The two indicted owners of Studio 54 discotheque pleaded guilty, as expected, here today to federal income tax charges.
U.S. District Judge Richard Owen set sentencing Jan. 18 for Steven Rubell and Ian Schrager, who made the pleas as part of an arrangement with the Justice Department to drop the rest of the multicount indictment.
There was no mention at the brief court hearing about any cooperation by the two men in the government's investigation of alleged cocaine use by White House chief of staff Hamilton Jordan.
The nightclub owners gained notoriety in August when Schrager's attorney, Mitchell Rogovin, alleged that Rubell had seen Jordan using cocaine at Studio 54 in 1977. Rogovin said he hoped to trade his client's testimony for a better deal on the tax charges.
Though the allegation forced the FBI to open an investigation of Jordan under the special prosecutor provisions of the new Ethics in Government Act, Justice Department officials insisted the tax case would not be sacrified for aid in the Jordan matter.
Attorneys for the two men said they were pleased that the government dropped obstruction of justice charges and a cocaine possession charge against Schrager.
Schrager, a lawyer, told the court, "I made a serious error in judgment which I deeply regret." He could face disbarment as a result of the plea.
Roy Cohn, Rubell's attorney, told reporters on the steps of the courthouse that the club hopes to save its liquor license because income tax violations don't require disciplinary action under New York laws.
On Thursday, the State Liquor Authority filed drug-use and liquor-tax evasion charges against the club in a move to strip Studio 54 of its license.
Rubell and Schrager pleaded guilty of paying corporate taxes of $8,366 on reported taxable income of $47,807 during the club's first year of operation. The club's actual income was $791,182 and the taxes due were $366,267, the men agreed in entering the plea.
Rubell pleaded guilty to reporting personal income of $55,675 for 1977 when his income actually was $131,862. Thus taxes due were $55,260, rather than the $18,052 he paid.
Schrager reported making $40,838 in the same year when his income was $116,976. He paid $14,061 in taxes, rather than the $59,146 due.
Attorney General Benjamin R. Civiletti reportedly is nearing a decision on whether to ask a special court to name a special prosecutor to investigate the Jordan cocaine allegation.