Nightclub, ex-manager plead guilty to tax fraud, obstruction

The Palmer Social Club, a Philly hip-hop nightspot, entered a guilty plea yesterday in federal district court to filing false tax returns, and its former manager, Michael Weiss, copped a plea to corruptly obstructing the administration of federal tax laws.

Weiss, 46, of Center City, admitted he gave bogus financial statements to Palmer's corporate accountant to prepare its 2004 and 2005 tax returns.

The false tax returns then were signed by Weiss and filed with the IRS by Palmer, the government's plea memo said.

Prosecutors said Palmer understated its gross receipts by more than $1.65 million in 2004 and 2005, resulting in a total tax loss of $397,000.

As part of its plea deal with the feds, Palmer has agreed to give up its federal income-tax exemption, which it has had since 1968, to prepare delinquent corporate tax returns for years 2004 through 2009 and to pay all back taxes, penalties and interest.

The private club, which takes up three floors of an old religious-goods warehouse at 6th and Spring Garden streets, is one of the city's few after-hours spots.

Convicted drug kingpin Alton "Ace Capone" Coles, now serving a life sentence in federal prison for running a $25 million cocaine-distribution network, once hosted weekly parties at the club, published reports said.

The feds cracked the case against Weiss and Palmer with help from a former Palmer employee, the plea memo said.

The court filing said the IRS received information in May 2005 that Palmer was not operating as a social club but as a "for-profit" nightclub.

The witness told an IRS agent that Weiss maintained two sets of financial records, one with the actual tally of gross receipts and another that understated them, the feds said.

Authorities subsequently compared "tally sheets" with Palmer's tax returns, the plea memo said, and agents later executed a search warrant at Weiss' apartment, where they seized a "thumb drive" for a computer.

An analysis of the thumb drive revealed two sets of books for 2004 and 2005, one of which understated Palmer's gross receipts, the plea memo said.

U.S. District Judge Jan DuBois set sentencing for Oct. 15.

Weiss could face 10 to 16 months in a federal lockup. Palmer could be fined as much as $1 million and be placed on "organizational probation."