Parole Violation Hearing
Continued Until May 9 and
"Can Lion's LP assign
its rights to collect the balance on
the Philly sale to Bart
before somebody else seeks to
attach the payments..?"
"I'm your silent partner
that you don't have to pay."
U.S. Probation Officer Eric
INSIDE VEGAS by Steve Miller
April 4, 2011
The United States Federal Court of Judge
Philip Pro convened at 9:10 AM, March 29, 2011 in the Lloyd George Federal
Courthouse in downtown Las Vegas to hear arguments from Assistant U.S.
Attorney Eric Johnson as to why convicted racketeer Rick
Rizzolo's parole should be extended for three years, and he be sent
back to prison for (at least) three months.
Johnson told the court that the former
owner of the Crazy Horse Too strip clubs in Las Vegas and Philadelphia
was guilty of two violations of supervised release: not reporting new financial
transactions to his probation officer; and avoiding paying his taxes and
other financial obligations including the restitution of $9 million dollars
victim Kirk Henry.
A key document entered into evidence by
the prosecutors was the following Confidential fax to political
powerhouse law firm Lionel,
Sawyer & Collins that may indicate a collusive scheme between Rizzolo
family attorneys Mark Hafer and John Dawson to hide Rick and ex-wife Lisa
Rizzolo's money from creditors and the government.
During testimony of Rizzolo's probation
officer Erik Christiansen, it was revealed that Rizzolo failed to inform
his P.O. of a series of payments Rizzolo received from Pennsylvania
businessman Vince Piazza.
According to information discovered by
Kirk Henry's attorneys and the U.S. Attorney that was later shared with
Christiansen and the federal court, Piazza paid Rizzolo an initial payment
of $999,000.00 in April 2008 for part of Rizzolo's interest in the Philadelphia
Crazy Horse Too.
Rizzolo did not report the payment to his
probation officer or the IRS according to Christiansen's testimony.
In a complex scheme to hide the Philadelphia
sale proceeds, it was disclosed in court that Las Vegas attorney John Dawson
at Lisa Rizzolo's behest transferred the initial $999,000.00 payment to
a Southpac Offshore
Planning Institute bank in the Cook Islands, then Dawson reportedly
redeposited the allegedly laundered money into an LLC controlled by Rick
Rizzolo. Dawson reportedly assigned those proceeds plus additional others
from the Philadelphia club's sale to Rizzolo's
late father Bart, and after Bart's death on March 19, 2010, assigned
proceeds to Bart's widow Kim Tran Rizzolo.
The prosecution during the March 29 hearing
stated that after the initial $999,000.00 payment was deposited off shore
by Dawson, additional unreported monthly payments of $57,000.00 each were
reportedly given the same "asset protection" treatment by Dawson who eventually
assigned the moneys to Kim Tran Rizzolo with the loot probably ending up
in the hands of Rick Rizzolo for his personal use.
Probation Officer Christiansen testified
that he was not aware of these transactions, and that they violated an
agreement Rizzolo signed upon his release from prison in April 2008 stating
that any and all information regarding his financial dealings must be reported
to and receive the blessings of the U.S. Office of Parole and Probation.
The agreement containing Rizzolo's signature
was entered into evidence.
Christiansen testified that at least $3
million dollars in funds handled by John Dawson and ending up in Rick Rizzolo's
control between April 2008 and 2010 were not reported to his office in
violation of federal law.
Court records show that Lionel, Sawyer
& Collins was paid a minimum of $80,000.00 for providing Dawson's asset
protection skills, and for him to act as the Rizzolo's personal bank teller.
U.S. Attorney Johnson provided evidence
that Rizzolo also failed to report the Philadelphia transaction on his
income tax forms which is an additional violation of his terms of supervised
release. However, supporting documents were not available in court last
week because they are reportedly in the possession of Rizzolo's former
lawyers Dean Patti and Tony Sgro.
Johnson also told the court that attorney
John Dawson once wrote an email to a Lionel, Sawyer & Collins colleague
stating: "Rick wants to get some money back." No further explanation was
This happened while Rizzolo was on parole
and not supposed to be consummating financial transactions without the
knowledge and approval of his probation officer.
However, Rick did get some money back
while he was avoiding paying millions in back taxes; $9 million plus interest
to Kirk Henry; and while he was telling the court he's "broke."
(It was not mentioned during the hearing
Dawson will be charged as a co-conspirator for allegedly committing
the crime of intentionally hiding a client's assets from seizure by the
U.S. Internal Revenue Service.)
Court records were also revealed showing
that Rick Rizzolo had two Las Vegas bank accounts that were unknown to
his probation officer. From one account Rizzolo reportedly paid $6,000.00
for a birthday party.
Johnson told the court that Rizzolo went
"on cash basis after the IRS levied the two accounts."
Johnson explained that Rizzolo was pleading
poverty in 2009, and in a deposition stated
his jewelry was his only asset, and that he had "no recollection" or
was under the "mistaken belief" he had reported all his financial transactions
to the parole officer and the IRS even though he began receiving his additional
$2 million in $57,000.00 per month payments from Piazza beginning in 2010
that he failed to report to authorities or the IRS.
Officer Christiansen testified that he visited Rizzolo for the first time
in April 2008 at the Roma Hills mansion (left) Rizzolo shares with Slots
of Fun heir Cliff Diamond. There he reportedly told Rizzolo "I'm your silent
partner that you don't have to pay." Christiansen said he clearly explained
that he must be informed of every financial transaction in monthly written
reports, and that Rizzolo agreed in writing to do so -- but immediately
went back on his word by not reporting the $999,000.00 initial payment
received by Rizzolo's family less than a week after he began his supervised
release in April 2008.
Christiansen testified that during the
first two years of Rizzolo's supervised release, the veteran P.O. had no
knowledge of the sale of the Philadelphia Crazy Horse Too, or knowledge
of any off shore accounts held by Rizzolo's ex-wife Lisa. Rizzolo
told his P.O. his only income was from a personal bank account he was draining
that contained $92,000.
Christiansen continued to be steam rolled
by Rizzolo for the next two years.
On February 17, 2010, Christiansen began
to smell a rat and filed a REQUEST FOR HEARING TO MODIFY CONDITIONS OR
TERMS OF SUPERVISION.
In the two
page document, Christiansen stated: "On December 17, 2009, the offender
was asked to sign a Payment Schedule for U.S. District Court Clerk in which
he was requested to make monthly payments towards his restitution and fine.
Mr. Rizzolo declined, stating that he would not sign the document at the
advice of his attorney."
The P.O. testified that he finally requested
Rizzolo's parole be modified or revoked in 2010 after being informed of
the secreted assets by the U.S. Attorney and attorneys for Kirk Henry.
In his request, he asked the court to send Rizzolo back to prison for three
months, and to extend his term of supervised release for an additional
three years. Christiansen's request was supported by the U.S. Attorney
and inspired the March 29 Parole Violation Hearing.
Because so much more information is now
available including new statements from witnesses on both sides including
the recent deposition testimony of Vince Piazza, the March 29 hearing was
only the beginning of an extensive probe that will require at least two
additional days to complete.
After Judge Pro ruled there would be a
continuance, Rizzolo's lead attorney Dominic Gentile told the court that
he will be forced to add additional lawyers to his team who are familiar
with tax fraud to challenge the government's evidence of tax evasion. It's
anticipated that Rizzolo crony Fred Doumani will continue his claim that
he is personally paying his friend's burgeoning legal tab, while
Rick Rizzolo persists in pleading
poverty, and his ex-wife
Lisa divides her time between the
couple's lavish estates in Las Vegas, Chicago, and Newport Beach.
Judge Pro scheduled the continuation for
May 9 and 10, 2011, so the U.S. Attorney will have time to gather tax related
documents. Rizzolo will be allowed to remain free until then, though several
court observers were later heard asking why his passport had not been seized?
Rizzolo's "Dream Team" (top
L to R): The Defendant; Attorneys Dominic Gentile, Paola Armeni and Margaret
Lambrose; (bottom L to R) Rizzolo's spiritual advisor Father Dave Casaleggio;
Attorneys Tony Sgro and John Dawson; and Rick Rizzolo's legal defense financier
(Photos of Rizzolo, Doumani,
and Rev. Casaleggio by AmericanMafia.com photographer Mike Christ)
Many of the documents that are reportedly
needed by the U.S. Attorney for the May 9 and 10 hearing were once in the
possession of Rizzolo's former attorneys at Patti,
Sgro & Lewis. The local law firm known for defending members of
organized crime has since claimed that the documents were destroyed in
a "flood," but were unable to demonstrate the validity of their claim.
A senior member of the same firm, Mark Hafer, authored the confidential
fax to John Dawson that revealed a scheme to secretly assign the $3 million
dollar proceeds from the Philadelphia Crazy Horse Too sale to Rick Rizzolo's
father "before somebody else seeks to attach the payments," referring obscurely
to the IRS.
And as to what happened to the rest of
Rick and Lisa Rizzolo's financial records, these photos taken on April
3, 2007 by the late Buffalo
Jim Barrier can be entered into evidence with my full consent (click
on photos to enlarge). They were taken at Rizzolo's personal warehouse
behind the Crazy Horse Too when thousands of documents were being shredded.
To the best of my knowledge, the shredding
was not approved by the court or IRS.
And regarding the "flood" that purportedly
destroyed more of the Rizzolo's records, here's U.S. Magistrate Judge George
|Patti, Sgro & Lewis has, in
fact, placed its credibility in issue by stating that it is unable to produce
client records that it had a legal duty to retain and which one would expect
an attorney to retain. Patti, Sgro & Lewis’s assertion that client
records may have been destroyed in a flood was uninformative as to when
the flood occurred, where it occurred and extent of records destroyed.
It is reasonably incumbent on Patti, Sgro & Lewis to demonstrate the
validity of its explanation that records relating to Mr. and/or Mrs. Rizzolo
were or may have been destroyed in a flood. The discovery sought by Plaintiffs
is therefore a reasonable follow-up to its efforts to obtain relevant records
from the Rizzolos’ attorneys. Patti, Sgro & Lewis has not demonstrated
that it will incur a substantial burden and expense to locate and produce
records relating to a flood which apparently occurred within the past several
Motion to Compel - #129 - ORDER
delivered by George Foley, Jr., United States Magistrate Judge, June 30,
To the present day, no court record has
been entered proving Patti, Sro & Lewis complied with Magistrate Foley's
ORDER by demonstrating the validity of their claim Rizzolo's records were
destroyed in a "flood." And the politically
connected firm has miraculously escaped being sanctioned for their
noncompliance with Foley's ORDER, or for their conspiring with John Dawson
to assign Vince Piazza's payments to Rizzolo's late father or his widow.
The following are excerpts from the UNITED
STATES SENTENCING COMMISSION guidelines for FEDERAL OFFENDERS SENTENCED
TO SUPERVISED RELEASE.
Judge Pro will be bound on May 9 and 10
to follow these guidelines regarding the possible punishment Rick Rizzolo
may receive for allegedly violating his terms of supervised release.
99 PAGE GUIDELINES TEXT:
on Page 38)
Modification, Early Termination, and Revocation of Supervised Release
on the circumstances, courts have the authority to modify the conditions
of an offender’s supervised release, to terminate it before the original
expiration date, or to revoke supervised release and return an offender
to prison (emphasis
Revocation and Sentencing Proceedings
Procedural Issues Related to Revocation Proceedings
the government or a probation officer supervising an offender believes
that the defendant has violated one or more conditions of supervised release,
the government or the probation officer is authorized to file with the
court a petition to revoke supervised release; the petition need not be
filed by an attorney for the government. The petition serves as the “written
notice of the alleged violation” of the conditions of the defendant’s supervised
release. In response to the petition, a court may issue a summons
added - Rizzolo received his summons during his term of supervised release)
an arrest warrant.
the revocation hearing, the offender possesses several rights: the right
to be present, the right to counsel, the right to disclosure of the evidence
upon which the government is relying in seeking revocation of supervision
or modification of its terms, the opportunity to be heard and present witnesses
and documentary evidence, a limited right to confront and cross-examine
adverse witnesses, and the right to a written statement by the court as
to the evidence relied on and the reasons for the revocation. At the revocation
hearing, the government — typically represented by an assistant United
States attorney — bears the burden of proving an alleged violation by a
preponderance of evidence.
court may . . . revoke the term of supervised release, and require
the defendant to serve in prison all or part of the term of supervised
release authorized by statute for the offense that resulted in such term
of supervised release without credit for time previously served on post
release supervision (emphasis
revocation after the term of supervised release has ended can be based
on any violation during the term, even if that ground was not specifically
listed in the petition to revoke filed during the term, as long as
a warrant or summons was issued during the term on the basis of some alleged
added - Rizzolo's supervised release was set to expire on April 3, 2011,
but the current court action has extended it past May 10).
this judgment imposes a fine or restitution, it is a condition of supervised
release that the defendant pay in accordance with the Schedule of Payments
sheet of this judgment (emphasis
added - After being released, Rizzolo refused to pay any fine or restitution
bargained for in his plea agreement).
According to Page
59 of the guidelines (excerpt below), Rick Rizzolo got off real easy.
According the guidelines, Rizzolo should
have received an Average Prison Term of 23 months. Instead, he received
only 10 months in prison and 2 months in a halfway house in exchange for
his promise to pay all his bills. In the meantime, almost ten years after
Sept. 20, 2001 when Kirk Henry was rendered a quadriplegic at the hands
of one of the Rizzolo's employees over a disputed $88 bar tab, Henry remains
unpaid while his medical and legal bills continue to mount.
Las Vegas Review-Journal
investigative reporter Jeff German covered the March 29 hearing. Here is
to his comprehensive story "Prosecutors want to send former strip club
boss back to prison" that includes an excellent courtroom
illustration by RJ artist David Stroud.
In the blog at the bottom of the story,
Review-Journal readers shared their thoughts. This reader said it
|Lawyer wrote on March 29, 2011 09:54 PM:
Probation is a privilege, not a right.
In reality, a.k.a. when you are defending a young black man who has been
in the bucket for a few years for hawking a crack rock, he does not get
a formal hearing with IRS Agents and one of the best attorneys in town.
Dominic Gentile probably earns 750 an hour for defending Rizzolo. In reality,
a young hoodlum gets a report from P & P and a one way ticket to High
Desert (prison). It is obvious that Rizzolo is up to no good and hiding
money, as such he should go back to the joint. Max Tanner served EIGHT
years for tax evasion, he was a lawyer with no priors who set up shell
corporations and sold stock for these shell corporations. His thugs never
paralyzed a man over a bar tab . . . there are some serious shenanigans
Four agents from the Internal Revenue Service
took extensive notes during the March 29 hearing and are expected to be
in court again on May 9 and 10, as will AmericanMafia.com.
During the next few months, additional
indictments may be filed possibly including one against Lisa Rizzolo.
John Dawson's name has also been mentioned.
This story is far from over.