Three employees at the gentleman’s club Scores set up shell corporations as part of a scheme to cheat the government of taxes on $3.1 million of income, the Manhattan district attorney’s office charged.

For a two-year period ending in 2003, the state lost about $200,000 in taxes due to the alleged plot, the assistant deputy commissioner for tax enforcement, Bruce Kato, said. Interest and penalties would likely push the number significantly higher if the taxes were not paid.

In what the D.A., Robert Morgenthau, called a “relatively simple” scam, the defendants funneled income into five dummy corporations, used some of the funds for personal purchases, and then reduced their taxable income by treating the purchases as “business deductions.”

“It’s a pretty flagrant and pretty obvious way of evading and avoiding taxes,” Mr. Morgenthau said yesterday.

The chief executive officer of the publicly traded Scores Holding Company Incorporated, Richard Goldring, 36, allegedly used one of the shell corporations to conceal $1.7 million in profits and claimed business-related deduc tions on the company’s state tax returns to the tune of more than $1.7 million,the 16-count indictment says. Mr. Goldring allegedly used $185,000 to pay for construction of an extension to his New Jersey home and $800,000 to buy jewelry and to cover household expenses.

The manager of Scores Showroom, Harvey Osher, 38, was charged with transferring $1.7 million into two shell corporations and using them to claim about $1.5 million of businessrelated tax deductions. He also allegedly financed a now defunct currency trading business with $100,000 of diverted funds.

Osher about five years ago pleaded guilty to money laundering in U.S. District Court of the Southern District of New York and was sentenced to 30 months in prison, a spokeswoman for the U.S. attorney’s office for the district, Heather Tasker, said. She would not respond to questions of whether her office is pursuing tax evasion charges against any of the defendants.

Osher’s 25-year-old niece, Scores’s bookkeeper, Cheryl Osher, was also charged in the indictment. She served as the nominal president of one of the phony companies and signed its tax returns, the court document charges. She facilitated some of the transfers of money to the phony companies, the chief of the investigation unit, Daniel Castleman, said. Ms. Osher was compensated for her role, Mr. Castleman said.

Investigators unearthed the alleged tax evasion scheme after a series of complaints from Scores patrons about overcharges at the bar prompted an investigation into Scores in 2003, the D.A. said. No charges have been filed with respect to the large tabs, although “that matter is still under investigation,” Mr. Morgenthau said.

Mr. Castleman also said the office is still investigating a number of securities issues in connection with Scores.

Scores operates eight nightclubs, two in Manhattan – on East 60th and West 28th streets. A woman in Scores’s corporate office declined to comment.

The defendants were arraigned on the indictment yesterday afternoon. They were each charged with several counts of offering a false instrument for filing, and Mr. Goldring and Osher were also each charged with four counts of falsifying business records. The five shell corporations were charged with falsifying business records. If convicted, the defendants could serve a maximum sentence of 1 1/2 to four years.