NEW HAVEN, Conn. — HSI New England Special Agent in Charge Michael J. Krol, U.S. Attorney for the District of Connecticut Vanessa Roberts Avery, IRS Criminal Investigation in New England Special Agent in Charge Harry T. Chavis Jr. and Connecticut State Police Colonel Daniel Loughman announced May 15 that a federal grand jury in Hartford has returned a 12-count indictment charging Kenneth Denning, 67, of Holland, Massachusetts; Joshua Baker, 41, of Willimantic; and William Mayo, 41, of Manchester, with offenses stemming from the operation of the Electric Blue strip club in Tolland.
The indictment was returned May 14 and Denning, Baker and Mayo were arrested May 15.
As alleged in the indictment, Denning owned and oversaw the operation of the Electric Blue strip club, which included the employment of dancers who performed nude dances and lap dances for customers. Baker was the club’s manager and bookkeeper, and Mayo was employed at the club as a bouncer and was primarily responsible for hiring dancers, many of whom were not legally authorized to live or work in the United States.
The indictment alleges that the Electric Blue had a semiprivate “lap dance room” and “VIP rooms” where dancers regularly performed commercial sex acts for customers. As payment for commercial sex acts, customers would typically pay the club an entry fee for use of the lap dance room or one of the VIP rooms and then pay an additional fee directly to the dancer. In addition, the club collected cash through cover charges paid at the door and fees paid by dancers to perform at the club. Baker or another club employee would collect the cash received by the club, place the cash in envelopes noting the source of the cash, and then place the envelopes in a safe in Denning’s office. The defendants referred to this cash as “Kenny’s money,” and used this money to pay business expenses and fund Denning’s personal expenditures, including trips to casinos where Denning spent large sums of money.
The indictment also alleges that Denning and Baker provided false information to the club’s tax return preparer in 2020, 2021 and 2022 by underreporting the gross receipts from the club and excluding income derived from commercial sex acts. As much as approximately $5.7 million in business receipts were not reported to the IRS, causing a tax underpayment of more than $2 million.
The indictment further alleges that Denning committed fraud by applying for and receiving an Economic Injury Disaster Loan during the COVID-19 pandemic by certifying that the business did not “present live performances of a prurient sexual nature.” Denning received a loan of approximately $150,000 in July 2020.
The indictment charges Denning, Baker and Mayo with conspiracy to use an interstate facility to promote or facilitate prostitution, an offense that carries a maximum term of imprisonment of five years, and with unlawful employment of aliens, an offense that carries a maximum term of imprisonment of six months.
Denning and Baker are charged with conspiracy to file false tax returns, which carries a maximum term of imprisonment of five years, and with conspiracy to commit promotional and concealment money laundering, which carries a maximum term of imprisonment of 20 years.
Denning is charged with engaging in a monetary transaction with proceeds derived from prostitution, an offense that carries a maximum term of imprisonment of 10 years, related to a cash deposit of approximately $21,700 at the Mohegan Sun Casino. He is also charged with aiding and abetting the filing of a false tax return related to his personal tax return for the 2020 tax year, an offense that carries a maximum term of imprisonment of three years, and with willful failure to file his personal tax return for the 2021 tax year, an offense that carries a maximum term of imprisonment of one year. He is also charged with wire fraud in connection with his receipt of the Economic Injury Disaster Loan, which carries a maximum term of imprisonment of 20 years.
An indictment is not evidence of guilt. Charges are only allegations, and each defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.
This matter is being investigated by HSI New England’s Hartford Resident Agent in Charge office, the IRS Criminal Investigation Division, the Connecticut State Police, the Connecticut Department of Consumer Protection’s Liquor Control Division, and the Massachusetts State Police, with the assistance of the Willimantic Police Department and the Manchester Police Department.
If you have additional information on this case, contact the HSI tip line at 877-4-HSI-TIP.
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HSI is the principal investigative arm of the Department of Homeland Security, responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move. HSI’s workforce consists of over 10,000 employees, assigned to 235 offices within the United States, and 93 overseas locations in 56 countries. HSI's international presence represents the Department of Homeland Security’s largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.