Judge refuses to drop federal charges against Myrtle Beach area club owners

A federal judge ruled against two Myrtle Beach area businessmen who asked that money laundering, racketeering and drug charges be dropped because of “outrageous government conduct” they say entrapped them in an elaborate scheme.

The motion to dismiss charges against Michael Rose, former owner of the Gold Club and Rodeo Bar and Grill, and Vladimir Handl, owner of the Heat Ultra Lounge, was rejected by Judge William Alsup of the U.S. District Court of Northern California.

“Handl and Rose depict themselves as innocent and naive saps preyed upon by a government bully,” Alsup wrote. “The record, however, shows otherwise.”

Numerous recordings provided to the court demonstrated that Handl and Rose were “eager participants” who helped devise a strategy to create fictitious companies and invoices to launder money, “and showed little doubt about their commitment to the criminal enterprise,” Alsup wrote in his Oct. 19 dismissal.

According to one transcript revealed in the judge’s dismissal, Rose asked an undercover FBI agent about the source of the funds.

“Are these ‘High Times’ executives or is this the mob?” Rose said, according to the transcript. When the undercover agent responded that they would be dealing with Colombians, Rose interrupted and said “So it’s the mob. Okay, that’s fine,” according to the transcript.

Also indicted in March were Peter Scalise, owner of the Georgetown restaurant Zest that was destroyed by fire in 2013, and David Gaither, a former Myrtle Beach police officer who was dismissed in 2009 for an indecent exposure incident.

The men are accused of knowingly accepting more than $2.3 million that they believed was either drug money, or fraudulently diverted from a bankruptcy court proceeding. From 2011 until their arrest in March, they allegedly laundered the money through their businesses, which included the Gold Clubs owned by Rose, said the U.S. Attorney’s office.

Alsup ruled that the undercover FBI agent provided opportunities for the indicted men to quit the operation and that it did not appear they were coerced or threatened.

In one transcripted conversation cited by the judge, Rose was told by the FBI agent that “If you decided this is not what you want, you let me know.”

Responded Rose: “Yeah, yeah, I’m fine. Yeah, no problem. That’s fine.”

The recorded conservations demonstrated a lack of coercion, as well as opportunities for Handl and Rose to back out of the scheme, but they continued with the conspiracy, the judge said in his ruling.

Solomon L. Wisenberg, Rose’s lawyer, said they were limited in the amount of documentation they could submit to the court to back their claim. Once the evidence is submitted in court, Wisenberg said he was confident that his client would prevail against the charges.

“It’s important to point out all the facts in the case have not been developed. The court very clearly left in a footnote, noting that it was leaving open the option to reconsider its ruling on the greater evidentiary record at trial,” Wisenberg said.

The judge noted that he was “bothered” the undercover operation extended over several years, and that “the entire multi-year criminal enterprise constituted a fiction from the beginning.”

“One can rightly ask whether the FBI should be out solving real crimes already committed by real criminals rather than encouraging innocents to commit manufactured crimes. Nevertheless, a close review of the record does not show the government’s conduct to be ‘so grossly shocking and so outrageous as to violate the universal sense of justice,’” Alsup said.

Former South Carolina State Trooper J.D. McGaha, who was stationed in Horry and Georgetown counties, was also named in the indictments. McGaha is accused of agreeing to provide protection for drug shipments in exchange for $5,000, according to court documents.

If convicted of all charges and given the maximum sentence, Handl, Rose, and Scalise face life in prison. McGaha’s sentence would range from 10 years to life, while Gaither faces a 40-year sentence.

Audrey Hudson can be contacted at 843-444-1765.

This story was originally published October 26, 2015 at 10:16 AM with the headline "Judge refuses to drop federal charges against Myrtle Beach area club owners."