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Undercover IRS sting targets retired cop’s role in North Side bar

IRS agents secretly recorded audio and video of a retired Chicago Police officer as he boasted about the bar he allegedly owned for 27 years.

IRS agents secretly recorded audio and video of a retired Chicago Police officer as he boasted about the bar he allegedly owned for 27 years. | AP file photo

When a pair of undercover IRS agents posed as potential buyers for a North Side bar last fall, they claim its longtime owner spilled the secret to his success.

Bottom line: He learned everything he needed to know about business working for the Chicago Police Department.

“I was police for 32 years,” he allegedly told them. “I worked in a subterfuge unit and, in a subterfuge unit, I worked undercover and I worked in organized crime, so you saw how organized crime hid their ownership in certain businesses. So, I structured mine the same way. I structured and structuring it the same way, it’s worked out.”

The agents secretly recorded audio and video of the retired officer as he boasted about the bar he allegedly owned for 27 years, according to court records obtained by the Chicago Sun-Times. They say he revealed differing handwritten ledgers for his cash-only business — raising suspicions that he substantially underreported the bar’s success.

But the man targeted in the undercover sting last September declined to comment on the details contained in the federal court records. The Sun-Times is not naming him because records show federal prosecutors have not filed any criminal charges against him. And, after agents used his recorded comments to obtain a search warrant for the bar last March, another document was filed indicating, “the warrant will not be executed.”

Meanwhile, general orders prohibit Chicago Police officers from owning a bar.

A spokesman for the U.S. Attorney’s office declined to comment, and a spokeswoman for the IRS did not respond to messages.

Property tax bills for the bar are mailed to a business headed by the retired officer’s wife, state and county records show. City Hall records list the retired officer as the bar’s treasurer.

An IRS special agent explained in a search warrant application that the bar was listed for sale online last August for $439,000. An undercover IRS agent called the retired officer, claimed to be a potential buyer and set up a meeting in September to discuss a purchase, records show.

During that meeting, two undercover IRS agents posed as business partners and met with the former officer for roughly 90 minutes, records show. Not only did he allegedly boast during that meeting about learning how to structure his business from organized crime, he allegedly went into detail about his efforts to hide his role in the bar.

“You get all kind of jealous people beef,” he allegedly said. “I had 13 complaints to IAD that I owned a tavern. They investigated and I said, ‘Well, yeah, I own the tavern. I own the building. The tavern pays me rent and I own everything in the bar. I own the seats, the glassware . . . I own everything and that’s why they pay me high rent. I can go in and out of there when I want because I make repairs.’ ”

He allegedly told the agents that, “every time I walked in, I’d walk in with a toolbox because I didn’t know if they were videotaping me from down the street.”

The agents claim the man showed them two handwritten notebooks — a pink “private” set of financial records, and a blue “public” set. He allegedly told them the private notebook is “my own personal book. This is the one I take home. This isn’t the one we use here at the business.”

He allegedly told them that the numbers he gave to his accountant — an attorney who previously worked for the IRS — differed from the numbers in his private notebook. And he allegedly said he would falsely record in the public notebook that the bar was closed on certain days, so he could use the income from those days to pay employees.

At one point, he allegedly pointed out the difference in January 2014 between his public notebook — which recorded totals of $9,845 for the month — and his private notebook — which recorded totals of $29,282.

And while the bar allegedly reported just $115,855 in gross income to the IRS in 2014 — for a loss of $7,700 — the retired officer allegedly boasted that its gross income that year was really $338,144 — with a net profit of $159,752.