Scamfluencers — Studio 54: Tax Evasion! At the Disco | Episode 189

Date: November 24, 2025
Hosts: Sachi Cole & Sarah Haggie
Podcast: Wondery’s Scamfluencers

Episode Overview

This episode explores the meteoric rise and dramatic fall of Studio 54, the most legendary nightclub of 1970s New York. Hosts Sachi Cole and Sarah Haggie unravel the story behind Studio 54’s founders Ian Schrager and Steve Rubell, charting their transformation from ambitious Brooklyn outsiders to Manhattan’s ultimate party kings—and the audacious tax evasion scam that ended their reign. The episode dives deep into the club’s cultural impact, criminal undertakings, and enduring mystique.

Key Discussion Points & Insights

1. Setting the Scene: Studio 54’s Allure and the Opening Raid

• The episode opens with hosts riffing on nightlife (salmon tartare jokes!) before Sachi sets the stage: December 1978, IRS agents raid Studio 54, catching co-owner Ian Schrager red-handed with incriminating evidence—including bags of cocaine and records of the club’s shady finances. (02:00–04:00)
• Memorable Quote:

  “Inside that case, along with his books and documents, are five 1-ounce bags of cocaine. The Feds seize the drugs and arrest him. But the coke isn’t even the most damning thing they find—because the Feds also seize Ian’s papers. Papers that might contain evidence of the tax fraud the agents were looking for.” (03:00–03:50, Sachi Cole)

2. Origins: Brooklyn Roots, Syracuse Connections, and the Mob

• Backstory on founders Steve Rubell and Ian Schrager: both from working-class Jewish families in Brooklyn, contrasting personalities, but united in ambition and social savvy. (05:15–07:30)
• Steve’s popularity at Syracuse University is contrasted with Ian’s quiet determination—stories include Steve’s control of social scenes and their meeting through fraternity circles or wrestling match lore. (06:00–07:30)
• Early business ties to organized crime via Ian’s stepdad, Sam Jacobson, tying Studio 54’s origins to mob-backed gay clubs (money laundering and protection). (09:00–10:45)
• Notable Moment (Mob Ties):

  “His dad was an associate of the famous mobster, Meyer Lansky... throughout the 60s and 70s, New York’s gay clubs are largely backed by the mob. They are cash-heavy businesses, which make them perfect for money laundering, tax evasion, and other types of organized crime.” (09:30–10:25, Sachi Cole)

3. First Forays: The Enchanted Garden & Early Law-Skirting

• Steve and Ian launch their first club, the Enchanted Garden, immediately skirting cabaret laws (throwing parties without proper permits, dodging authorities, and handling angry neighbors). (11:00–13:30)
• Even with city and community pushback, they persist, foreshadowing their determination to “hustle the system.”

4. Manhattan Calling: Finding and Building Studio 54

• 1977: The duo select the massive former CBS studio on West 54th St. Despite crime in Hell’s Kitchen, they see glitzy potential and make bold moves:
  • Rushing construction (often without permits).
  • Pivoting to hire “theater people” for staff.
  • Side-stepping liquor license requirements using temporary catering permits.
  • Bringing a third partner, Jack Duchet, into the chaos. (14:30–17:00)
• Notable Quote:

  “It’s clever, but also shady. These are the kinds of business practices you normally want to keep hidden. But Steve, Ian, and Jack do not care. They want Studio 54 to be huge, so they sprint toward opening day with as much fanfare as possible.” (16:35–17:00, Sachi Cole)

5. Grand Opening: The Instant Mythology of Studio 54

• Opening night (April 26, 1977): chaos, celebrity, and excess—a chaos so real thousands show up, causing near-riots and packed dance floors. Every element is over-the-top, from snowstorms to decadent invitations. (17:00–19:00)
• Quote from Steve Rubell (on inclusivity and vibe):

  “If it gets too straight, then there’s not enough energy in the room. If it gets too gay, then there’s no glamour. We want it to be bisexual. Very, very, very bisexual.” (19:13, read by Sarah)

• The infamous Bianca Jagger white-horse moment cements the club’s image. (21:00)
• Partying with celebrities and enforcing strict (often arbitrary) exclusivity at the door set the tone for the club's mythic status.

6. Skirting the Law (Again): The Liquor License Gambit

• Early standoffs with New York’s liquor authority: serving booze illegally, getting shut down in raids, yet keeping crowds with wild creativity (free juice, drugs, and spectacle). (23:30–26:30)
• Even after the authorities’ crackdown and scrutiny over mob ties, the club’s starpower and celebrity affidavits help them get their license back—a testament to their influence and the power of the press. (27:00)

7. Cash, Coke & Creative Accounting

• The real scam: skimming massive amounts of unreported income—literally millions in cash. The records (with a “SK”/skim column) are hidden in ceiling tiles, garbage bags, and behind bookcases. (30:00–31:45)
• Quote:

  “Every night, whoever’s in charge of the books records exactly how much money the business isn’t reporting to the IRS.” (31:29, Sachi Cole)

8. Downfall: Whistleblowers & The IRS Raid

• The club’s undoing comes not from Steve’s brags to the press, but from a disgruntled former employee blowing the whistle to federal authorities.
• December 14, 1978: the feds raid the club, seizing drugs and paper-trail evidence of systematic tax evasion, complete with links back to the mob and partners. (32:50–35:35)
• Memorable Quote:

  “Ian gets arrested on a charge of possessing cocaine with intent to distribute. When they go to apprehend Steve, he’s in his Mercedes and officers find 100 grand in the trunk.” (35:12–35:22, Sachi Cole)

• Introduction of Roy Cohn (Trump mentor, notorious fixer) as their defense attorney—and how his legal maneuvering only escalates their problems (tampering with evidence, failed attempts to implicate political figures). (36:24–39:54)
• Indicted on 12 counts, with irrefutable evidence of arrogance and scale. (39:54–41:00)

9. The Last Dance: Sentencing, Sale, and End of an Era

• Steve and Ian plead guilty (November 1979), sentenced to three and a half years in prison, but even their incarceration is marked by showmanship (massive farewell party with Diana Ross and Liza Minnelli performances). (41:32–42:21)
• Sale of Studio 54, federal cooperation to reduce sentences, and the legendary club’s official closure. (42:22–43:00)

10. Aftermath: Shifting Tides and the Second Act

• Out of prison, Steve and Ian find a changed world: the “Disco Sucks” backlash, the AIDS crisis, and personal financial ruin. Only a few friends (like Calvin Klein) stand by them.
• Reinvention: they pioneer the boutique hotel craze, launching the Morgans and a new aesthetic in hospitality, eventually earning the reputation as “comeback kids.” (43:51–46:36)
• Quote from Ian Schrager (about Steve, after Steve’s death from AIDS at 45):

  “We were best friends. We shared houses together. It was my first phone call in the morning and my last phone call at night. I never had another friend like Steve.” (47:28, read by Sarah)

11. Legacy: Reckoning, Redemption, and Cultural Memory

• Ian’s presidential pardon, release of the acclaimed documentary “Studio 54,” and continued family life punctuate the story’s later chapters. (47:45–48:45)
• The hosts reflect on Studio 54’s lasting impact—its blend of “celebrity and safe queer space,” the ephemeral magic, and its unrepeatable timing in history. (49:17–51:50)
• Quote from Sachi:

  “There’s like two versions of it. One is the celebrity version that people talk about. But the other is that it was like a safe, queer club in New York in a tricky neighborhood, and helped transform a neighborhood that nobody gave a shit about.” (51:52, Sachi Cole)

Notable Quotes & Memorable Moments

• “Gay Math” & Exclusivity
  "If it gets too straight, then there’s not enough energy in the room. If it gets too gay, then there’s no glamour. We want it to be bisexual. Very, very, very bisexual.”
  — Steve Rubell, quoted at (19:13)
• Steve’s Brag in New York Magazine
  “The profits are astronomical. Only the Mafia does it better. It’s a cash business and you have to worry about the IRS. I don’t want them to know everything.”
  — Steve Rubell, (31:44 paraphrased, New York Magazine 1977)
• End-of-Era Party Euphoria
  “He is beaming. God knows what he’s on. He’s wrapped in some sort of fur and he is wearing a fedora. Yeah, this guy’s living. He’s having his last day on earth.”
  — Sarah, on Steve Rubell’s going-away party (42:08)

Themes & Tone

• The hosts’ tone is irreverent, playful, and sharp—mixing genuine awe for Studio 54’s spectacle with sneaky affection for its hustler founders (“I love how much they love cocaine.” — Sachi, near episode end).
• Their back-and-forth illustrates the contrast between nostalgia for uninhibited excess and acknowledgment of ethical ambiguities, as well as the dark side of 1970s New York nightlife.
• There is reflective commentary on the club’s cultural legacy, both as a celebrity playground and as a queer sanctuary in an era of systemic repression.

Important Timestamps

• Opening banter & setting up the Studio 54 story: 00:00–03:00
• IRS Raid & evidence seized: 02:00–04:00
• Founders’ backgrounds & mob connections: 05:15–10:45
• First club (Enchanted Garden), early law-skirting: 11:00–14:00
• Studio 54 grand opening/spectacle: 17:00–21:00
• Iconic party moments (Bianca Jagger, velvet rope): 21:00–23:00
• Liquor license drama & Perseverance: 23:04–27:00
• Cash skimming & accounting details: 30:00–31:30
• Downfall begins (whistleblower turns IRS): 32:50–35:01
• Roy Cohn enters (& legal mishaps): 36:24–40:00
• Guilty plea, sentencing, final party: 41:32–43:00
• Post-prison, hotel pivot, Steve’s death: 43:51–47:45
• Ian’s redemption, cultural legacy discussion: 47:45–52:31
• Closing reflections (ephemeral club magic): 51:52–52:56

Conclusion

This episode is a vibrant, detailed romp through Studio 54’s legendary party culture, criminality, and legacy, blending investigative storytelling with cheeky nostalgia. Perfect for anyone fascinated by 1970s decadence, scammer lore, and the complicated ways queerness, celebrity, and crime intersected under the disco ball.

Highly recommended listening for pop culture junkies, true crime fans, and anyone curious how a 33-month club became an immortal slice of New York myth.