West Seattle Club owner Sam Adams, who played in the NFL for 14 years, has been charged, along with his business partner Dana Sargent, with criminal wage theft and fraud, Washington State Attorney General Bob Ferguson says
The Attorney General's Office (AGO) alleges that Adams and Sargent, who served as CFO, engaged in theft and fraud totaling more than $500,000. The defendants allegedly failed to pay state taxes, withheld wages from workers, failed to pay workers’ insurance premiums and failed to pay unemployment insurance.
“Wage theft is a crime, and its victims are often among our most vulnerable residents," Ferguson said in a press release. "My office will prosecute unscrupulous businesses that steal money out of the pockets of wage earners and taxpayers.”
According to the charging documents, the defendants owned and operated six athletic clubs, four in Oregon and two in Washington, between 2012 and 2014. One Washington location, Lincoln Plaza Athletic Club LLC in Tacoma, closed in 2013 because of unpaid retail sales tax, according to the AGO. The other Washington location,. West Seattle Athletic Club LLC, closed in 2013, after which West Seattle Club LLC opened at the same location. This operation closed in October 2014 after the landlord evicted the defendants for unpaid rent, according to the AGO.
The AGO alleges that Adams and Sargent failed to pay the state about $446,000 in retail sales taxes that they collected for their Washington athletic clubs, failed to pay 11 employees wages they rightfully earned totaling $7,166, failed to pay more than $35,000 into state unemployment insurance, and deducted insurance premium payments from employee paychecks, but failed to pay the insurance company, Aetna Healthcare. Aetna lost about $41,640 in unpaid medical and dental premiums, and workers were exposed to the risk of unpaid medical bills.
Adams, who filed for bankruptcy last year, told the Associated Press: "This is absolutely news to me. I don't know anything. I'm a little flustered right now."
Adams had shared concerns last year with Club Industry about the billing company that he used. After the charges against him, his attorney, C. James Frush, made similar claims about the billing company.
Frush told the Associated Press: "From what I know about the case, this is more an issue of basically mismanagement as opposed to intent to evade taxes. Sam is far from any kind of hands-on businessman when it comes to that type of activity. He's a marketer, a 40,000-foot guy."
The AGO has charged Adams and Sargent with:
- Five counts of theft in the first degree (Class B felony, 10-year maximum sentence);
- Three counts of theft in the second degree (Class C felony, five-year maximum sentence);
- Four counts of filing a false or fraudulent tax return (Class C felony, five-year maximum sentence); and
- Nine counts of theft in the third degree (gross misdemeanor, 364-day maximum sentence).
The AGO says that guidelines indicate tyhat sentencing for the charges could range from 43 to 57 months, but if the defendents are found guilty, the sentence could be even higher due to what the AGO alleges as aggravating circumstances.
The AGO is seeking full restitution for all of the victims involved including the State of Washington, the individual employees and Aetna Healthcare.
Arraignment is scheduled for Feb. 18 in King County Superior Court.
The AGO Criminal Justice Division conducted the investigation in conjunction with the Washington State Department of Revenue, Office of Insurance Commissioner, the Employment Security Department and Department of Labor & Industries, as well as the U. S. Bankruptcy Trustee and the U.S. Department of Labor.
Adams, 41, retired from the NFL in 2007. He played his first six seasons with the Seattle Seahawks before playing two seasons for the Baltimore Ravens, where he wa a member of a team that won the Super Bowl. He also played one season for the Oakland Raiders, three seasons for the Buffalo Bills and one season for the Cincinnati Bengals before ending his career with the Denver Broncos for one season.