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House of Babes received revenue from cover charges, the sale
of nonalcoholic beverages, vending machines, video games, and a
juke box. Most customers paid in cash, but some used credit
cards.
2. Shareholders
Tom Godby (Godby) bought a 50-percent interest in House of
Babes from Waldorf. Nelson Arencibia (Arencibia) bought a 10-
percent interest from Waldorf and a 10-percent interest from
Godby. Waldorf, Godby, and Arencibia owned House of Babes from
January to September 1984. Arencibia owned a 22.5-percent
interest in House of Babes in September 1984.
Wiltzius bought Arencibia's 22.5-percent interest on October
1, 1984, for $25,000. Arencibia was making about $1,500 per week
from House of Babes when he sold his interest. Wiltzius owned
22.5 percent and Waldorf owned 32.5 percent of the shares of
House of Babes from October 1984 to August 1986.
3. Skimmed Income
Around May 1984, Waldorf, Godby, and Arencibia agreed to
keep two sets of records for House of Babes. Waldorf kept the
second set of books to pay less taxes.
Waldorf wrote a memo at a time not stated in the record to
the other shareholders explaining how they would skim gross
receipts. The memo said that each shareholder's share of the
profits would be paid in cash from 50 percent of the gross
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Last modified: May 25, 2011