A federal judge today sentenced two owners of the Studio 54 discotheque to 3 1/2 years in prison for income tax evasion.
U.S. District Court Judge Robert Owen told Steve Rubell and Ian Schrager that their crime -- evading $366,000 in corporate taxes from the operations of the popular nightclub since 1977 -- was an act of "tremendous arrogrance." He also fined the $20,000 each.
The two men pleaded guilty in November after their attorneys failed in efforts to trade testimony about alleged cocaine use by White House chief of staff Hamilton Jordan for a reduction in charges.
Owen noted that he took into account the defendants' willingness to cooperate with Arthur Christy, the special prosecutor appointed last month to investigate the cocaine charge.
Sources told The Washington Post earlier this week that Christy had asked Owen to postpone sentencing the two men, but was refused.
The prosecutor in the tax case, Peter D. Sudler, said the two men skimmed $2.5 million, half the nightly receipts of the disco. Owen noted that Studio 54 was "a perfect example of an overnight financial success" and said "this sentence must act as a warning to all such cash businesses."
The judge also said that the two men knew they were breaking the law when "cash register tapes were switched, records were kept behind ceiling panels and cash was even kept in a garbage bag in the basement."
The two men are to report to prison authorities Feb. 4. Richard DeCourcey, the disco's bookkeeper, was given a three-month term after pleading guilty to making a false statement on his personal tax return.