Rick Porrello's - AmericanMafia.com - Steve Miller

Government taking sealed bids on Crazy Horse Too
Many debts to go unpaid if bids come up short
Rick Rizzolo suspected of backing highest bid to keep
his ex from being prosecuted for hiding assets

INSIDE VEGAS by Steve Miller
AmericanMafia.com
October 15, 2007

LAS VEGAS - The U.S. Department of Justice has given potential buyers of the shuttered Crazy Horse Too topless bar until 5 PM, Thursday October 25 to make unpriced sealed bid cash offers for the building and 2.65 acre property. The winning bidder will then have until December 31, 2007 to close escrow on the purchase.

Because the City of Las Vegas revoked its liquor license on July 1, the city gave 180 days from that date -- or until December 31 -- for an approved buyer to obtain a temporary liquor license and reopen the Crazy Horse Too, or according to CLV Ordinance 19.16.030 (3): "If a non conforming use of a conforming building is discontinued for a period of one hundred eighty days.... the future use of such building shall be only in conformance with the provisions of this Title."

The Crazy Horse was previously zoned as Industrial/Office Warehouse only, and was operating as a topless bar under a grand fathered Conditional Use Permit since 1986 that allowed it to be within 1,500 feet of another adult use (Cheetahs). If it stays dark for more than 180 days, the Use Permit permanently expires.

So the race is on!

As I reported in INSIDE VEGAS on October 1, 2007, attorneys for ex-Crazy Horse owner Rick Rizzolo filed a PETITION AND REQUEST FOR HEARING to try to convince the court that an error had been made and the property was seized from the wrong entity. The lawyers argued that the property actually belonged to RICRIZ LLC, not Frederick John Rizzolo, and should be returned to its rightful owner.

U.S. Federal Court Chief Judge Philip Pro made short order of the PETITION by denying a hearing and issuing a simple Docket Correction from his chambers refilling the case under RICRIZ LLC.

NOTICE of Docket Correction to [79] MOTION for Hearing and Petition and Request for Hearing by Ricriz, LLC re [62] Order, as to Power Company, Inc., Frederick John Rizzolo: Filed under defendants name; To be refilled under interested party name.

Now, to buy the shuttered "Horse" is like buying a pig in a poke.

Even if your bid is accepted, there's no guarantee the City Council will issue a temporary liquor license. In that case, if you paid more than what a run down warehouse is worth -- estimated to be somewhere around $5.5 million -- you could get stuck with an overpriced white elephant and no liquor license unless you had inside information from the city, and that would be a blatant violation of the State Open Meeting Law.

On September 1, 2007, Judge Pro STIPULATED that beating victim Kirk Henry would be first in line to receive proceeds from the sale of the Crazy Horse Too real estate and building.

This put other creditors including the IRS and Security Pacific Bank in the awkward position of having to go after the Rizzolo's personal assets if the bids come up short.

Mayor Oscar Goodman has admitted several times to being Rick Rizzolo's good friend. He once served as Rick's criminal defense attorney, and his law firm has since profited heavily from Rizzolo's referrals of dozens of criminal clients.

Only after I filed an ethics complaint against him for voting to help his friend did Goodman begin recusing on matters before the council that affected Rizzolo.

I believe Goodman would grant a quick liquor license to Mahmoud Ahmadinejad if it would protect the personal assets of Rick and Lisa Rizzolo! Goodman is well known for his loyalty to former clients. It normally takes six months for a new applicant to go through the investigative process to obtain a liquor license with adult use, but in this case, the city is prepared to treat any application like it's a matter of national security!

In the event the bar is sold at a bargain basement price that only covers the obligation to Henry but does not cover over $5 million in back taxes and penalties along with a now-in default $5 million mortgage, Goodman may be reluctant to grant the bargain-seeking buyer a temporary liquor license. He wouldn't want to insult Rizzolo. However, if the buyer has secret connections to the imprisoned Rizzolo -- possibly including Rizzolo's hidden financial backing -- Goodman is expected to convince his weak council to license the applicant no matter who he is as long as he pays off the taxes and mortgage, and keeps Lisa Rizzolo from going to jail for hiding assets.

That of course could only happen if the Feds let down their guard.

The United States Department of Justice, District of Nevada

Tuesday, January 23, 2007

PRESS RELEASE

Additionally, defendants’ plea agreements require The Power Company, Inc. to sell The Crazy Horse Too by June 1, 2007. The Government has the right to disapprove the sale if the buyer is a close relative or ongoing business partner of Rizzolo’s, is a felon, or has business dealings with organized crime members or groups.

FULL PRESS RELEASE: http://www.usdoj.gov/usao/nv/press/January2007/Rizzolo012307.htm

According to FBI sources, the Feds are only interested in assuring that Kirk Henry's $9 million is paid. They could care less about Rizzolo's personal debts to the IRS and bank saying the IRS and bank can recover their money in future civil or criminal prosecution. That the LLCs and trusts suspiciously formed after Kirk Henry filed his attempted murder law suit -- trusts filed after Rick and Lisa Rizzolo's hasty divorce, can easily be pierced to get the Rizzolo's three houses that were heavily mortgaged in 2006 so Lisa could hide the cash; the land under the Philadelphia Crazy Horse Too; and their personal bank accounts -- collectively amounting to more than enough to satisfy their debts.

Goodman along with a slew of Rizzolo's friends in casinos do not want the Feds to come after Rizzolo's family fortune to make up the difference. Rizzolo is a heavy gambler known to lose up to $1 million per night on the crap tables. So anyone who bids enough to pay off all of his former client's debts will receive special treatment from the Mayor and Jim DiFiore, the City Director of Business Activity who acts as his stooge.

(Rizzolo over paid $5.5 million for the property on March 22, 2002 as a means to oust his next door neighbor Buffalo Jim Barrier who was photographing beatings and other crimes committed by Crazy Horse employees. Several of Barrier's photos were used on NBC News. In 2007, the value of the property is near what he paid, and Barrier is still there in his garage paying forty three cents per square foot rent, making money, and taking pictures.)

Last week during a discussion about potentially taking all of Rizzolo's personal assets to satisfy creditors, a law enforcement official jokingly asked, "How will Rick survive if that happens?" I reminded him that Rick is a "Whale" on the Strip and probably has millions in cash hidden in the casino cages of the MGM and Palms -- something most degenerate gamblers are known to do.

Sources say the legitimate bids will probably come up short of Rizzolo's total obligation of around $19 million dollars. Anything over $9 million will most likely be considered suspect unless every investor is publicly disclosed, and few legitimate investors want their names associated with over paying for a property with no guarantee they can make it profitable without resorting to extortion, and after years of horrible publicity based on Rizzolo's business practices. That being the case, Lisa Rizzolo is expected to be asked to fully cooperate in recovering the millions of dollars in real estate and annuities that according to an FBI Declaration she hid after her divorce in the middle of the RICO investigation.

Just prior to their hasty divorce in 2005, this photo was purposefully published showing Rizzolo and Rocco Lombardo at the MGM. It was later revealed that Rizzolo paid each girl $1,000 to be photographed with him in order to make it look like he was playing around and to give his wife purported grounds for a divorce in the middle of the Federal investigation.

If Lisa Rizzolo refuses to voluntarily tell the Feds where her hidden assets are stashed, or refuses to sign off on her LLCs, sources say she may face criminal prosecution under 923 18 U.S.C. § 371 -- Conspiracy to Defraud the United States.

Nevada is a community property state. All the assets she hid were accumulated during a 19 year marriage and during the time crimes were committed at the Crazy Horse Too.

How much is the Crazy Horse worth if it regains a liquor license? Keep in mind that its previous owners pleaded guilty to racketeering that included padding credit card bills and threatening or beating patrons who refused to sign. Therefore their claims of extraordinary profits must be taken with a grain of salt -- unless the new operator plans on resuming the extortion, beatings, and tax evasion that made Rick and Lisa filthy rich.

Other club owners say that without the criminal activity, the place won't be able to stand on its own against well established competition with no criminal activity, so recent claims that it's worth $30 - $70 million are ridiculous.

Since the bar went dark, Rick Rizzolo's father Bart, sister Annette, and brother Ralph were amazingly permitted to accompany U.S. Marshals and potential buyers on at least three tours of the facility. During the tours, the Rizzolo's reportedly bragged that their former operation grossed as high as $14.5 million with a net of as high as $7 million in a single year. However, they didn't mention that extortion, prostitution, and drug sales were included in their former business plan.

Last summer, even though the place was about to be seized, Bart Rizzolo had it completely renovated as if he was sure his family would soon be back in business.

Also not mentioned during the tours were the unreported millions in cash bribes the Rizzolo's paid to transportation drivers to divert customers to the club -- bribes as high as $100 per passenger. (Currently, strip bars are bribing limo, van, and taxi drivers $50 per head.) Since the Rizzolos were the first to up the ante from $5 to $20 in the late 90s, then to continue increasing the bribes until they reached $100 just before the Crazy Horse closed, greedy drivers are expected to swarm the new owner. If he doesn't pay up, they'll divert passengers to his more generous competitors -- a racket long overlooked by state and local authorities.

In other words, it will be very difficult for any new operator to rake in the millions once gleaned by the Rizzolo's and their band of thieves.

In addition to the transportation driver's bribes, there are several other factors any interested buyer should take into consideration. Factors such as a sinking foundation, cracked walls, toxic waste, vibration, and a possible eminent domain taking must be included in all disclosures according to state law.

Next door neighbor Buffalo Jim Barrier reports that his garage has been sinking since early 2006. He had an engineer assess the damage and discovered a water main had been leaking under the foundation of the building for several years creating a large cavern. This type of damage under a concrete slab requires major structural repair costing hundreds of thousands of dollars and requiring temporary closure of the businesses affected.

City building officials last week told INSIDE VEGAS that several expansions on the property were not signed off by electrical, mechanical, and plumbing inspectors. Nor did the building meet city parking requirements when it was politically allowed to expand by 6,000 square feet in 1999 without a parking and traffic study. These are all issues that will have to be addressed by the new owner according to a veteran building inspector who promised to take action after the first of the year.

The property's adjacency to the rail road tracks revealed over 75 years of toxic waste spills absorbed by the soil behind the back row of warehouses. The building's proximity to the U.P. tracks and Sahara overpass indicate ground vibration limiting the height of future development on the site.

Then there's the threat of eminent domain for a road widening referred to on January 30, 2003 in the Las Vegas Mercury when Rizzolo said the Nevada Department of Transportation needed to raze the entire building. The latest figures show the state taking a 23 foot deep swath of the property's 142 foot frontage eliminating the main entrance to the Crazy Horse and forcing it to be replaced in the ally behind the building.

But that didn't dampen the enthusiasm of one purported bidder. David Lannon and K. Michael Kinses of The Mortgage Broker, Inc. located in Rizzolo's home town of Anaheim, California paid several visits to Barrier's Allstate Auto. They reportedly told him they had the purchase in the bag for $31.5 million! They also told Barrier that the bar was worth $70 million! This flies in the face of the Department of Justice who wants to keep a lid on who is bidding, and how much is being bid.

A confidentiality agreement required of all legitimate bidders clearly states: "No Disclosure: Accepting Parties shall not (i) disclose the fact that discussions or negotiations are taking place concerning the possible acquisition of the property by Registered Potential Purchaser or any of the terms thereof, or (ii) conduct any discussions, negotiations or make any inquiries concerning the possible acquisition of the Property with any other person or entity (including tenants) except for Owner and Listing Broker."

Not only did their visits to tenant Barrier violate confidentiality, it speaks volumes about there being a possible new straw man about to buy the Crazy Horse Too.

Real estate experts repeatedly say the property is worth no more than $5.5 million without a liquor license. The Feds say they are only interested in getting $9 million to cover the ongoing medical expenses of the Henry family. So why would anyone want to pay $31.5 million not knowing with certainty if they would be granted a liquor license by the City? Maybe it's because they're assured they'll get the license if they agree to relieve Lisa Rizzolo from the threat of federal prosecution by paying her legal obligations to the Henrys, IRS, and bank.

Expediting a new liquor license for another straw man before December 31 is the least Mayor Goodman can do to repay Rizzolo, et. al. for making him a rich and famous criminal defense lawyer. Goodman worked behind the scenes to help another straw man get a temporary license to operate (skim) the Crazy Horse back in 2006. After welching on his payroll taxes and health insurance premiums, the straw man probably was able to share at least $10 million cash with Rizzolo before his temporary license expired in June, 2007.

I don't think it matters what a new straw man offers for the strip club. All moneys paid over those owed to the Henry's, IRS, and bank will probably be returned to Rizzolo or whoever else is backing the scam. Meanwhile, if the Feds lose interest, the mayor will let the new/old operator resume all the criminal activities the old Crazy Horse Too became infamous for.

Federal authorities should look at ridiculously high offers through a microscope because if Rick Rizzolo is the silent backer, it would be worth his while to guarantee his wife will not face criminal prosecution and asset seizure. Later, his family could be hired as employees by the new operator and resume control of the criminal enterprise in his stead.

Rizzolo can accomplish this by putting cash into a Nevada LLC that does not legally have to reveal its investors. Then his Disneyland pals can buy the bar, hire Rizzolo's son Dominic, daughter Monica, dad Bart, Mickey Mouse, and his sister Annette Rizzolo (not Annette Funicello) to run the place just like in the bloody old days.

But a local poker player told me "Rizzolo overplayed his hand" when he divorced his wife in the middle of the investigation. The Feds now can anticipate his moves and raise red flags if offers come in that are exaggerated too far above the property's worth. The Feds may gladly accept $9 million from someone who is clean, but higher bids should be carefully scrutinized in what little time is left.

The local hard money lender Vestin Mortgage should also raise red flags. Vestin has a major investor named John E. Dawson, the same John E. Dawson who is the asset protection lawyer who was hired by the Rizzolos to hide their assets in 2006 while his brother U.S. Federal Court Judge Kent Dawson presided over the trials and sentencing of 16 former Crazy Horse goons. Judge Dawson did not reveal that his brother was working for the Rizzolos when he gave Rizzolo's former employees slaps on the wrist. Judge Dawson is scheduled on October 15 to preside over a trial involving a Vestin investor. He did not recuse when this was recently brought to his attention.

I suggest if Vestin Mortgage is listed as an institution financing any Crazy Horse Too bidder, the Feds should pay particularly close attention based on John Dawson's connection to Vestin and Rizzolo. The Dawson family owns over a million dollars worth of shares in Vestin. Vestin accepts LLCs as investors, and the partners need not be identified according to state law -- a perfect cover up for Rizzolo. The Judge also didn't reveal that his brother became the Rizzolo's corporate agent during the time of the trials.

All names of investors must be made public before the Crazy Horse sale is approved.

With so much being hidden from the public, and if the Feds let down their guard, Rizzolo could easily slip back into the mix and have the last laugh as his family regains control of the strip joint.

Buffalo Jim Barrier will be watching every move a new operator may make. Barrier still has two years left on his iron clad 30 year lease. As he did in the past, Barrier pledges to monitor and photograph any suspicious activity at his neighboring business, especially the comings and goings of persons associated with Rizzolo or the mob.

"I'm gonna be on them at all times. Any new operator with shady ties will have a microscope up his ass, and I'll give my pictures to INSIDE VEGAS and the FBI within minutes of any mobster coming on the property," stated Barrier.

If the place sells for less than $19 million, Security Pacific Bank will probably have a foot race with the IRS to file legal actions against Lisa Rizzolo.

This could also prove to be a big embarrassment to former LV Mayor Jan Jones who as a past Director of Security Pacific and a major stockholder may have helped her Newport Beach neighbor and crony obtain his breached loan.

Security Pacific is not located in Nevada and may not have been aware of Rizzolo's well publicized troubles in October 2005 when he took them for $5 million cash. They probably took someone's word for Rizzolo's credit.

This sordid story should finally come to an end by New Years Eve. Or a new chapter may begin if "Mr. Clean Face" is about to take over the Crazy Horse Too. Will the Department of Justice get fed up and let the time elapse then auction the place as warehouse property in January, give the proceeds to the Henrys, then go after Lisa Rizzolo for the balance?

I bet if she was charged with Conspiracy to Defraud the United States, the money would magically appear the next day.

Copyright © Steve Miller

Editor's note: The author is currently writing a book about the mob's battle to keep the Crazy Horse open.