Rizzolo threatened with Contempt of Court - sort of
"The Court's power to hold
Mr. Rizzolo in civil contempt is likely to be
the most effective method
for coercing him into complying with the
Court's discovery orders
if he refuses to comply voluntarily."
Magistrate Judge George Foley, March 11, 2010
INSIDE VEGAS by Steve Miller
March 15, 2010
LAS VEGAS - In the latest in a series of
hollow Orders issued by United States Magistrate Judge George Foley compelling
racketeer Rick Rizzolo to answer unpaid beating
victim Kirk Henry's interrogatories regarding the extent and whereabouts
of Rick and his ex-wife Lisa's hidden cash, the judge for the first time
is beginning to sound tough.
But in his third Order to Compel, Judge
Foley -- again -- refuses to issue sanctions against the recalcitrant Defendant,
and in the past week rescheduled the close of discovery in this case to
accommodate the ex-felon's reluctance to reveal the extent and whereabouts
"IT IS FURTHER ORDERED that Defendant shall
provide full and complete discovery responses within thirty (30) days of
this order. Defendant's responses shall include any and all documents that
the Court has ordered him to request and obtain from banks, financial institutions,
credit card providers or other persons or entities. To the extent such
documents have been requested, but not yet received by Defendant, he shall
provide full and complete information showing that he has requested such
documents and when he or his counsel expect to receive and produce such
documents. To the extent Defendant is unable to produce information and
documents that the Court has ordered him to produce, he shall provide a
full and complete explanation under oath setting forth the reasons why
such information or documents cannot be provided."
This latest 16
page Order issued on March 11, compels Rizzolo to produce years worth
of financial documents. However, conspicuously missing from the Order is
the mention of the shredding of
documents that occurred on April 3, 2007 at Rizzolo's 2486 Industrial
Road office behind the LV Crazy Horse Too, or the "flood" in the law office
of Dean Patti and Tony Sgro that purportedly turned the Rizzolo's financial
documents into "MISSING
(Upon learning of the "flood," Judge Foley
did not require Patti and Sgro to verify when and if it actually occurred.)
In regard to those destroyed documents,
it will be interesting to hear Rizzolo's explanation as to what happened
to them, if he's asked.
Fraudulent Transfer Act (UFTA) jury trial of the Rizzolos is set for
sometime in September 2010. Motions are due by 7/30/2010, and the Proposed
Joint Pretrial Order is due by 8/31/2010.
"Defendant has not fully complied with
his obligations to disclose his assets or transfer of assets in response
to Plaintiffs’ discovery requests. The Court is particularly troubled by
the information that Defendant did not disclose the deposit of $990,000
into the “RLR Trust” bank account in 2008."
Foley is talking about $990,000 that Rizzolo allegedly received in 2008
sale of his interest in the Philadelphia Crazy Horse Too strip club
But Judge Foley is not being informed of
the Rizzolo's recent penchant for mortgaging their other real property;
taking cash outs, and stashing
the money in the Cook Islands out of the reach of Henry and the IRS.
The first occurrence was in 2005 when Rick
mortgaged the Vegas Crazy Horse Too through a suspicious
bank loan made by the now defunct Security Pacific Bank of California.
Rizzolo borrowed (stole) $5,000,000.00
from the bank with no intention of ever paying it back. The bank went belly
up, and the First Deed of Trust on the LV Crazy Horse Too that was used
as collateral was purchased four years later at the FDIC auction by a California
LLC. (More on this later.)
The Rizzolo's "sham"
of Divorce was signed on June 3, 2005 soon after he mortgaged the strip
club. On August 29, 2005, Lionel Sawyer & Collins asset protection
Dawson, the brother of Federal Court Judge Kent
the couple's Las Vegas mansion, parcel number 163-05-711-072, over
to something called "THE LISA M. RIZZOLO SEPARATE PROPERTY TRUST."
According to Clark County Records, two
months after transferring APN: 163-05-711-072 to her trust, Lisa placed
a First Mortgage on the property with the now-defunct INDYMAC
Bank at a time when the bank was known for making questionable loans.
One month later, it appears she placed
a Second Mortgage on the same property (left) with an almost unknown California
lender called Money
First Financial Services, Inc.
This was during the time Las Vegas was
enjoying a housing market "bubble," and real estate prices were sky high.
It was also possible at the time to mortgage houses for over 100% of their
value by use of combined first and second mortgages from overly friendly
But the Las Vegas house was not the only
property Rick transferred to Lisa's "Separate Property Trust." Two
other houses were transferred that she may have also mortgaged to the hilt.
One is a beach house located at 104 West Ocean Front, in ritzy Newport
Beach, California. The other is a lake front condo located at 195 Harbor
Drive in Chicago.
Two Oppenheimer accounts valued at $7,200,000
in 2005, were also discovered during an
investigation of the Rizzolo's assets by the FBI.
Experts in the real estate field estimate
that the Rizzolo's three houses, if mortgaged, generated between $8 to
$10 million in possible cash backs. That, along with the $5 million stolen
from Security Pacific Bank and the $7.2 million dollar annuity totals over
$20 million undisclosed dollars that may be hidden in the Cook Islands
-- money that Rizzolo may be keeping secret from the court.
Now, according to Judge Foley, Rick has
until around April 11 to come clean, or possibly be held in civil contempt.
I won't hold my breath based on Judge Foley's previous actions.
However, while we wait for this to happen,
several other things are going on.
In an obvious further attempt to waste
time and divert the court's attention from the relevant issues in this
case, Lisa Rizzolo is trying to force Kirk Henry's attorneys to violate
their attorney-client privilege by being compelled to appear for depositions.
This required Henry's attorneys Don Campbell
and Stan Hunterton to spend time and resources that must later be reimbursed
by Mr. Henry, to file a MOTION
TO QUASH SUBPOENAS AND FOR PROTECTIVE ORDER.
Attorneys in active court cases are almost
invariably protected from being deposed by opposing party's attorneys because
it would have a chilling effect on honest communication between attorney
and client. But instead of summarily quashing their subpoenas, Judge Foley
scheduled a hearing so attorneys for both sides can waste the court's time
arguing with each other about attorney-client privilege.
This is not the only silly hearing Judge
Foley has calandered in this case.
He's still obsessed with Rizzolo's jail
house lawyer James
'Spud" Kimsey, and has scheduled an expensive Contempt of Court jury
trial to decide if Spud needs to go back to prison for ghost writing over
a dozen Motions and documents that Rick Rizzolo signed, thereby successfully
stalling Kirk Henry's UFTA case for an extra six months. Notice that Judge
Foley didn't include Rizzolo as a co-defendent even thou Spud was working
at Rizzolo's behest.
At taxpayer's expense, the United States
Public Defender was assigned to defend Spud, and last week she filed a
5 page MOTION
FOR EXTENSION OF TIME, followed by a 13 page well written MOTION
Based on this Motion to Dismiss, Judge
Foley must decide if he still wishes to go through with a jury trial in
Spud's case, and he's still toying with the idea of requiring Kirk Henry,
a quadriplegic, and his wife Amy to travel to Las Vegas for a face to face
deposition so Lisa Rizzolo's legal team can "evaluate their demeanor and
credibility as witnesses," (see page 16 @
All of this is costing the taxpayers lots
of money, but there are even more recent developments in this case that
can further muddy the water!
On February 28, 2008, the United States
Federal Court granted a STAY to prevent Security Pacific Bank of California
from foreclosing on the defunct Crazy Horse Too strip club in Las Vegas
after the bank loaned Rick Rizzolo $5 million cash secured by a First Deed
of Trust on the Crazy Horse property. As I said earlier, Rizzolo promptly
stashed the money off shore, and never paid one payment on the loan.
After making this and many other highly
questionable loans, Security Pacific went belly up. The First Deed of Trust
was purchased by a California LLC.
However, the LLC was STAYED from foreclosing
on the property because, at the time, the government was making a diligent
effort to sell the closed Crazy Horse Too.
After all efforts to sell the business
and property failed, the California LLC on March 9 filed a MOTION
TO LIFT STAY so they can foreclose on the property and purportedly
sell it to the highest bidder.
(On several occasions, associates of Rick
Rizzolo have attempted to purchase the Crazy Horse Too as straw
men representing his interests. The principals in the California LLC
have not yet been identified, but should be individually scrutinized if
they are successful in foreclosing on the property.)
If the LLC is granted permission to foreclose,
it may signal a "sale" has taken place, therefore opening the door for
the government to require Rick and Lisa Rizzolo to be forced to "repatriate"
their off-shore-stashed money to pay Kirk Henry, the IRS, and other debtors
per Rick's plea agreement to make up the difference between what the club
sells for, and what he owes which is estimated to be in excess of $17 million
dollars, and growing.
Per a recent Federal Court decision, case
law now exists to allow the court to imprison Defendants who refuse to
"repatriate," or return funds stashed off shore that are owed to the government.
In the meantime, it would be prudent for
the court to immediately seize Rick and Lisa's passports.