Lincoln Smith ran the Hypnotic nightclub in Herne Hill without planning permission and in breach of a planning enforcement notice until it was successfully closed by the London Borough of Southwark in September 2013.
The council’s planning enforcement team instigated criminal proceedings and last week the Inner London Crown Court secured a confiscation order of £171,000 under the Proceeds of Crime Act.
Smith has now been given a period of three months in which to pay the money or face a two-year custodial sentence.
Southwark Council's cabinet member for regeneration, planning and transport Mark Williams said the nightclub had been a "significant disturbance" to local residents and other traders nearby.
"It has taken a long while for the courts to process this matter but we can now confirm the confiscation order, which demonstrates that flagrantly breaching planning control will not go unpunished and the council will use the law to ensure that those who harm their local environment are appropriately penalised."