighton and Keith Ingram did excellent and painstaking work in assembling and presenting a solid case that the jurors found compelling,” he said. “My thanks to them and their supervisors, Deputy Attorney General for Public Safety Mina Malik and Criminal Section Chief Peter Saba, for guiding this case to a good resolution for the District’s taxpayers and small businesses. I also thank Special Agent Solomon Irving from the D.C. Office of Tax and Revenue for his work on this case.”

For more information about the District’s CBE program visit DSLBD’s website here.