Kenneth Denning, 69, of Holland, Massachusetts, pleaded guilty on May 19 in New Haven federal court to charges related to his operation of the Electric Blue strip club in Tolland, Connecticut. The charges include promoting and facilitating prostitution as well as defrauding the Internal Revenue Service and committing money laundering.
The case highlights ongoing efforts by law enforcement agencies to address criminal activity associated with adult entertainment businesses and financial fraud. Denning owned and managed the Electric Blue through Denning Enterprises from the 1990s until it was sold in January 2025. Court documents show that dancers at the club paid a house fee for each shift and were encouraged to engage in commercial sex transactions with customers in private rooms. Club employees collected cash from these activities, referred to as “Kenny’s money,” which was used for business expenses and Denning’s personal spending.
Investigators found that spreadsheets provided by Denning and his bookkeeper omitted significant amounts of income from tax records. On March 16, 2023, authorities seized $45,421 in cash from a safe at the club; documentation indicated $39,751 had been collected over just two weeks earlier that month. Investigators estimate nearly $3 million in taxable receipts went unreported between 2020 and 2022.
Denning also received a federal Economic Injury Disaster Loan during the COVID-19 pandemic after falsely certifying that his business did not present live performances of a prurient sexual nature. The Electric Blue received $149,900 through this program; shortly after receiving funds he transferred $20,000 into his personal account.
Denning pleaded guilty to five counts: conspiracy to use an interstate facility for prostitution (maximum five years imprisonment), conspiracy to defraud the IRS (five years), conspiracy to commit money laundering (20 years), and two counts of engaging in monetary transactions with unlawful proceeds (10 years each). He agreed to pay restitution totaling $700,000—$550,000 to the IRS and $150,000 to the Small Business Administration—and will forfeit seized cash assets.
He is currently released on a $250,000 bond pending sentencing. Multiple agencies participated in investigating this matter including Homeland Security Investigations; Internal Revenue Service – Criminal Investigation Division; Connecticut State Police; Connecticut Department of Consumer Protection – Liquor Control Division; Massachusetts State Police; Willimantic Police Department; and Manchester Police Department.
On April 7, the Department of Justice announced creation of its National Fraud Enforcement Division focused on prosecuting those who commit fraud against Americans—a part of President Trump’s Task Force chaired by Vice President J.D. Vance aimed at eliminating fraud within federal benefit programs.
The Justice Department includes more than 115,000 employees operating across all U.S. states as well as internationally,according to its official website. It serves as the principal federal agency for law enforcement while upholding rule of law and safeguarding civil rights.