Although Rubell and Schrager were arrested for selling alcohol without a license, their incredible legal representation managed to get them out of trouble. To fix their problem, Rubell and Schrager hired Roy Cohn. The ruthless attorney served other big names like Senator McCarthy and Donald Trump, and he had a reputation as a big-shot lawyer with plenty of pull.
Cohn freed Rubell and Schrager from prison, and they immediately returned to the club. However, they didn’t learn from their mistake. After a few more years of success, the owners had the IRS breathing down their necks.
The End of Studio 54 Was the End of Disco
A little while after their first run-in with the law, Rubell and Schrager faced allegations from the IRS that they were hiding unreported money and illicit drugs within Studio 54. When two dozen IRS agents arrived to investigate the claims, they searched the club’s vault and found the illegal cash and substances.
In all, the club owners hid $2.5 million from the IRS, resulting in two prison sentences for fraud. After Rubell and Schrager were caught in 1980, Studio 54 permanently closed its doors. Although the owners were eventually released, the disco itself ended when Studio 54 went under.
Been There, Done That, Wrote the Book About It
No doubt, the walls of Studio 54 could tell stories that would make you blush like an innocent maiden at a debutant ball. But since the walls are pretty quiet, you'd have to settle for the tell-all novel, "The Club." Published in 1980, the book was written by a past employee of the infamous nightclub.
American author Steven Gains and former Studio 54 bartender Robert Jon Cohen didn't go to great lengths to cover the identities of the people involved. In fact, their depiction of the events was so close to reality that they were almost slapped with a $20 million lawsuit. The suit was only dropped because, literally, no one of the people involved would go on record admitting to taking part in the obscene acts.
The Owners Wore Their Books on Their Sleeve
When business owners do something illegal, they usually put in at least a small amount of effort trying to cover up their tracks. Or, at the very least, keep their illegal activities to a minimum. Not the owners of Studio 54. In order to get away from skimming some of a business's profits, the owners would have to limit themselves to about 1-2 percent.
The famous disco, however, had up to 80% skimmed by the owners, who proudly tracked their unseemly records and their purchases of so-called "party favors." The charges effectively shut down the disco, which had become an iconic symbol of the '70s and of New York City nightlife.
The Bouncers Had Power. Maybe Too Much Power
During the club's few years of operation, many people tried to get through its doors to no avail. According to co-owner Steve Rubell, he viewed picking the mix of patrons as casting for a theater play. While he's had his fair share of "casting," more often than not, the bouncers were the ones to do it most of the time.
Marc Benecke, one of the club's bouncers, was only 19 when he started working there as a bouncer. From his position by the door, he learned that the people of New York were willing to pay thousands of dollars or offer their very bodies to get in. In accordance with Studio 54's hedonistic spirit, Benecke says he occasionally accepted those offers.