Late last month, the U.S. Attorney’s office indicted Bourbon Street and Lei Lounge business owner Michael Weiss for tax fraud.

The indictment alleges that Weiss underreported approximately $1.6 million between 2004 and 2005 as the principle-operating officer and manager of Philadelphia after-hours nightclub Palmer Social Club (PSC), which is registered as a nonprofit/tax-exempt organization.

The U.S. Attorney’s office is charging the nightclub owner with tax fraud on several counts: one count of corrupt endeavor to impede the due administration of the tax code and two counts of aiding and abetting the preparation and filing of false tax returns.

The indictment alleges that, at the end of each business night, a PSC employee collected bar receipts and cash and recorded their amounts onto a “tally sheet” and placed them in a bag and drove and deposited the bag at Weiss’s home. Weiss then used the employee’s tally sheet to prepare PSC’s financial records and did so by creating two sets of records: one that stated PSC’s total revenue tallied by the employee and another that underreported the club’s total revenue, the indictment states.

For 2004, PSC made approximately $1,411,373 but only reported $528,228 on IRS form 990, underreporting its annual revenue by $883,145, according to the indictment.

The indictment also alleges that for 2005, PSC made approximately $1,411,390 but only reported $641,409 on IRS form 990, underreporting its annual revenue by $768,981.

Under federal sentencing guidelines, Weiss could face a nine-year prison term, a fine up to $750,000 and two years of supervised release and the nightclub could be stamped with a $350,000 fine.

Several attempts were made to reach Weiss for comment but he did not respond.

Tom Bergstrom, Weiss’s attorney, questions several of the allegations in the indictment: that Weiss would underreport revenue for a nonprofit/tax-exempt organization and the specific figures that Weiss is being accused for underreporting.

“Why would you underreport receipts for a nonprofit when you don’t have to pay taxes on a nonprofit? That doesn’t make a whole lot of sense. It’s not completely logical,” Bergstrom said.

“And then the numbers do not seem to square with what we think the numbers should be,” he added.

At an arraignment hearing on Feb. 3, Weiss pleaded not guilty to all counts and Bergstrom, on behalf of PSC, pleaded not guilty to two counts of filing false tax returns.

Weiss was released on $250,000 bail, 10 percent of which had to be paid in cash, with the requirement that he not leave the country, relinquish his passport and only travel within the Eastern District of Pennsylvania and the Southern District of California, The Philadelphia Gay News reported.

The trial against Weiss and PSC is set for April 12, said Patricia Hartman, spokesperson for the U.S. Attorney’s Office in the Eastern District of Pennsylvania.

Assistant United States Attorney Floyd J. Miller is prosecuting the case.