Adult Site Marketer Heads to Prison for Tax Evasion

May 8, 2012 4:45 PM PST

DETROIT — An adult website marketer who made millions spamming email addresses has been sentenced to six years imprisonment for not paying federal income taxes.

Francis Sharrak, of Farmington Hills, Mich., was sentenced last week as the result of a 2010 trial conviction for failing to file tax returns and tax evasion. Sharrak also must pay the IRS $4.2 million, as well as interest and penalties, and face three years of supervised release after his prison sentence.

According to court records, during the tax years 1997 through 2005, Sharrak earned millions of dollars in taxable income by running and promoting various adult websites, spamming millions of email addresses. His companies, LCGM Inc. and Web Promo, were sued and found liable by America Online and Playboy Enterprises in the late 1990s for their spam operations.

In 2003, Sharrak filed his 1997 through 2001 tax returns, reporting more than $3.7 million in income with $1.4 million in taxes owed to the IRS. He also submitted a compromise offer to the IRS to settle his tax debt for an amount that was far less than the tax admittedly he owed.

That offer was not accepted, and Sharrak then failed to file tax returns for the years 2003 through 2005, during which he received more than an additional $1.4 million in income.

According to court records, the IRS attempted to collect Sharrak's tax due and owing through liens and levies, but Sharrak was able to derail collection attempts by concealing his assets, among other charges.

Knowing that he owed the IRS a significant amount of tax, the Justice Department said that Sharrak continually paid himself in cash from the accounts of the adult entertainment clubs he ran — Platinum Show Girls in Toledo, Ohio, and Spanky's Club in Dayton, Ohio.

Authorities also said he gambled at casinos with large sums of money drawn from those same accounts, and used financial accounts he controlled that were in the names of others to pay his bills.

He also leased and purchased high-end vehicles in other people's names, which included a 2003 Mercedes Roadster, a 2003 Pace Arrow Motor Home and a 2001 Chevrolet Corvette.

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