Federal Court may order access
to Rizzolo's hidden assets
sometime this week

Judge Philip M. Pro mentioned that Rick Rizzolo's
criminal investigation was ongoing at the time of his
divorce. He then asked, "Does that not show intent?"

INSIDE VEGAS by Steve Miller
AmericanMafia.com
March 23, 2009
 
LAS VEGAS - Last Tuesday after listening to over 90 minutes of arguments from lawyers representing unpaid beating victim Kirk Henry, and rebuttals from lawyers representing former Crazy Horse Too strip club owners Rick and Lisa Rizzolo, U.S. Federal Judge Philip Pro said he will take their pleadings under advisement and issue his ruling "as quickly as possible."

As of press time, no ruling has been filed.

Henry's main arguments were that the Rizzolos staged a phony divorce to hide their assets, and that a "commercially reasonable amount of time" has elapsed since Rick Rizzolo agreed to sell his now defunct topless bar to pay Henry in exchange for a light prison sentence and to keep Rizzolo's father, sister, and brother from being indicted.
 
Both Judge Pro and Henry's attorney Stan Hunterton agreed that U.S. Magistrate George Foley in a previous Order intended that the case go back to Clark County District Court Judge Jackie Glass for further resolution. However, Hunterton said Judge Glass has twice ruled that Ms. Rizzolo cannot be compelled to reveal the whereabouts of her assets so they could be examined and possibly seized by Henry or other creditors. And that Judge Glass (the wife of LV City Councilman Steve Wolfson) has become impatient from being asked the same questions.

At the outset of the hearing, Judge Pro asked whether a "stalemate exists?' because it's been thirty-three months since Rick Rizzolo signed a Plea Agreement promising to sell the Crazy Horse within 12 months, and to pay over $27 million dollars in restitution including $9 million to quadriplegic Kirk Henry whose neck was broken in 2001 by one of the Rizzolo's shift managers during a dispute over a padded bar bill.

In a Press Release issued by the U.S. Department of Justice on June 1, 2006, then U.S. Attorney for Nevada Daniel Bogden stated: “This plea allows us to quickly and efficiently accomplish the primary goals of our investigation to remove the current ownership from the Crazy Horse Too strip club and bring closure to Kirk Henry and his family for the brutal and tragic extortionate attack at the club. The corporate plea to racketeering charges acknowledges the serious threat that the Crazy Horse Too has presented to the community, and the 17 pleas to felony charges by past and present managers and employees of the club requires all those involved in its illegal operations to acknowledge some level of responsibility and guilt for its criminal existence."

Thirty-three months following Bogden's statement, Henry and his family are still waiting for the "closure" Bogden promised; Lisa Rizzolo has hidden most of her family's fortune off shore; and Rick Rizzolo has been out of prison for over a year and is observed on a nightly basis squandering large sums of cash in local casinos!
 
Hunterton argued that lower court Judge Glass had effectively issued a Summary Judgment that stopped his client's case in its tracks. Hunterton told Judge Pro; "We have nowhere to go unless Magistrate Foley's Order is reversed." "No one on our team saw Magistrate Foley's Order coming." "It was like a bolt of lightening."

Judge Pro asked if the Rizzolo's attempted to make themselves "Judgment proof?"
 
Replying that he didn't see any reason Judge Glass would now reverse her two previous rulings, Hunterton said her decision to not reduce Kirk Henry's settlement to a judgment against the Rizzolo's personal assets was unnecessary for Henry to begin Discovery as to where those assets were located based on Henry's Uniform Fraudulent Transfer Act (UFTA) claim.

In other words, the Rizzolo's assets are not judgment proof if they can be located, and their transfer proven to be fraudulent under UFTA law.

Hunterton said that in his Plea Agreement (below), Rizzolo's obligation to pay Henry the agreed upon $9 million dollars is "not contingent" on the sale of the Crazy Horse property.

Hunterton went on to say that Rick Rizzolo's attorney Tony Sgro made this non contingency clear in a September 2006 promise to the Las Vegas City Council (below) that convinced them to grant a liquor license to one of Rizzolo's straw men. And that Rick Rizzolo has never disputed his responsibility to pay Henry the $9 million whether or not the bar sold for enough to cover Rizzolo's over $27 million in court ordered obligations.

 
Judge Pro asked if all of those obligations were contingent on the bar's sale, including liens, fines, and Mr. Henry's $9 million?
 
Hunterton replied that they were not contingent on the sale, and his client said "Nuts to that" when asked if the bar must be sold prior to his settlement being paid. That the UFTA means a Plaintiff has a claim to payment whether the claim is a judgment or settlement.
 
Hunterton argued that the "Commercially reasonable amount of time" rule gives parties a reasonable amount of time to close a sale. "We have now passed that commercially reasonable amount of time," Hunterton stated in regard to the government's failure to find a legitimate buyer for the property. "The real estate firm hired by the U.S. Marshals have thrown up their hands. Something needs to be done," stated Hunterton.
 
Hunterton then called the Rizzolo's family trust "bogus," and said that Rick Rizzolo's gambling, absconding with the proceeds from a $5 million dollar loan negligently issued by now-defunct California bank, and other ploys, were meant to distract from the settlement agreement. "For the Henrys to have their day in court, Magistrate Foley's Order must be reversed."
 
Rick Rizzolo's attorney Mark Hafer next addressed the court. He told the judge that Henry's claims were "unenforceable" because Judge Glass said so.
 
Judge Pro responded that the determining factor is that "There is a claim." But Mr. Hafer countered that Judge Glass decided there was "no enforceable claim," and said her ruling should stand. "Can you set aside a divorce when the state court said you couldn't? asked Hafer.
 
Judge Pro then asked all attorneys, "What would you ask Judge Glass to do?" if the case was sent back to her court?
 
Hafer avoided answering the question and replied that Henry has gotten "plenty" in his Discovery, inferring that there was nothing more to discover. That Henry was provided tax returns and financial statements from the Crazy Horse Too.  He did not mention records of other assets transferred to Lisa Rizzolo in the divorce.
 
Hafer then mentioned that there had been seven signed contracts for the purchase of the Crazy Horse Too for amounts above $29 million each, but did not explain why they all fell through. He told the court that Rick Rizzolo "was rendered insolvent by his divorce."
 
Judge Pro asked, "Does the settlement concede that Mr. Rizzolo is liable for amounts over the amount of sale, all depending -- focusing on the considerable length of time?"
 
Hafer replied, "Somebody is trying to buy the Crazy Horse Too now," but didn't elaborate.

So far, the only pending offers are in the $2 - $5 million range, hardly enough to cover Rick and Lisa's court ordered debts.
 
Hafer went on. "We are here to enforce Nevada statute," referring to Judge Glass' two ill advised rulings, and a suspect divorce decree isued by a judge with serious personal problems that keeps the Rizzolo's fortune off limits.
 
"He (Rick) does not see his wife often," Hafer continued. He then asked, "Can you go around the state court's (Judge Glass') Order? Or go to the MGM where Mr. Rizzolo is alleged to gamble," in order to get the money? "This case has become an abuse of process. The case has no merit. Dismiss this case!" Hafer stated.
 
Hafer then said, "Mr. Campbell and Mr. Hunterton are afraid of a malpractice action."(Campbell and Hunterton could be heard moaning in the background.) "A judgment is unenforceable because the transfer (of assets in the divorce) was not a fraud," stated Hafer.
 
Hafer ended by saying times have changed, and the Henrys should accept their fate based on the turn around of the economy.
 
Then Marc Bailus, Lisa Rizzolo's attorney spoke. He said his client was not a party to Mr. Henry's beating. That the Statute of Limitations had run out. That Henry had no viable claim against her.
 
Mr. Bailus made no mention that Lisa Rizzolo was married to Rick Rizzolo at the time of Henry's beating, and they were married at the time Henry filed his lawsuit in 2001.

And according to the FBI, the Rizzolo's hidden assets "have been commingled with the criminal proceeds...."
 
Judge Pro then stated that "This case is different than the original 2001 lawsuit (in Clark County District Court)."  That under UFTA, the Statute of Limitations does not apply.
 
Bailus replied "it was not a collusive divorce." He said Kirk Henry did not object at the time of the 2005 divorce when the Crazy Horse was worth a purported $29 million dollars. That Lisa got the standard Nevada division of community property. That the Crazy Horse was once worth over $50 million (according to Rick Rizzolo whose corporation was found guilty of extorting tens of millions from Crazy Horse customers). That if the place had sold for what Rizzolo considered fair market value by the deadline of July 1, 2007, Rick Rizzolo would have easily been able to pay off all his debts and still receive millions in excess. But according to the Rizzolo's lawyers, "the government" screwed up all the sales -- the debtors getting stiffed was not their client's fault.

Bailus said Henry chose to agree to the settlement contingent on the sale. "After it all fell apart, they filed an UFTA lawsuit."

Amy Henry's attorney Donald Campbell responded, "They were at all times hedging their bets. We never abandoned our right to use UFTA. We are asking the court to protect our client in this ongoing fraud."
 
Judge Pro again asked, "What relief would Mr. Henry seek in (Judge Glass") court?
 
Bailus changed the subject responding that Henry did not put a time frame into his receipt of the $9 million. Mr. Henry did not present a "commercially reasonable amount of time" to Judge Glass, i.e., that Henry should continue waiting and waiting and waiting for his money.
 
"Lisa got less than Rick did at the time of the divorce." In 2005, the Crazy Horse was worth at least $30 million." Bailus said the couple's three expensive houses; Lisa's $83,000.00 per month alimony for six years; their $7.3 million annuity; and other assets she received did not equal the $30 million dollar asset Rick supposedly received with his award of the Crazy Horse Too.
  
Attorney Campbell told the court that ex-Las Vegas city councilman Michael McDonald is suspected of "dissipating Rizzolo's assets, and is hiding others."

Michael McDonald is presently the Target of a related Federal Grand Jury investigation.
 
But most telling was that Judge Pro mentioned during last Tuesday's hearing that Rick Rizzolo's criminal investigation was ongoing at the time of the couple's divorce, then asked, "Does that not show intent?"
 
Bailus responded, "The criminal investigation did not render Mr. Rizzolo insolvent. Mr. Henry was aware of the criminal investigation and entered into the (settlement) agreement anyhow. You have to live with the settlement. Mr. Campbell is actually arguing against his own settlement agreement."
 
Hafer had the last word; "There is no time limit in the plea agreement. The government was supposed to keep the Crazy Horse open to protect its value.
 
However, the Federal Government has consistently refused to operate a topless bar under any circumstances.
 
Judge Pro ended the hearing.
 
It's now been more than THIRTY-THREE MONTHS since Rick Rizzolo made his promise to pay Henry, and it's undisputed that a "commercially reasonable amount of time" has elapsed without the Crazy Horse Too being sold.

Regarding Judge Jackie Glass, on June 29, 2007, Glass, when asked if Henry's attorneys could locate Rizzolo's personal assets, stated: "Stop, stop, please. I did not draft the settlement agreement. You have to wait for the sale of this business."

She did not elaborate on how long that would take, nor did she take into consideration that Kirk Henry is now a quadriplegic, and -- based on her decision -- may not live long enough to see his family receive the $9 million dollars Rick Rizzolo promised to pay him in exchange for getting a light sentence, and keeping his relatives out of jail.

Lisa Rizzolo's complete and total defense is based on the following:

A politically ambitious judge's misguided ORDER put Kirk Henry's case on hold indefinitely. It was a de facto Summary Judgment in the Rizzolo's favor, and the Rizzolos are close friends with some of our town's biggest political campaign contributors who may support Glass in a bid for the Nevada Supreme Court, and support her husband in a run for LV Mayor.

Also, it was the same Judge Glass who recently let the Rizzolo's 26 year old son Dominic off with probation after he tried to stab a man to death during an extortion attempt. She ignored police requests that she should consider attempted murder and conspiracy charges.

Based on Judge Glass' questionable actions, Kirk Henry had no choice but to ask the Federal Court to intervene and get his case out of her politically charged court.
 
It's now up to Judge Philip Pro to decide whether a commercially reasonable amount of time has passed to find a buyer. According to the U.S. Department of Justice (D.O.J.), the buyer must not be "a close relative or ongoing business partner of the Rizzolos, is a felon, or has business dealings with organized crime members or groups."
 
So far, only buyers within the above categories have signed contracts, and the D.O.J. has wisely turned them down. All legitimate buyers made offers within the market value range of $2 - $5 million, and were declined.
 
In the Federal Court ruling, Rick and Lisa Rizzolo owe over $27 million dollars in the following order of payment.
 

All of the United States Marshals Service's costs, expenses, and private counsel's attorney fees for the real property transaction related to the care and the sale of the Property and the Trademark and Trade name Crazy Horse Too, including but not limited to the maintenance, the protection, the repair, the service of process, the publication, the utilities, the insurance, the CB Richard Ellis real estate commission, the escrow, the closing costs, the real estate transfer tax, private counsel's attorney fees for the real property transaction, etc.;   The Clark County Taxes owed on the Property with penalties and interest   The City of Las Vegas sewer lein   The Security Pacific Bank ($5 million dollar) loan with attorneys' fees, penalties, and interest   The restitution of US $9,000,000.00 plus interest to Kirk and Amy Henry   The restitution of US $1,734,000.00 plus accruals to the IRS   The assessment of US $500.00 plus interest   The fines of US $750,000.00 plus interest   The forfeiture of US $4,250,000.00 plus interest   The City of Las Vegas judgment lien of US $2,192,000.00 plus interest   The IRS tax lien against Rizzolo for the 2006 individual income taxes of US $1,032,535.26 plus accruals

 
In order for Kirk Henry to ever be paid, the deteriorating bar without a liquor license would have to sell for at least $18 million to cover the debts that are listed above Henry's. So if it sells for fair market value, Henry will be left out in the cold. Judge Glass failed to take this into consideration -- twice.

Based on our current local economy, only the Mafia would be willing to pay enough to cover all the Rizzolo's court ordered debts because -- like the former Crazy Horse crew -- they're experts on beating money out of people, and that's the only way to make that blood soaked place profitable again.
 
If Judge Pro decides to uphold Judge Glass's Order -- and I don't believe he will -- then anyone who anticipates being convicted of a felony can get away with conducting a hasty divorce and successfully transfer their ill gotten assets to their wife in order to avoid paying creditors.

If Judge Pro overturns the lower court's Order, justice in this ad nauseam case may begin to be served. I'll let you know his decision in next week's INSIDE VEGAS.