Federal Case Against Connecticut Strip Club Owner Takes Wild Turn

According to Jakethelawyer.org, a Massachusetts man who operated the Electric Blue Cafe in Tolland just admitted to a long list of federal crimes tied to the adult entertainment club, and the details sound less like a business operation and more like the plot of a late-night cable crime drama.

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Federal prosecutors say 69-year-old Kenneth Denning, from Holland, Massachusetts, used the club as the center of an operation involving prostitution, hidden cash, tax fraud, money laundering and even pandemic relief fraud. The whole thing eventually unraveled in federal court in New Haven.

Authorities claim the club’s public-facing business was exotic dancing and private lap dances, but behind the scenes, workers were allegedly encouraged to arrange paid sexual encounters with customers in VIP-style rooms throughout the building. According to court records, cash flowed constantly through the club, and much of it allegedly never made its way onto official tax paperwork.

Investigators say employees would collect stacks of cash, place it into labeled envelopes and lock it in a safe inside Denning’s office. Prosecutors said the money even had a nickname around the club: “Kenny’s money.”

And apparently Kenny liked to gamble.

One of the details grabbing attention in the case involves a massive casino cash deposit at Mohegan Sun. Prosecutors say Denning dropped more than $21,000 in cash at the casino in a single day for gambling purposes. Investigators later claimed the club was secretly pulling in tens of thousands in off-the-books cash every couple weeks, which paints a pretty clear picture of where a chunk of the money was allegedly going.

The IRS portion of the case is where things really escalated. Federal investigators believe nearly $3 million in taxable income was hidden from the government between 2020 and 2022. Authorities say accountants preparing the club’s tax returns were allegedly given incomplete spreadsheets that intentionally left out large portions of the cash revenue.

Then there’s the pandemic relief angle, because apparently this story needed one more twist.

During COVID, prosecutors say Denning applied for a federal disaster relief loan through the CARES Act by allegedly misrepresenting the club’s business activities. Instead of identifying the business as an adult entertainment venue, court documents say it was described as an eating and drinking establishment. The business received nearly $150,000 in relief money, and investigators claim some of those funds were quickly transferred into Denning’s personal account.

Denning pleaded guilty to multiple federal charges, including conspiracy related to prostitution, tax fraud and money laundering. Altogether, the financial penalties tied to the plea agreement total well over $700,000 between restitution and forfeitures.

For now, Denning remains free on bond while awaiting sentencing.