The proprietor of a shuttered Harvey strip club at the center of a federal corruption case that ensnared relatives of the city’s former mayor has been sentenced to 20 months in federal prison for filing false tax returns, according to the U.S. attorney’s office.
Alicia Arnold, formerly of Homer Glen and a Lemont High School graduate, was charged in February 2021 and pleaded guilty in late November 2022. She was sentenced Wednesday by U.S. District Court Judge Jorge Alonso.
Arnold operated Arnie’s Idle Hour in Harvey, which billed itself as the “No 1 strip club on the South Side,” also promoted prostitution, with the club’s exotic dancers taking customers to a back room of the establishment, court filings showed.
According to a criminal complaint filed in 2019, the club’s owner had been making biweekly payments of $3,000 and later $6,000 to relatives of then-Mayor Eric Kellogg for years to protect a prostitution racket being run out of the business.
Last December, Rommell Kellogg, brother of Kellogg, was convicted by a federal jury in a yearslong shakedown scheme in which thousands of dollars were extorted from the club.
He has not yet been sentenced, according to court filings.
Corey Johnson, a cousin of Eric Kellogg, was charged with Rommell Kellogg in March 2019 and was the bagman in the conspiracy, according to prosecutors.
He collected biweekly $3,000 payments from the business and delivered the money to Rommell Kellogg, prosecutors said.
From 2003 to 2018, Kellogg and Johnson conspired to regularly demand and collect payments from the strip club based on threats that the city of Harvey would potentially interfere with the club’s operations if the payments were not made, according to prosecutors.
Johnson pleaded guilty in March to a count of theft/embezzlement of government property and was sentenced to a year’s probation, according to court filings.
Arnie’s, 14701 S. Wood St., operated since 1997 and was owned by Arnold’s father. After it closed, it later reopened as Boogie Nights and was the scene of a fatal shooting in March 2019.
From 2012 through 2017, the club underreported income by more than $5 million, according to prosecutors, who sought a prison sentence for Arnold of a bit more than two years but less than three years.
Her attorneys said the 55-year-old suffers from medical problems and is the sole caregiver for her terminally ill mother. They asked for a sentence of probation, including home confinement and community service.
Prosecutors said Arnold kept a separate set of books for Arnie’s, which she inherited from her father, and that she concealed income from the business from her bookkeeper.
A relative of Arnold’s was the sole shareholder of the business and purportedly the president, but Arnold was in charge of Arnie’s, receiving near-daily reports regarding operations and making all final decisions regarding the business, prosecutors said.
Arnold concealed proceeds including fees paid by patrons, nightly payments received by the club’s dancers as well as payments made by the club’s managers, which included a percentage of prostitution money earned by dancers at the club, prosecutors said in the filing recommending prison for Arnold.
Arnold would refer to the dancers as “whores” or “hoes,” and demanded from managers information about fees they collected from customers, according to the government filing.
The government said after charges were filed and while Arnold was on pretrial release, she filed two fraudulent Paycheck Protection Program loan applications, the program meant to help businesses keep their doors open during the COVID-19 pandemic.
Instead, the money she received was used for expenses such as restaurant bills, a tattoo parlor and payments to family members, prosecutors said.
Prosecutors said Arnold had no prior criminal history.
“Arnold’s fraud was brazen. Her entire goal was to evade paying taxes so that she could increase the amount of money she earned from the business” and encourage prostitution at the club, prosecutors said.
The concealment of revenue from the IRS is “a slap in the face to every honest business owner who faithfully reports their entire business income and pays the full amount of taxes due,” the government said.
Arnold’s lawyers said she is diagnosed with anxiety, depression and post-traumatic disorder, and has been the victim of violent crimes.
Arnold “has accepted responsibility and has displayed extreme remorse,” her attorneys wrote in seeking leniency.
Her attorneys said Arnold moved to Las Vegas in 2019, and her 83-year-old mother lives with her. They said that Arnold is not married and has no children.
mnolan@southtownstar.com