Thursday, April 24, 2008 | 2 a.m.
The owners: Past and potential
The past: Rick Rizzolo is expected to use proceeds from the sale to pay fines and debt racked up since his plea deal was struck. His attorney has said Rizzolo might owe as much as $29 million.
The potential: David Dupont runs a mortgage funding company and is said to have secured the financing for the purchase. Mahesh Patel has experience running topless clubs, their attorney says. Both are from South Carolina.
After months of negotiations with several suitors, the federal government finally has buyers for the Crazy Horse Too.
The U.S. Marshals Service and CB Richard Ellis, the commercial real estate brokerage the marshals hired to market the strip club, have refused to publicly identify the buyers, who quietly signed a contract with the government to purchase the club for more than $30 million several weeks ago.
But Jeff Silver, one of the buyers’ Las Vegas attorneys, said late Wednesday the purchaser is LCC Cafe Nevada, a limited liability corporation formed last week by two South Carolina businessmen. One of them, records show, runs topless clubs in North Carolina and West Virginia.
Silver said his law firm last week submitted an application for a temporary liquor license on behalf of LCC Cafe Nevada for the Crazy Horse Too, which has been closed since July.
Silver said LCC Cafe Nevada’s managing members are David Dupont and Mahesh Patel.
Dupont, who is said to have secured the financing, is listed in South Carolina records as president of Estate Funding Inc., which bills itself as “America’s most trusted mortgage resource.” On its Web site, the Myrtle Beach company says it lends money to real estate professionals, builders and homebuyers.
Patel has experience in the topless nightclub business, Silver said.
North Carolina secretary of state records list Patel as president of Platinum Diamonds, a corporation that runs strip clubs under that name in the North Carolina cities of Monroe and Winston-Salem.
West Virginia records indicate that Patel also owns at least three Southern Exposure topless clubs near that state’s cities of Bradley, Barboursville and Princeton.
Patel did not return telephone calls to his corporate office in Spartanburg, S.C., and Dupont did not returns calls to Estate Funding.
Geoffrey West, a CB Richard Ellis executive who put the Crazy Horse Too deal together for the government, would not discuss its specifics. He did, however, call the signed contract an “absolutely positive step” in the government’s six-month effort to sell the club. The buyer has put up just less than $500,000 in earnest money so far and is expected to make a larger nonrefundable down payment in the near future, West said.
“This is the first buyer who has performed under the terms of its agreement and is proceeding with its license application,” West said.
For days the Sun has been asking the city for a copy of the application, which is a public document. One of the city’s spokesmen, Jace Radke, said Wednesday that Las Vegas “does not have a completed (Crazy Horse Too) application.”
“Until the city accepts an application, with fees, and enters it into the system it is not a completed application,” Radke wrote in an e-mail.
Sources close to the deal said LCC Cafe Nevada is hoping to get the license application on the agenda of the May 7 or May 22 City Council meeting.
As part of the sale agreement, the sources said, LCC Cafe Nevada receives the rights to the Crazy Horse Too name at that location. Until it closed, the Crazy Horse Too, on Industrial Road just off the Strip, was one of the most popular topless clubs in the valley. In 2005, Rick Rizzolo, the owner at the time, said in a deposition that the club’s gross revenue was $800,000 to $1 million a month.
Dupont and Patel reportedly won the informal approval of the FBI before the purchase agreement was signed.
They now must pass a Metro Police background check and open the club under the temporary liquor license by June 30. If that deadline is not met, the Crazy Horse Too loses its right to obtain a permanent liquor license, a city ordinance mandates. The liquor license is key to the club’s profitability.
The Marshals Service seized the club in September under a federal court order after Rizzolo failed to sell the property before he headed to prison to serve a 366-day sentence for tax evasion.
Rizzolo pleaded guilty June 1, 2006, as part of an agreement to end a decadelong FBI racketeering probe of the Crazy Horse Too. The deal required Rizzolo and his company to pay the government $7 million in fines and forfeitures, as well as $10 million in a settlement with a Kansas City-area man who had sued him over an altercation at the club that left the man paralyzed.
Money from the club’s sale is expected to be used by Rizzolo to pay those debts and others incurred since he struck the plea agreement with the government. Rizzolo’s financial liabilities could be as high as $29 million, his attorney Mark Hafer has said.
The road to the sales agreement over the past six months has not been easy for the Marshals Service. The club’s closure hindered efforts to reach agreements with several other potential buyers.
Rizzolo, who is barred from getting back into the topless club business under the terms of his plea agreement, was furloughed March 4 from a federal prison in Los Angeles. He served the final month of his sentence at a halfway house in the shadow of the Strip, just a few blocks south of the Crazy Horse Too.