Rizzolo's Lawyers Squirm!
They tried to squelch production of documents;
admit "money that was long ago spent" -- and
their conflict of interest; then try to withdraw
while triggering speculation they received
their law firm's legal fees under the table.

INSIDE VEGAS by Steve Miller
AmericanMafia.com
December 8, 2008

LAS VEGAS - At first it was thought that the sale of the Crazy Horse Too would cover all of Rick and Lisa Rizzolo's financial obligations, but as a conciliation, Rick agreed to personally stand good for the couple's debts in the event the bar did not sell. This was supposed to occur instead of letting the money be "long ago spent!" However, it's now been two and a half years since he plea bargained; the Crazy Horse is dark and decaying; and Rizzolo and his wife have not paid a dime while they scoff at United States District Judge Philip Pro, the Federal Prosecutors, and the U.S. Attorneys who they so skillfully duped with the help of local mob lawyers.

But circumstances may be about to change. With friends like the criminal defense attorneys at Patti & Sgro, the convicted racketeer and his ex-wife need no enemies.

Not only did Patti & Sgro blow the Rizzolo's cover by admitting the couple "long ago spent" moneys intended to pay beating victim Kirk Henry, the IRS, and other creditors, but when Patti & Sgro saw a COMPLAINT filed in Federal Court by Henry's current legal team; former U.S. Federal Prosecutors Don Campbell and Stan Hunterton, asserting that Patti & Sgro and others might have participated in a Conspiracy to Defraud, and a Violation of the Uniform Fraudulent Transfer Act (UFTA), they began squirming and immediately filed a MOTION TO WITHDRAW as Rick and Lisa's attorneys.
 

The Nevada Rules of Professional Conduct at Rule  1 .7(a)(2) prohibit a lawyer from representing a client when there is a significant risk that the representation will be materially limited by a personal interest of the lawyer. In addition, the Nevada Rules of Professional Conduct at Rule 1.9(a) prohibit a lawyer from representing a person who has interests materially adverse to the interests of a former client. In this action, Patti, Sgro & Lewis formerly represented both Defendants in their divorce and it has been threatened with a lawsuit by the insinuations made in Plaintiffs' Complaint. This firm has a genuine conflict of interest in remaining as counsel of record for one of its two former clients in this action. Pursuant to Nevada Rules of Professional Conduct, Rule 1.16(a) Patti, Sgro & Lewis is required to seek this Court's order permitting it to withdraw.   DATED this 4th day of November, 2008. PATTI, SGRO & LEWIS MARK C. HAFER 720 So. Seventh St., Third floor Las Vegas, NV 89101 Attorneys For FREDRICK RIZZOLO

But they are not the only local attorneys who may find themselves embroiled in this legal mess. John E. Dawson of the firm Lionel Sawyer and Collins also played a major part in helping the Rizzolos hide their assets from creditors. By coincidence, Mr. Dawson's brother Kent Dawson was the Federal Judge who officiated over the trials of 15 Crazy Horse Too defendants. Another potential conflict of interest.

What is most telling is Patti & Sgro's utter refusal to abide by Campbell and Hunterton's Rule 45 right to subpoena financial records relating to Patti & Sgro's long standing financial relationship with the Rizzolos and the couple's now defunct criminal enterprise the Crazy Horse Too strip joint (see INTRODUCTION below). This refusal is fodder for those who believe Patti & Sgro were paid their legal fees under the table with no records kept, something the IRS may find of interest.

And the following notes in Campbell and Hunterton's MOTION must also be giving Patti & Sgro chills up and down their spines:

Based on the above court documents, Judge Pro is being asked to rule on whether Patti & Sgro are obstructing justice, and if they should be severely sanctioned. The Internal Revenue Service may also discover the law firm's alleged lack of record keeping was a factor that should have been included in Rick Rizzolo's 2006 indictment for tax evasion.

During Rick Rizzolo's 2006 plea bargain, Patti & Sgro cut a deal for him with Federal Prosecutors to get an abbreviated one year sentence in exchange for Rizzolo's guarantee to pay over $27 million in restitution including $9 million plus interest to Kirk and Amy Henry; Clark County taxes owed on the property with penalties and interest; a defaulted Security Pacific Bank $5 million dollar loan with attorneys' fees, penalties, and interest; the restitution of $1,734,000.00 plus accruals to the IRS; fines of $750,000.00 plus interest; the forfeiture of $4,250,000.00 plus interest to the IRS; the City of Las Vegas' judgment lien of $2,192,000.00 plus interest; the IRS tax Iien against Rick and Lisa Rizzolo for their 2006 individual income taxes of $1,032,535.26 plus accruals; and the $1 million ordered to be retained in the Clark County District Court's escrow account pending the resolution of the late Buffalo Jim Barrier's harassment lawsuit against Rizzolo.

Rizzolo was released from prison on April 4, 2008, and has since failed to pay one cent of the above restitution. This has raised the question as to when Judge Pro will drop the hammer on Rick and Lisa, and possibly the mob attorneys who helped them hide their assets?

The most deserving of the Rizzolo's creditors is Kirk Henry. His neck was broken by one of the Rizzolo's employees in 2001 when Henry refused to pay what he believed was a bogus $88 bar tab. Henry was permanently paralyzed from the neck down. This occurrence triggered the FBI investigation that revealed "35 to 40 beatings had occurred at Crazy Horse Too in three years," according to Las Vegas City Attorney Brad Jerbic, plus the plethora of other heinous crimes that resulted in the strip bar's closure and seizure by the U.S. Department of Justice in 2007.

The least deserving creditor is Security Pacific Bank of California. The institution was closed down by the FDIC on November 7, 2008 for making questionable loans including the $5 million dollar one they foolishly granted the Rizzolos in 2005, three weeks before Rick began his plea negotiations.

In a DECLARATION filed with the court on February 12, 2008, the bank acknowledged being forewarned (by Steve Miller) that they were about to loan $5 million to a crook, but they ignored the warning and funded the loan. This is the same bank that once featured former LV Mayor Jan Jones -- Rizzolo's Newport Beach neighbor -- as one of its Directors and stockholders. Rizzolo may have taken unfair advantage of his long time friendship with the former mayor so she would inadvertently help him obtain the loan that he had no intention to repay.

On October 20, 2008, a few weeks before it was shut down, Security Pacific Bank filed a MOTION in Federal Court trying to foreclose on the Crazy Horse Too. Based on the bank's lack of credibility, it was rumored that certain bank officials were functioning as surrogates for organized crime figures who wanted to obtain the topless bar for less than the $5 million Rizzolo owed the bank so they could possibly resume his lucrative criminal activities that caused the Crazy Horse Too's closure and seizure.

On December 3, the United States Attorney for Nevada correctly petitioned Judge Pro asking that he deny the bank's, or its successor's MOTION. Judge Pro is expected to rule on this MOTION in the near future, but court observers don't expect him to honor a discredited bank's unreasonable request.

Meanwhile, the feds continue to try to find a buyer who is willing to pay $7-11 million for the depilated converted warehouse.

But most important is the admission by the Rizzolo's lawyers that the couple's money was "long ago spent."

That statement may offend Federal Prosecutor Eric Johnson enough to finally inspire him to go after Rick and Lisa Rizzolo's illegally hidden assets including their property under the Philadelphia Crazy Horse Too, assets that have an estimated value far in excess of the couple's debts, as was recommended in the August 21, 2007 Las Vegas Sun Editorial; "Get tough with Rizzolo."

The Rizzolos seemed fully aware as late as June 4, 2008 that they could be at risk to creditors according to the following document from the Federal Court record. Hence the claim their money was "long ago spent."

Also, Rick Rizzolo has long been suspected of stashing millions in cash at the MGM, Hard Rock, and Palms casino cages where he is known as a "Whale." According to "Casino Host to the stars" Richard Wilk, "Rick Rizzolo is one of (his) top players and closest pals."

So if it's true, as Patti & Sgro claim, the couple "long ago spent" their (ill-gotten) money (and are probably stashing millions in cash), Rick could face additional prison time, and Lisa could be indicted for Fraudulent Transfer of Assets after clearly trying to hide her family's money from creditors.

And local attorneys John E. Dawson, Dean Patti, Tony Sgro, and Mark C. Hafer could also face indictment if evidence is found to prove they knowingly conspired to aid and abet such a scam.

In the meantime, Rick Rizzolo is regularly seen in our town's most expensive venues squandering cash, entertaining friends, and gambling while Kirk Henry's family struggles to pay his life-long medical bills.