Las Vegas Sun

June 21, 2021

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County was ready to enforce anti-kickback rule

Clark County had been poised to enforce a rarely used, 20-year-old ordinance barring strip clubs from giving cabdrivers bounties for bringing them customers but backed off late Monday, apparently to ward off a potential cabbie strike.

Last week, nine of the county's 15 licensed adult cabarets were issued written warnings to cease the practice of giving drivers kickbacks or potentially be called to answer why their liquor licenses should not be yanked.

But Monday's more conciliatory action by the county and state Taxicab Authority officials came as Gov. Kenny Guinn was prepared to veto a bill that would have outlawed cabdrivers statewide from accepting kickbacks for delivering customers to topless clubs and other businesses.

More than 300 cabbies have signed a petition asking for a full investigation of Assembly Bill 505 that the Legislature recently passed -- the bill Guinn, amid a firestorm of protests from angry taxi drivers, vowed last week to veto.

But as of late Monday, Guinn had not vetoed AB505, his spokesman Greg Bortolin said. "We have to review everything" first, Bortolin said.

After a closed-door meeting Monday with Clark County Manager Thom Reilly and others, Taxicab Authority spokesman Rob Stewart said that conference and other meetings scheduled in the coming days could offset what could be a "volatile situation" as drivers protesting the bill threaten to strike -- a move experts say could cripple the tourist economy.

Last Thursday night, angry cabdrivers, threatening to strike unless Guinn vetoed the bill, staged a protest by driving slowly down the Strip into downtown Las Vegas, snarling traffic.

Some of Southern Nevada's 5,000 cabdrivers have estimated that strip club bounties account for as much as 30 percent of their take-home pay, Stewart said.

At least two of the strip clubs that received notices of violations -- and likely others -- stopped awarding the customer bounties to drivers last week after their licenses were threatened by county officials.

Following undercover surveillance by Clark County business licensing agents at all 15 clubs, the following businesses got notices, warnings to discontinue acting in a manner that violates ordinances:

Jaguars, 3355 Procyon St.; Sapphire Club, 3025 Industrial Road; Striptease, 3750 S. Valley View Blvd.; Club Paradise, 4416 Paradise Road; Spearmint Rhino Adult Cabaret, 3344 Highland Drive; The Library, 3785 Boulder Highway; Play It Again Sam, 4120 Spring Mountain Road; Foxy Girls, 3013 S. Highland Drive; and Sin, 3525 W. Russell Road.

But, by late Monday, county officials appeared less gung ho to shut down clubs that have given cabdrivers bounties and were instead scrambling to find what one official called "one cohesive, consistent, legal law" governing whether drivers can take bounties from adult-oriented businesses.

State and county officials opted to defer enforcement of the law until all jurisdictions can agree on how to approach the issue, county spokesman Erik Pappa said.

The decision, following the first of what is expected to be several meetings designed to hammer out a compromise, came in a last-minute private gathering at the request of Taxicab Authority Administrator Yvette Moore.

Others attending the meeting with Reilly included Deputy District Attorney Bob Gower and Clark County Business Licensing head Jacqueline Holloway, Pappa said. A representative from the state attorney general's office was asked to attend but could not make it to Las Vegas in time, spokeswoman Nicole Moon said.

Some local officials insist that last week's action by the county to enforce the little used anti-kickback ordinance was not a knee-jerk reaction to Guinn's threat of a veto that, in effect, kicked the ball back into the county's court to enforce its existing measures.

"The passage or veto of AB505 has absolutely no bearing on Clark County Business License code," said Derek Dubasik, assistant manager of business license operations for the Clark County Department of Business License.

"Our ordinance deals with the licensing of the (strip clubs) businesses, the state's regulations deal with the taxi companies, which we do not regulate."

Dubasik said it was "a coincidence that our enforcement happened the weekend before this became very big news. We were working on complaints from May (from some adult businesses) complaining about their competitors."

Many in the cab industry say the county has long ignored enforcing the 1985 ordinance that prohibits the bounties. They say authorities instead focus on enforcing state regulations that prohibit cabbies from diverting customers from where they want to go to where cabdrivers suggest they should go.

Pappa said enforcement of the ordinance has been "sporadic" over the last 20 years. Reilly went further, saying there had been "little, if any" enforcement of the ordinance.

Dubasik, however, said that while he could not provide statistics on how many clubs have been cited for violating the ordinance over the years, the measure has at times been useful in regulating the industry.

"We've done joint operations with the state Taxicab Authority and Metro Police (enforcing the measure), especially when licenses are being issued for new owners, key employees and management," he said.

Reilly said after the meeting that Moore's suggestion for a single ordinance governing all Southern Nevada jurisdictions could resolve any confusion stemming from the ordinance.

"Her suggestions seemed to make a lot of sense," Reilly said.

The county manager would not say whether he supported repealing the law but that, "whatever occurs, it needs to be consistent."

Moore did not return phone calls seeking comment.

Reilly said county officials had not begun preparing for a cabbie strike, noting that the lack of enforcement of the current law made a strike unnecessary because the cabbies were still getting their money from clubs.

Some strip club operators, however, say they are taking last week's tough talk from county licensing investigators seriously -- and that is already hitting cabbies in the pocketbook.

Dee Eliades, co-owner of Sapphire, said her club quit giving cabbie bounties after Sapphire received the notice on June 7.

"We've stopped paying to both cab and limo drivers," she said, noting the problem has escalated because some of the clubs have upped the bounties from the industry standard of $20 per customer to $30, $50 or more.

"The people (businesses) who need to raise it evidently can't get business into their places," she said. "I do not want to take anything away from the drivers, but there is so much more to this issue."

Eliades said the county agent who issued her club the notice said, "if we continue to pay we could receive a fine up to $500 for each violation. He said if we receive enough citations -- he did not say how many enough was -- it could lead to a show cause hearing for our liquor license."

Dennis DeGori, one of the owners of Jaguars, said he too has ceased giving the bounties in the wake of the county's notice.

DeGori, who took over Jaguars about three months ago after running Club Paradise for six years, said he is waiting for Guinn to veto the Assembly bill and then would watch what the county planned to do.

Cabbies had jammed Jaguars over the weekend, seeking contracts as "promoters" for the club. But those contracts had not gone into effect as of Monday, DeGori said.

Jaguars' plan could open another can of worms, officials say.

"That's the first I've heard of it," Dubasik, the county's assistant business licensing manager, said. "We will have to take a look at it, but it appears it would make the cabdrivers independent contractors and our code requires independent contractors to get a business licenses."

The Internal Revenue Service agrees.

An IRS spokesman in San Diego said Monday that any arrangement a club made with cabdrivers would be considered an independent contract. Cabbies would have to report income from the clubs as extra on annual tax returns.

Clark County and Las Vegas enacted ordinances in 1985 that made it unlawful for clubs to pay bounties to taxicab drivers for delivering passengers. Penalties can range from a $100 fine to $1,000.

Jim DiFiore, manager of city of Las Vegas business licensing, said that no notices of violation were issued to clubs within the city limits last week.

Violation of the ordinance is "a difficult thing to prove," DiFiore said.

The city also is waiting for the governor to take action on the Assembly bill, he said, noting city officials also plan to meet with Metro Police and decide how to proceed.

Some cab company operators say they are tolerant of their workers accepting bounties from the strip clubs -- to a point.

Brent Bell, president of Whittlesea Blue and Henderson Taxi companies, say some "drivers take it to the extreme."

"I don't appreciate the drivers who take up their whole shifts doing it (bounty-producing business)," Bell said, noting he does not have a problem with drivers who do it a few times on their shifts to make some extra money.

"If we catch them spending the whole night (transporting customers for the night clubs) we will terminate them, as we did with two drivers three months ago who were giving free rides just to get (the bounties)."

Bell blames the adult nightclub industry for turning what was a much ignored indiscretion into front-page news.

"Some of the clubs are continually upping the ante to a point where the money becomes a major part of the drivers' income," he said. "The way to stop it is for the clubs to police themselves and put a limit on how much they will pay."

Bell said the cab companies can only do so much in dispatching drivers, who pretty much travel the streets looking for customers. "If we doubled their salaries they would still go after the bounty business," Bell said.

Bill Shranko, operations manager for local taxicab conglomerate Yellow Checker Star, supports the bounty tradition.

"This is our free market system," Shranko said. "They (officials) want to take the Las Vegas out of Las Vegas.

"What's happening in our industry is no different than what's happening in the casino industry. The casinos compete with each other by giving their regular customers comps through player cards that are known all over Las Vegas."

Craig Harris, managing editor of Trip Sheet, a publication addressing taxicab industry issues and a longtime Las Vegas cab driver, said the cabdrivers' petition seeks an investigation of AB505 by an independent party and reforms to prevent last-minute changes to bills by future Legislatures.

"This is not openness in government," Harris said of the bill originally supported by Guinn because it called for eliminating the state's Transportation Services Authority and putting its duties under the control of the state Public Service Commission.

But on the next-to-last day of the Legislature, an amendment by Assemblyman John Oceguera, D-Las Vegas, was inserted into the bill to prohibit cabdrivers statewide from accepting gratuities for bringing a customer to their location.

The amendment did not include limousine, bus or van drivers.

The county and city ordinances also do not ban kickbacks for limousine or shuttle bus drivers -- only cabbies, Harris said, calling such omissions discriminatory.