Indictment maps out details of CT strip club arrests, nude dancing, alleged prostitution operation

As alleged by federal authorities, the defendants and their coconspirators attracted customers to the Electric Blue by advertising and featuring women dancing nude and semi-nude on stages.

When a federal grand jury indicted the owner and two employees of the Electric Blue strip club in Tolland on charges they conspired to commit an array of financial crimes associated with an alleged prostitution operation at the business, officials released the document detailing the allegations and conclusions of the investigation.

Authorities accused three people of offenses that included money laundering and illegal hiring of aliens: Kenneth Denning, 67, of Holland, Mass.; bookkeeper Joshua Baker, 41, of Willimantic; and bouncer William Mayo, 41, of Manchester.

Federal prosecutors allege the three participated in an operation in which customers paid as much as hundreds of dollars for sexual encounters with nude dancers in the strip club’s warren of private rooms and semi-private cubicles, some of which were monitored by security cameras.

Claims in the indictment map out an alleged scheme that included undocumented immigrants, nude dancers, ATM schemes, cash payments, fake documents, a “Champagne room”, and strippers. All of the information here are allegations made by federal authorities, the suspects have not been convicted.

The suspects:

Kenneth Denning was the owner of the Electric Blue Café, a strip club in Tolland; Electric Blue was owned by Denning Enterprises, a holding company nominally owned by Denning’s wife, but controlled by him.

Joshua Baker worked at the Electric Blue and served as the manager and bookkeeper for the club.

William Mayo worked at the Electric Blue and served as a bouncer and was responsible for hiring dancers to work at the club.

How customers were attracted:

As alleged by federal authorities, the defendants and their coconspirators attracted customers to the Electric Blue by advertising and featuring women dancing nude and semi-nude on stages and in private and semi-private rooms.

Electric Blue advertised itself on social media and elsewhere as a gentlemen’s club that employed numerous dancers and held promotional events and contests.

On some occasions, but not all, customers would be required to pay a cover charge, typically $5 but sometimes more, at the door to enter the Electric Blue.

A coconspirator regularly posted on social media accounts for the club, including a Facebook account in the name “Electric Blue Café” advertising and promoting events with dancers to attract customers, each social media post being a separate overt act.

The cover charge was always paid in cash.

The setting:

As alleged by federal authorities: The Electric Blue had multiple small, private rooms inside. These rooms, called “VIP rooms” or “Champagne rooms,’ were typically furnished with a small couch and were separate from the rest of the club.

To enter one of the VIP rooms with a dancer, a customer had to pay a fee to an employee of the club, usually but not always paid in cash, and then negotiate an additional fee with the dancer directly for their time in the VIP room. These additional fees often included payments for commercial sex acts with the dancers.

Electric Blue also had a “lap dance room,” which was a room with semi-private stalls where dancers and customers could go for private dances.

The “fees”:

As alleged by federal authorities: To enter the lap dance room, a customer had to pay a cash fee to an employee of the club, and then negotiate a fee for the private dance directly with the dancer. These additional fees often included payments for commercial sex acts with the dancers.

Dancers were encouraged by employees of the Electric Blue, including the defendants, to solicit customers to engage in commercial sex transactions in the private and semi-private rooms.

The defendants ordered, placed, and operated automated teller machines in the Electric Blue.

Denning allegedly profited from the use of the ATMs by customers of the Electric Blue. The ATMs were facilities operating in interstate commerce.

Economic Injury Disaster Loan Program

The United States Small Business Administration agency provides support to entrepreneurs and small businesses and by assisting in the economic recovery of communities after disasters.

Loan applicants are asked questions, one of which is certifying that “Applicant  does not present live performances of a prurient sexual nature or derive directly or indirectly more than de minimis gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature.” Applicants must certify that all of the information in the application was true and correct to the best of the applicant’s knowledge.

Conspiracy:

As alleged by federal authorities: Beginning in or around January 2020 and continuing through at least March 2023, Denning, Baker, and Mayo “did knowingly and willfully combine, conspire, confederate, and agree with each other, and with others known and unknown to the Grand Jury, to commit an offense against the United States, namely, the following object of the conspiracy”: to use facilities in interstate commerce, including but not limited to automatic teller machines (“ATMs”), the processing of credit card payments, and social media accounts operated on behalf of the Electric Blue, with the intent to promote, manage, establish, carry on, and facilitate the promotion, management, establishment, and carrying on of unlawful activity, namely, prostitution offenses in violation of Connecticut laws.”

Denning, Baker, and Mayo allegedly “hired dancers to work at the Electric Blue. They then allowed nude dancers, commonly referred to as strippers, to perform at the Electric Blue. Despite Connecticut laws prohibiting fully nude dancers at strip clubs, the defendants and their coconspirators allowed and encouraged dancers to be fully nude.

“The defendants and their coconspirators typically, but not always, required each dancer to pay a ‘house fee’ to perform. The amount for house fees varied but could be as much as $50 per dancer per shift. This payment was almost always paid in cash and was collected by the defendants and their coconspirators. The dancers would perform dances for customers, often referred to as lap dances, in the semi-private ‘lap dance room’. The defendants and their coconspirators maintained the lap dance room for this purpose. To enter the lap dance room with a dancer, a customer would pay a cash fee, typically $20, to an employee of the bar.

“Defendants and their coconspirators collected the $20 entrance fee to the lap dance room. The customer then paid the dancer a separate fee for the lap dance. Customers regularly paid dancers for commercial sex acts in the lap dance room. The sex acts would occur in semi-private booths. The defendants and their coconspirators understood and intended that a lap dance often involved dancers engaging in sex acts with the customers. The lap dance room was visible to the defendants and other employees of the club, who could see in the room or inspect what was going on inside. The defendants could also view the lap dance room through security cameras on screens in the back office of the Electric Blue.”

Further, “the dancers would perform dances or shows for customers in private rooms in the club, often referred to as the VIP room’ or the ‘Champagne room.’

“These rooms were separated from the rest of the club, giving the dancers and their customers privacy from the rest of the patrons. To enter a private room with a dancer, a customer had to pay a fee to the bar, typically $100-$150, often but not always paid for in cash.

“Customers would regularly pay dancers for commercial sex acts in the private rooms. The customers would pay the dancers directly, almost always in cash, for the commercial sex act. Many customers at the Electric Blue obtained some or all of the cash used to pay for entrance fees to the semi-private and private rooms and for commercial sex acts from dancers from ATMs on the premises. The defendants and their coconspirators knew and intended that customers would regularly use cash from the ATMs to pay for commercial sex acts.

“The $20 fee to enter the lap dance room and the $100-$150 fee to enter the private rooms, typically paid in cash, went to ‘the house,’ meaning these funds went to the defendants and their coconspirators. The dancers negotiated the fees paid for the lap dances or private shows and retained those fees, which were almost always paid in cash. In other words, the dancers performed sexual acts on their customers in return for the customers having paid ‘the house’ a fee, typically either $20 or $100- $150 depending on the level of privacy desired, along with paying the dancer a separate fee, sometimes hundreds of dollars or more, often with cash from the ATMs.”

“In addition, dancers sometimes travelled to locations away from the Electric Blue with customers to engage in commercial sex acts. Employees of the club, who worked for Denning and were managed by Baker, often drove dancers to the locations to engage in commercial sex acts, which were often paid for in cash.”

“To conceal the conspiracy and to conceal their knowing facilitation, promotion, and management of the commercial sex acts at the Electric Blue, the defendants and their coconspirators required the dancers to sign a contract before beginning employment at the club. The contract states, among other things, that dancers “must be clothed at all times;” “cannot be touched by any other person on the premises on the breasts, buttocks, anus, or genitals;” and “cannot perform Sexual Acts of any kind on the premises, regardless of whether the dancer has chosen to consensually perform such acts even at the dancer’s own free will.”

“The defendants and their coconspirators provided the dancers at the club with condoms for use during commercial sex acts at the club, each provision of condoms being a separate overt act. The defendants and their coconspirators required the dancers to sign a contract  before beginning work at the Electric Blue, each such signing being a separate overt act. ”

The indictment also charges the men with being “engaged in, and aided and abetted in, a practice and pattern of hiring for employment in the United States certain aliens whose identities are known to the Grand Jury, knowing that said aliens were unauthorized aliens (as defined in Title 8, United States Code, Section 1324a(h)(3)), with respect to such employment.”

The indictment also alleges there was a policy to “separate income earned at the Electric Blue through legitimate means, often derived from a customer paying for food or beverages with a credit or debit card, from income earned through illegal means such as prostitution, typically paid for in cash.”

“The defendants and their coconspirators caused as much as approximately $5,726,918.73 in material taxable business receipts not to be reported to the IRS, causing a total income tax underpayment of approximately $2,092,864.”

The indictment alleges Baker, as the Electric Blue as a manager and bookkeeper for the club, and at Denning’s direction, “compiled a monthly spreadsheet showing, among other things, the Electric Blue’s purported income.” Baker “included on this spreadsheet income generated from food and alcohol sales and other sources of income from the club, but purposefully omitted cash generated from private dances and commercial sex acts by dancers at the club.”

Electric Blue would allegedly “send the spreadsheets to the Electric Blue’s tax return preparer, who would report to the relevant authorities and prepare taxes on only the reported income. The income generated from the commission of commercial sex acts was not reported to the club’s tax return preparer, but instead would be put in envelopes that were placed in a safe that only” Denning could access.

Also, authorities allege, “Beginning at least as early as April 2020, and continuing through in or around July 2020, in the District of Connecticut and elsewhere,” Denning, “together with others known and unknown to the Grand Jury, knowingly and with intent to defraud, devised, participated in, and executed a scheme and artifice to defraud and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises, that is, Denning knowingly provided materially false information to the SBA in order to obtain an EIDL for his business, the Electric Blue, a strip club in Tolland, Connecticut, when, in fact, (he) knew that he was not eligible to receive an EIDL for such a business.” Electric Blue received an estimated  $149,900 from the SBA.