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July 18, 2018

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Donation or bribe? Crazy Horse’s $1.4 million quid pro quo raises questions

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Steve Marcus / File photo

The Crazy Horse Too strip club on Industrial Road is shown in September 2007.

Crazy Horse Too

A Nevada ethics watchdog group likened an expected $1.46 million donation to Las Vegas to a “public bribe” after learning new owners of the shuttered Crazy Horse Too strip club said they would give the city that much money for a permit.

The new owners of the property at 2466 Industrial Road needed City Council approval to reopen the building as a strip club because the permit for the previous strip club had lapsed.

A May 15 letter from an attorney representing Canico Capital Group LLC, which is owned by nine investors, said the city would get the money if Canico received a special use permit.

“My clients have specifically agreed to fund an escrow account with $1.461 million (the fine amount) on or before the 1st of June,” the attorney wrote. “These funds will be released to the City of Las Vegas upon issuance of the special use permit on the subject parcel.”

The attorney was referencing a city fine against the strip club’s former owner, Rick Rizzolo. In 2006, Rizzolo pleaded guilty to felony tax crimes and served 10 months in prison. The U.S. Marshals Service assumed ownership of Crazy Horse Too in 2007 as part of a plea agreement with Rizzolo. Canico bought the club in 2011 for $3 million.

Asked about the letter and subsequent approval Wednesday by the City Council, Martin Dean Dupalo, president of the Nevada Center for Public Ethics, replied, “Where do I begin?”

“I think it’s more of a public bribe,” Dupalo said.

“When you see that verbiage in the letter,” he added, “that we’ll pay ... so we can have this permit, I think it’s just unfortunate and a very, very poor agreement. It is financial interests that are speaking more loudly than safety or the public interest. I think we have enough strip clubs that we don’t need another one.”

Councilman Bob Coffin said the agreement was “something beyond my control” and began more than a year ago under a different city administration.

“This was a promise made to (former Mayor) Oscar Goodman,” Coffin said of the donation.

Goodman could not be reached for comment.

Coffin added he would rather the city receive no money and that if any money is donated, it should go to Kansas-area tourist Kirk Henry, who was paralyzed after a fight over a bar tab outside the club in 2001. Henry sued and is still owed some $10 million.

“If anybody gets money, it ought to be Mr. Henry,” Coffin added. “The city is hurt anytime something like this happens, and the city had not corrected the problem (at Crazy Horse Too). I had a list of police calls for service a mile long from 1998 to 2001 and tons afterward. But licensing didn’t clamp down on them. No one clamped down on them.”

City Attorney Brad Jerbic said any money given as a donation to the city has to go into the city’s general fund and cannot be given to Henry.

Jay Brown, one of the attorneys representing Canico, said “everything was done properly.”

“The city did the right thing, and they followed the advice of their city attorney,” he said.

The fact also remains, Coffin added, that the city is not guaranteed the $1.46 million. Though the City Council approved the special use permit Wednesday, it won’t consider the donation until it meets again in July.

Meanwhile, Coffin will attempt to get something for Henry but doubts he will succeed because “some members of the City Council have already started to count the money.”

If he had a preference, Coffin added, “they could have the permit without the city getting the money. It wouldn’t bother me if it happened that way because I feel the money would be most appropriate for Mr. Henry.”

Legal questions

Aside from the donation, a city resident also filed a protest with the city contending the special use permit bill needed Planning Commission review before going to the City Council.

Steve Gebeke, who lives in Coffin’s Ward 3, filed a letter June 15 with the city clerk citing this ordinance:

“Except where immediate concern for the public health, safety or general welfare dictate otherwise, the substance of any proposed amendment to the text of this Title shall be presented to the Planning Commission for its recommendation.”

Gebeke did not say so in his letter, but he works for the city’s Planning Department.

During a meeting of the city’s Recommending Committee on Tuesday, city attorneys said the ordinance pointed out by Gebeke did not fit the bill being considered.

In minutes of the committee, Val Steed, chief deputy city attorney, began by saying the bill would “authorize re-establishment of certain nonconforming uses under specified circumstances.”

He went on, saying the proposed bill would work “independently” and would not change the current text of Title 19, which is the city’s zoning code.

“It’s not something that a person will read every day,” Steed said. “It’s generally not operable in the city. It was a less necessary exercise to take it to the Planning Commission than it is (with) a typical text amendment.”

In his letter, Gebeke says that even though the bill is “presented as a stand-alone ordinance,” it would temporarily change part of Title 19.

“I would further argue that the action violates the spirit of the code to fully inform the general public of proposed changes to city ordinances and to allow the public adequate opportunity to express their support or opposition to such changes,” he added.

The committee’s three members voted to recommend the bill to the City Council for final action.

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