Connecticut: Former Strip Club Owner Gets 16 Months; Prosecutors Say Club Cash Paid for Casino Trips

At the Electric Blue strip club in Tolland, Connecticut, the cash had a nickname. Employees placed it in envelopes, stored it in Denning’s office safe and called it “Kenny’s money,” federal prosecutors say.

Some of that money, prosecutors say, ended up at a casino. On February 23, 2023, Kenneth Denning deposited about $21,700 in cash at Mohegan Sun for gambling purposes.

Denning, 69, of Holland, Massachusetts, was sentenced on October 13, 2026, to 16 months in federal prison and three years of supervised release, the U.S. Attorney’s Office for the District of Connecticut said. U.S. District Judge Victor A. Bolden imposed the sentence in New Haven. The club was sold in January 2025.

How the club made its money

Denning ran the Electric Blue from the 1990s until it was sold. On paper, a holding company in his wife’s name owned the club, but he controlled it, according to court documents and statements described by prosecutors.

The cash came in several ways. Customers paid a cover charge at the door. Dancers typically paid a “house fee” of up to $50 a shift. And prosecutors say dancers were encouraged to have commercial sex with customers in private rooms, where customers paid the club a room fee, usually in cash, before paying the dancer separately.

The club’s cash went into those envelopes and that safe. Prosecutors say it paid business expenses and Denning’s personal spending, including “trips to casinos where Denning spent large sums of money.” The Mohegan Sun deposit was the example they gave.

The announcements do not say how much of that deposit Denning bet, won or lost, and they do not accuse Mohegan Sun or its staff of any wrongdoing.

The deposit later became part of the case against him. The 12-count indictment returned against Denning and two employees in May 2024 included a charge against Denning of engaging in a monetary transaction with proceeds derived from prostitution, tied to the Mohegan Sun deposit.

The cash the IRS never saw

“Kenny’s money” also stayed off the books. Denning and his bookkeeper gave the club’s tax preparer spreadsheets that left out that cash, prosecutors say.

The safe is where investigators found it. On March 16, 2023, they seized $45,421 in cash from the safe in Denning’s office. Records found with the cash showed that about $39,751 was “Kenny’s money” collected in just two weeks, from March 2 to March 15.

From those two weeks, investigators worked out a much bigger number: nearly $3 million in taxable business receipts that went unreported to the IRS for 2020, 2021 and 2022. Prosecutors described that figure as an estimate extrapolated from the two-week collection period. It is also lower than the figure in the 2024 indictment, which alleged that as much as about $5.7 million in receipts went unreported.

A pandemic loan for “Eating & Drinking Places”

The club also drew on federal pandemic relief. During the COVID-19 pandemic, Denning applied for an Economic Injury Disaster Loan from the U.S. Small Business Administration. Prosecutors say he falsely certified that the business did not “present live performances of a prurient sexual nature” and listed it as “Eating & Drinking Places.”

The money arrived in July 2020: $149,900. Almost immediately, prosecutors say, Denning moved $20,000 of it into his personal bank account.

Five counts, 16 months and a $1.5 million forfeiture

Denning was arrested on May 15, 2024. On May 19, 2026, he pleaded guilty to five counts:

• conspiracy to use an interstate facility to promote or facilitate prostitution;
• conspiracy to defraud the IRS;
• conspiracy to commit money laundering; and
• two counts of engaging in a monetary transaction in property derived from unlawful activity.

The plea announcement does not say which transactions those last two counts covered. The indictment had also charged him with wire fraud over the pandemic loan, but that charge is not among the counts he pleaded guilty to.

Along with the prison term, Judge Bolden ordered Denning to pay $549,999 in restitution to the IRS and $150,000 to the SBA. The IRS figure is $1 less than the $550,000 listed when he pleaded guilty.

Denning also agreed to forfeit $1,525,842. That includes the $45,421 seized from the club and $1,047 taken from his home when he was arrested. The announcement does not say how much of the forfeiture has been collected.

He was released on a $250,000 bond and is required to report to prison on November 17, 2026, according to the sentencing announcement.

The club’s manager and bouncer

Denning was not the only one charged. The indictment also named the club’s manager and bookkeeper, Joshua Baker, and a bouncer, William Mayo. Mayo pleaded guilty on June 17, 2024, to conspiracy to use an interstate facility to promote or facilitate prostitution. The DOJ announcements reviewed for this article do not establish Baker’s subsequent case outcome or whether Mayo has since been sentenced.

Casino spending has surfaced in other recent federal fraud cases, too. In Florida, prosecutors said the operator of a grant business gambled away hundreds of thousands of dollars at local casinos. In West Virginia, an animal clinic manager admitted stealing $624,600 and said he lost it all gambling.