He loved the nightlife. He got to boogie. He just didn’t get around to paying his taxes. And for that, in 1980, Ian Schrager, a former co-owner of the storied Studio 54 disco, was sentenced to jail time following a conviction for federal tax evasion. This year, however, Schrager got a second chance when he was granted a presidential pardon.
The now 70-year old Schrager opened Studio 54 in 1977 with his partner (and fellow tax felon) Steve Rubell. Studio 54 became an instant hit with stars and wannabe stars who clamored to get in. Guests who made it beyond the famed velvet ropes included Elton John, Andy Warhol, Elizabeth Taylor, Mick Jagger, Michael Jackson, Cher, David Bowie, and even President-elect Donald Trump.
All of those clubbers translated into cash – lots of cash. Supposedly, the club brought in $7 million in its first year ($28 million in today’s dollars). Schrager’s partner, Rubell, bragged that “only the Mafia made more money.” Potential customers were listening, and so were the feds. In December of 1978, Studio 54 was raided. Officers found cash stashed inside the club, including dollars hidden in the ceiling. During the raid, Schrager was allegedly found with 24.67 grams of cocaine. Six months later, Rubell and Schrager, together with studio manager Richard DeCourcey, were charged with conspiring to avoid $2.5 million in corporate income taxes; Schrager was also charged on information with a misdemeanor drug offense.
The case didn’t go to trial. Rubell and Schrager pleaded guilty to evading corporate and personal income taxes; the government dropped the charges of conspiracy and obstruction of justice. Following the pleas, the pair faced up to 10 years in prison, plus fines.
On January 18, 1980, Rubell and Schrager were each sentenced to three and a half years in prison plus fines. At sentencing, Federal Judge Richard Owen told the pair, “Your crime, I conclude, is one of tremendous arrogance. You assumed you achieved your success on your own and you owed nothing to fellow citizens and the economic system.” He went on to tell Rubell, “You fail to appreciate the true nature of the seriousness of a tax charge.”
In response, Schrager told the judge, “I was able to meet with luck and meet with some success. I made some stupid mistakes. The mistakes I made I never will make again. I hope I can lead a productive life.”
Final call at Studio 54 was referred to “The End of Modern-day Gomorrah” and featured such luminaries as Diana Ross, Ryan O’Neal, Richard Gere, Jack Nicholson, and Sylvester Stallone. Shortly after, Rubell and Schrager went to prison. While in prison, the club was sold for $4.75 million ($13.84 million in today’s dollars).
After prison, Schrager and Rubell continued as partners in the hospitality business, this time with a focus on hotels. Rubell died of AIDS-related illnesses on July 25, 1989. Schrager continued as a hotelier and real estate broker on his own after Rubell died.
In 2012, Schrader hired Hogan Lovells to apply for a pardon. He did it, he has said, for his family, telling The New York Times, “I wanted it for closure. I wanted it for my family. It’s hard to be a good example for your kids when you did something like what I did, and you try to teach your kids to live by the rules and be an upstanding person.”
San Francisco Giants Hall of Famer Willie McCovey also received a pardon from President Obama. In 1995, McCovey pleaded guilty to willfully making and subscribing a false federal income tax return; the charges stemmed from McCovey’s failure to report $70,000 in income from selling his autograph and memorabilia. Los Angeles Dodgers Hall of Famer Duke Snider had also pleaded guilty to similar tax charges in 1995. This year, Obama pardoned both McCovey and Snider. Only McCovey lived to hear about the pardon: Snider died in 2011.
At least two other individuals convicted on tax-related charges also received a pardon. Herbert Eugene Bennett, of Lubbock, Texas, received probation, a fine and an order of restitution, in 1996 following convictions for mail fraud and making and subscribing to a false tax return. Mitchell Ray Campbell, of Twin Falls, Idaho, was sentenced to jail in 1985 and 1986 on drugs, weapons and tax charges.
With the most recent 64 pardons, the President has now granted a total of 212 pardons. President Obama has also commuted the sentences of 1,385 individuals, the most grants of commutation issued by any President.
An application for a pardon is made to the President, who holds the power to grant or deny the request. A pardon isn’t the same as “not guilty,” nor does it mean the record is erased or expunged (in other words, the conviction remains). It does mean, however, that a person who has been convicted of a crime regains civil rights they might have lost because of a conviction. That includes the right to vote (felons in 11 states may lose their right to vote even after being released from prison, parole, and probation).
A commutation is different. The President may only commute a federal sentence. Following a commutation, the convicted person’s penalty or sentence is reduced by the President, but the conviction remains. And unlike a pardon, there is no restoration of the person’s civil rights.