The owner of Club 15, a strip club based in New Jersey, along with multiple family members, has been found guilty in federal court for crimes involving prostitution and tax fraud.
The announcement came from the U.S. Attorney’s Office for the District of New Jersey on Monday.
53-year-old Joseph Labarca, who owned and operated Club 15, was convicted along with his wife Maria Labarca (also 53), daughter Samantha Labarca (27), and son Joseph Labarca Jr. (33). A jury in Newark returned the guilty verdicts after a 10-day trial.
According to prosecutors, Joseph Labarca used Club 15 to run a prostitution business. Dancers and other workers were paid directly by clients in cash for sexual services offered at the club. The illegal operation brought in substantial cash earnings, which were not reported to the IRS.
Joseph and Maria Labarca both failed to report over $2 million in income from the business between 2012 and 2017. Prosecutors say the family kept two sets of books—one real and one fake. The fake books were used to show false income figures on their tax returns.
The investigation also revealed that the dancers were not treated as official employees. Instead, they were paid under the table in cash, allowing the club to avoid payroll taxes and wage reporting. These actions violated both state and federal employment and tax laws.
In court, the jury found Joseph Labarca guilty of conspiracy to promote prostitution, operating a business for prostitution, and several counts of tax fraud and false statements.
Maria, Samantha, and Joseph Jr. were found guilty of various related offenses, including helping in filing false tax returns and hiding income.
Authorities said this case was about more than just tax cheating—it was about a deliberate effort to run an illegal business while avoiding financial responsibility to the government. U.S. Attorney Philip Sellinger emphasized that the Labarcas not only broke the law by promoting prostitution but also cheated taxpayers by hiding large sums of income.
The guilty verdicts follow a thorough investigation by multiple agencies, including the Internal Revenue Service – Criminal Investigation division and local law enforcement.
Officials said they hope this case sends a clear message that business owners who ignore the law and exploit workers for profit will be held accountable.
Sentencing for the Labarca family is scheduled for later this year. Each could face significant prison time and fines, depending on the court’s final judgment.