Was Pure unpure?

07:41 PM PT, Feb 25 2008

That is the question all Las Vegas is asking.

I am writing this item to update you on the IRS investigation into Pure Management Group, but also to give you some insight on the subtle judgments required in deciding what to report to you and what is trading in gossip. I tend to be very conservative in these matters.

I have spent much of the weekend reporting on the unfolding situation involving the IRS raid on Pure Management Group last week. That does not mean I am going to write a story about what I am hearing yet. I have promised before that I will not sensationalize this story, and I won't address the entire situation until I have documents and/or on-the-record interviews to back up the dark stories emerging.

But I also want to keep Buffet readers in the loop on what others are reporting in what could be a very big story in Las Vegas. Here is why: Any issue involving how money is handled inside a Nevada casino takes on an added significance that is unfathomable in its implications. Nevada authorities can hold casinos responsible for everything that goes on at their properties. So an investigation of Pure Management Group (operator of 10 nightclubs, lounges and restaurants in the tourist corridor), assuming it turns up serious wrongdoing -- a big assumption -- could result in fines, sanctions and lots of other trouble for the casinos renting them space. So far, of the Pure operations in Vegas, the IRS is known to have visited Pure at Caesars and LAX at Luxor. Therefore we are talking about parent companies Harrah's and MGM-Mirage, the two biggest players in town.

But so far no one has been accused of or charged with a crime or even of hiding a single penny from the IRS. And Pure Management Group issued this statement immediately after the IRS visit:

"Pure Management Group is fully cooperating with this IRS investigation and looks forward to a quick and satisfactory resolution. Until that time, we will have no further comment on this matter."

Since the raid, Pure properties like LAX at Luxor seem to be operating under a new normal. Meanwhile, Norm Clarke in his column at the Review-Journal has some text messages that have been forwarded to him showing a certain shameful greed by nightclub employees. Other text messages I know are being forwarded to other reporters in town, including me. It is too loud to hear in nightclubs and so texting is often substituted for speech. That is a real bonus right now for us reporters, and probably investigators. But Norm also hints at the real dynamite in the PMG-IRS story:

"Shaken employees from several local clubs contacted me to say they participated in what they are convinced was questionable handling of cash night after night."

Norm does not define those practices of cash handling. Many people have discussed versions of those cash handling practices with me. I am not sure who to believe yet, and so I will keep working on this story until I am sure. In the meantime, all of Pure Management Group's restaurants and nightclubs are open for business. And I hear that the line folks are being a lot less demanding in terms of what it costs to get past the rope than they were last week at this time.

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