Hip-hop club, manager charged with tax fraud

A popular Philadelphia hip-hop nightspot and its principal manager were charged by a federal grand jury yesterday with filing false tax returns and related offenses.

Authorities said that the Palmer Social Club, at 6th and Spring Garden, which is a tax-exempt nonprofit, underreported its gross receipts for tax years 2004 and 2005 by more than $1.6 million.

The huge private club, which takes up three floors of an old religious-goods warehouse, is one of the city's few after-hours spots.

Palmer was reportedly a favorite spot for convicted drug kingpin Alton "Ace Capone" Coles.

Coles, sentenced to life plus 55 years in federal prison last April for running a continuing criminal enterprise and related weapons offenses, used to host weekly Friday-night parties at the club that attracted crowds of more than 1,000, sources said.

The club has also been hit with liquor and noise citations in the past, according to published reports.

Palmer's principal operating officer and manager, Michael Weiss, 46, of Center City, was also charged with preparing false financial statements.

Authorities said that Weiss had given the allegedly bogus financial records to the club's accountant, knowing he would use them to prepare Palmer's tax returns.

The indictment alleged that Weiss had prepared two sets of financial records, one with the actual tally of gross receipts and a second set that understated them.

For example, the indictment charged, in 2004 Palmer had gross receipts of $1.4 million but reported only $528,228 on its annual tax return; and the following year, Palmer took in approximately $1.4 million but reported only $641,409 on its return.

Both returns were signed by Weiss, the indictment charged.

Defense attorney Thomas Bergstrom said that he disputed the government's calculations of the club's gross receipts. "Unless we can resolve it, we'll probably wind up trying the case," he said.