Crazy Horse Too's worth highly exaggerated
Skim allowed to continue until eventual sale
VEGAS by Steve Miller
June 26, 2006
Emergency vehicles respond to beating at Crazy Horse Too, Sept. 2001
(Photo by Buffalo Jim Barrier used on Dateline NBC)
LAS VEGAS - Now that Rick Rizzolo
family, and corporation have pleaded guilty to racketeering and tax
evasion, he's been given one year to sell his topless bar, the Crazy
Horse Too, for market value, and get out of the adult business for the
rest of his life. He may also have to sell the land under the
just-opened Philadelphia Crazy Horse Too. But there may be more to this
story than meets the eye.
Located in one of Las Vegas' seediest neighborhoods surrounded by a
jungle of telephone poles, power lines, and billboards (some
advertising competing gentlemen's clubs
), Rizzolo shocked local
real estate experts in 2002 by paying an amazing $5.5 million for the
2.63-acre site where his strip club and a next door auto garage owned
by former pro wrestler Buffalo
, less-than-peacefully coexist in the shadow of an
overpass next to the tracks. In the eyes of those experts, this can
hardly be referred to as prime Vegas real estate, and speaks loudly
about Rizzolo's limited business skills.
Competitor leases billboard over Crazy
Nonetheless, Rizzolo has sold the U.S. Federal Court a bill of goods,
including that his broken down, blood stained bar is worth in excess of
$35 million - enough to cover almost $7 million in fines and penalties,
along with paying Kirk
another $10 million for his broken neck suffered at the hands
of a Crazy Horse bouncer.
Meanwhile, as Rizzolo prepares to cool his heels in Club Fed, if his
braggadocio holds true that the club generates up to $18 million each
year -- compared to a legitimate appraisal obtained by INSIDE VEGAS
that tells quite a different story -- his father Bart, brother Ralph,
and sister Annette might be able to continue skimming at least another
$15 million between now and the time Rick gets out of the slammer.
(They did plead guilty to skimming!)
How can the Feds let this happen? To enlighten them, I inquired of one
the most knowledgeable professional real estate and business appraisers
in the country. I asked him to evaluate the actual worth of the Crazy
Horse Too business and property. This was his reply:
Steve: The property was in contract earlier this year, but the buyer
walked away from the deal after the shooting inside the club in
February at the advice of counsel - also after the buyer
found out that Rizzolo wildly exaggerated what the club actually makes
(per Crazy Horse Too - Power Co. Inc. tax returns)...in fact, the club
does not make anywhere near the $18M NOI that (Rizzolo) suggested. The
Power Company Inc. 2004 tax returns you supplied indicate they made
only $3.6M before debt service on the $6M 1st Trust Deed, netting
around $3M after debt service.
the Scores sale (with 5 and 1/2 acres) and Cheetahs no-sale, Rizzolo
may well be in the hole financially the rest of his life if the club
sells for "MARKET VALUE."
The expert quoted Rizzolo's tax returns showing declining "EBITDA"
which means "earnings before interest, taxes, depreciation and
amortization," and declining "NOI" which means "Net operating income,"
after both had been wildly exaggerated by Rizzolo to the Federal Court,
Kirk Henry's attorneys, and the Federal prosecutors.
Business at the Crazy Horse started a steady decline after the 2001
beating of Kirk Henry that made national news and showed Rizzolo to be
less than a legitimate businessman. The Henry episode, and several
prior cases of brutality, clearly showed that Rizzolo and his
management are most
skilled at beating
profits out of customers instead of profiting through legitimate
Henry's story inspired many patrons to seek safer venues causing the
declining revenues indicated on Rizzolo's corporate 2003 and 2004 tax
returns which I asked my expert to review. Since 2004, patronage has
continued to decline which is evidenced by an increasingly empty
parking lot during peak hours, i.e., it will be hard to sell the Crazy
Horse for enough to cover Rizzolo's obligations.
In February 2003, after 80 FBI agents raided the Crazy Horse, one agent
described the interior of the building as a "toilet." "They have to
spray perfume all around the place to cover up the smell. The place
looks like it hasn't been cleaned for years."
Its obvious that whoever buys the bar will also have to invest millions
to clean up Rizzolo's mess and make the place competitive with newer
clubs, let alone invest in a public relations campaign to improve the
club's reputation and image.
In an interview a day after the raid, Rizzolo told the Review-Journal that his club
makes more than $10 million a year. "It makes so much money, I wouldn't
do something stupid to jeopardize it," he said at the time.
Now, Rizzolo's playing poor boy, this while he's known as a "whale"
on the Strip for losing up to a million dollars per night during his
frequent gambling binges. Because of his felony conviction, Rizzolo
could become the first whale inducted into Nevada's Black
Book of persons banned from entering casinos, but that's a long
shot because casino owners pay for the governor's political campaigns,
and the governor appoints the Gaming Control Board members. No casino
wants to lose a whale, no matter how much damage Rick Rizzolo could do
to the reputation of gaming in Nevada.
After a convenient divorce from his wife of 27 years, and the
vesting of most of his assets to her in the quasi divorce settlement,
Rizzolo claims he's now limited to
gathering the $17 million he owes the IRS and Kirk Henry's family from
the sale of his property on Industrial Road, or so he says. In reality,
there's plenty of money to go around considering his wife's beach front
home in Newport Beach, California, and her golf course estate in Las
Often, when a defendant transfers his assets to a family member
prior to anticipated prosecution, the court wisely reverses the
after-the-fact transfer. They should do so in this case - immediately!
Rizzolo is obviously scamming the Federal Court and the Henry family.
His ex-wife was his partner when Henry was crippled and while her
husband skimmed profits. That makes her liable even after the contrived
Foreseeing a lack of assets available for award in an unrelated civil
harassment lawsuit brought by Buffalo Jim Barrier, Gus Flangas,
Barrier's attorney, recently filed a motion for Prejudgment
Writ of Attachment and Garnishment of at least $1 million worth of
Rizzolo's assets in the likely event his client prevails at a jury
trial expected to take place later this year in the court of Judge
Elizabeth Gonzelez. Barrier has proved he's been harassed by Rizzolo in
five successful lower court cases, so he's expected to again prevail in
his upcoming District Court lawsuit seeking several million dollars in
damages for attempts by Rizzolo to put him out of business so the Crazy
Horse could expand into his space.
Frankly, I'd rather be
attacked by a swarm of malaria-crazed mosquitoes than
Miller and Barrier on my case. -- John L.
Smith, LV Review-Journal
(AmericanMafia.com photo by Mike
Then there's the threat by the City of Las Vegas to fine 47 year old
Rizzolo up to $2 million. After hundreds of requests to bring the Crazy
Horse before the City Council for disciplinary
, the City Attorney finally decided to respond. I hope the
council members are not swayed by Rizzolo's claim his wife now has all
his assets, or his claim that he's in poor health. The taxpayers could
sure use the $2 million after all the bad press the Crazy Horse has
brought upon our city, and the pain and suffering he's caused so many
Rizzolo has also reportedly bragged that he would "burn
the place down
" before he would lose it to the government or Henry.
For this reason alone, U.S. Federal Court Chief Judge Philip Pro should
immediately place a receiver in the business to collect and protect all
the cash that could be ripped off by Rizzolo's family members while
he's in prison and beyond.
A confidential source close to Rizzolo put it this way:
that Rizzolo is trying to stall the government by putting the club into
contract for sale, then killing the deals by finding unreasonable
escape clauses and claiming the buyers didn't perform. He's using this
tactic to keep possession of the club and continue his activities and
avoid a receiver from being placed in the property by the federal govt.
(by showing them he is "acting in good faith" to find a buyer -
to get the govt. and Henry their money). I can't believe that the govt.
is allowing this guy to remain open for business and continue to lie to
them about "sale of the club" to stall potential receivership action by
the govt. I heard that Rizzolo said he would burn the club down rather
than lose it to Henry or the govt.
This is also a case where the
government is doomed if it does, and doomed if it doesn't. The Feds
learned over a decade ago
impossible to run an sexually orientated business after it made several
attempts to sell Joe Conforte's Mustang Ranch brothel in Reno. In
September 1990, the IRS seized the Mustang and failed in an attempt to
successfully run the brothel to pay back taxes.
Could you imagine paying the United States Treasury to get laid in a
Nevada brothel? Few customers took advantage of the bizarre offer.
After being criticized in the national media for trying to run a
whorehouse, the government padlocked the Mustang, and announced it was
for sale. When the sale never materialized, the Feds in 1990 auctioned
the Mustang Ranch property and sexy memorabilia. The Feds later learned
that the ranch was sold to Mustang Properties Inc., a shell corporation
represented by Victor Perry, brother of Conforte lawyer Peter Perry. To
the Fed's dismay, Joe Conforte returned to manage the Mustang, and it
was business as usual until 1995 when Conforte and Perry were indicted
for bankruptcy fraud, aiding and abetting, money laundering, witness
tampering, racketeering, conspiracy and forfeiture. In 1999, the shell
owners transferred millions of dollars to Conforte, and the Mustang was
ordered closed. Conforte fled the country and never returned.
Another source familiar with Rizzolo wrote:
What is interesting is that the government is willing to allow the
guilty parties to continue running the club until it's sold. Rizzolo
recently told someone that the report that “he only has a year to sell
the club” isn't true. He said, that “he could conceivably own it for an
indefinite period of time.” Example: if he is unable to find a buyer
who can be approved for licensing; let's say after six months he sells
it to someone. The sale is contingent on licensing approval which can
take up to a year to obtain. Let's further say that the buyer gets
denied at the 11th month. Rizzolo can now take the club back and put it
on the market again. The government will allow him more time to sell it
and to get the buyer approved. For the sake of speculation, let's say
that Rick wants to hold on to the club for an extended period of time,
because after all, he still gets the profits until it's sold. All he
has to do is set an unrealistic price (like the one that he's asking
$30 - $40 million). In this case, no one will ever buy it. Does the
word “loophole” come to mind? In
a similar case in Atlanta (Gold Club -Steve Kaplan), the government
took possession of the property immediately upon the plea signing. They
closed the club, tore down the building and sold the property to a
developer, with a covenant that the property could never be used for a
strip club again. In most cases of business fraud, the business entity
goes down with its operators.
Now, the Feds may have a similar problem on their hands with Rizzolo
and his relatives. Its starting to look like the Rizzolos are borrowing
a page from Joe Conforte's book, and will never keep their promises to
the IRS, FBI, Judge Pro, or Kirk Henry.
If so, then instead of the pubic getting screwed at a Federally
operated Reno whore house, it will be Judge Pro and the Feds bending
over for Rizzolo who may be plotting a successful scheme to get away
with murder, beatings, robbery, and tax evasion.
Let's hope Judge Pro, and Kirk Henry's attorney Stan Hunterton, get
wise to this scheme before Rick Rizzolo and his family steal all the
money they owe for hurting so many people, while leaving the IRS, FBI,
taxpayers, and the Henry's out in the cold.
LATE BREAKING NEWS:
PM, PDT, Sunday June 25, two ambulances and two Las Vegas Metro Police
units were observed at the front entrance of the Crazy Horse Too. No
further information was available.