Tuesday, May 1, 2007 | 7:13 a.m.
The business before the Las Vegas City Council was a strip club. Even in Las Vegas, that raises a few eyebrows.
With the current owner of the Crazy Horse Too about to head off to federal prison, the prospective buyer, Mike Signorelli, needed City Hall to approve a liquor license to smooth the purchase. While the city checked out Signorelli's credentials, it laid down some rules for him to follow - rules that he proceeded to break over the next several months.
For that and other reasons, the police and city attorney recommended that the would-be owner not be issued a liquor license.
The City Council, though, ignored the advice from its top law enforcement officials and awarded the license to Signorelli.
Given that the City Council has sometimes shown less flexibility in taking a by-the-book approach to other licensing and zoning requests, its decision last month to essentially cut a troubled strip club a break is perplexing.
It's also a question most council members are not eager to answer. Of the five who voted for the license, two - Steve Wolfson and Gary Reese - were willing to discuss the issue. Three others - Lois Tarkanian, Larry Brown and Steven Ross - did not return the Sun's phone calls.
When the council approved the permanent liquor license for the Crazy Horse Too at its April 17 meeting, reactions in the Council Chamber ranged from mild surprise to shock.
Former Councilman Steve Miller, who has accused Signorelli of being a front for owner Rick Rizzolo - under a court order to sell the club after pleading guilty to federal racketeering charges that this month will send him to prison to serve a 366-day term - threw up his hands in disgust.
The council granted the permanent license against the advice of City Attorney Brad Jerbic and after a report from Metro suggested that granting the license was not in the city's best interest.
As part of his plea deal, Rizzolo last June was ordered to sell the club within a year.
Signorelli began leasing the club in October, with an option to buy it for $45 million.
At that time the council approved a three-month temporary liquor license, saying it wanted to keep the club on a short leash. Several conditions - notably, keeping Rizzolo and those who worked for him at a distance - were attached to the license to try to prevent a repeat of the problems that occurred during Rizzolo's ownership.
Three months later the council granted a second three-month license for the club, even though council members roundly criticized Signorelli's failure to comply with some of those conditions.
Jerbic pointed out, for example, that Signorelli was not current on his $400,000 monthly lease payments to Rizzolo, had possibly communicated with Rizzolo regarding club operations and, in violation of the municipal code, had permitted the tipping of cab drivers who brought customers to the club.
Club operators also had used a merchant credit card account that allowed money to be deposited into an account controlled by Rizzolo and hired relatives of Rizzolo's co-defendants in the federal case to work at the club.
"It just makes no sense to me why he would jeopardize this license, if he's honest and sincere, and wants to buy this, why he would allow something like that to happen," Reese said at the January hearing.
Several on the council said they went along with a second temporary license only to give Metro time to finish an investigation of the business.
But when the report came back last month, the council disregarded Metro's recommendations and overlooked the transgressions that had occurred in the first three months of Signorelli's management.
Wolfson, who led the questioning at the April 17 meeting, said Signorelli had taken steps to correct the problems and deserved the license.
"Mr. Signorelli has been in town for many, many years, and there's not been one blemish against his record," Wolfson said. "He's a respected businessman who offered evidence of his good credit with financial institutions."
Metro's report, however, paints a different picture.
"The fact that no funds have been produced by the applicant or secured through loans or investors to purchase this business, further distancing Rizzolo from the business, is troubling," the report said.
Jay Brown, Signorelli's attorney, said the lack of a permanent license made it difficult to obtain financing.
While the report conceded that Signorelli could be legitimately trying to purchase the business and simply made poor decisions along the way, it also raised the possibility that Rizzolo might still be in charge.
"The other line of thinking is that Signorelli is a classic 'straw man' in the business world," the report said. "He is a local, legitimate business owner with no criminal history who could operate the business for the previous owner , who is prohibited from operating it."
Wolfson, though, said the report and Jerbic's concerns regarding it were based on innuendo, adding that alone was not reason enough to deny Signorelli a permanent license.
He also said the council previously shortchanged Signorelli - and, in so doing, put itself in a procedural corner that limited its options at the April 17 meeting - by granting the club temporary licenses of three months instead of six, as it could have done.
With the longer temporary permit, the club would have been licensed through June and Rizzolo's mandated date to sell the club under his plea agreement would have passed. By then, either Signorelli or another buyer would be in place or the federal government would have taken over.
Jerbic made clear to the council in January that Metro's report would not be complete before the first three-month license expired and that the club's second temporary license, which expired April 17, would be the last permitted under municipal code.
Just as the council had indicated that the first three-month license stemmed from the club's checkered past, the decision to also limit the second permit to less than the six months allowed reflected members' concerns over the questionable management decisions under Signorelli's watch.
Metro's report asserted that Rizzolo has been allowed to keep some control of the business by placing employees in key positions.
One employee, Mary Crespi, applied for and received a work card the day after the business was granted its first temporary liquor license from the council. Crespi is the wife of Steven Isaac Crespi, formerly a manager at Crazy Horse Too and a co-conspirator in Rizzolo's federal fraud case. She has since been terminated.
Other key employee applicants included a bookkeeper trained by the Rizzolo family a week before Signorelli took over and another Rizzolo associate with a criminal history.
Metro said five operating leases were submitted to the city's business services office, each of which would have allowed Rizzolo some control at the club, before a satisfactory draft was approved.
When Rizzolo could not get lease conditions that would allow him continuing control over the club, Jerbic says, he simply ignored the lease terms that were approved.
"The divorce that we had hoped to have seen between the former regime, the ownership of Mr. Rizzolo, and the control of the business by Mr. Signorelli , has not occurred," Jerbic said. "I don't have an explanation as to why."
Jerbic also pointed to Signorelli's previous violations of the other conditions of his temporary permits in recommending denial of a permanent license.
While Wolfson was the most vocal in his support for the permit, all the council members who voted approved the permanent license. Mayor Oscar Goodman abstained because of a business relationship with Brown and interim Councilwoman Brenda Williams did not vote, citing a personal emergency that caused her to miss the vote.
Reese, whose ward includes the Crazy Horse Too, said the club provides "no benefit that I know of" to the city. Yet he voted to allow the permanent license.
Because a liquor license is awarded at the city's discretion, it does not need a reason to deny one. In this case, though, it appeared to have several.
Not only did Signorelli violate the city's code by tipping taxi drivers who deliver customers to the club, but by his own admission also ignored the conditions under which the temporary license was granted.
Wolfson admitted that the city has had to spend more resources to ensure compliance of the license conditions and said he has no problem with it continuing to do so.
"Because of the history ... I don't think there's anything wrong with putting some extra resources, on a temporary basis, on a particular business," Wolfson said.
From another perspective, however, in light of that same history, others - starting with police and the city attorney - would have found nothing wrong with denying the permit.