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Rick Rizzolo case update
Source of payment to attorneys questioned
Two Judge's Orders being appealed

INSIDE VEGAS by Steve Miller
October 17, 2011

LAS VEGAS - Former Crazy Horse Too strip club owner and convicted racketeer Rick Rizzolo ( photo by Mike Christ) has been back in federal prison since September 15, 2011. He was re-incarcerated for multiple violations of his supervised release, and is not scheduled to be released until June 12, 2012, when his added on two years of parole begin.

Since his return to prison, Rizzolo's high priced attorneys have been busy appealing judgments handed down by Clark County District Court Judge Timothy Williams, and United States Federal Judge Philip Pro. The lengthy but mostly ineffective appeals have caused speculation that an organized crime associate may be laundering Rizzolo's hidden cash to pay attorneys, or that the fees are being paid by Rizzolo's ex-wife from his ill-gotten money she stashed off shore.

This speculation inspired beating victim Kirk Henry's attorneys on October 13 to file the first of what is expected to be a long list of subpoenas to obtain financial records from the law firms who represent Rizzolo.

Clark County Judge Williams on August 19, 2011, granted Henry's motion to require Rizzolo to pay him what has now grown to over $14 million dollars in court ordered restitution including interest for the beating Henry received in October 2001 in front of Rizzolo's bar after the Kansas tourist refused to pay a padded bar tab. Henry's neck was broken by a Crazy Horse Too manager rendering him a quadriplegic.

In 2002, Henry's case along with dozens of other beatings and robberies of Crazy Horse Too patrons inspired an extensive FBI racketeering investigation that led to Rizzolo and 15 of his associates being indicted. The govenrment's most valuable source of information was a garage owner who rented space next to Rizzolo's club.

In exchange for an abbreviated prison sentence, Rizzolo plea bargained and agreed to pay Henry $9 million. RIzzolo served less than a year in Federal Prison and was released on April 4, 2008. The garage owner was found dead in a Boulder Highway motel room the day following Rizzolo's release.

Since getting out of jail, Rizzolo has reneged on his deal claiming the money to pay Henry and others must come from the sale of the Crazy Horse Too. However, the sale netted only $3 million, money that was quickly snatched by the government for expenses incurred trying to sell the derelict property. According to Judge Williams, Rick Rizzolo is personally responsible to pay the remaining money owed, but Rizzolo has cleverly hidden his assets off shore in his ex-wife's name, and stashed additional funds with his step mother which has opened another can of legal worms.

Here is Judge Williams' Minute Order that Rizzolo is appealing:
Minute Order  Judicial Officer Williams, Timothy C.
     -  PLAINTIFF’S MOTION TO REDUCE SETTLEMENT TO JUDGMENT After a review and consideration of the points and authorities on file herein, and the argument of counsel, Plaintiff’s Motion to Reduce Settlement to Judgment is hereby GRANTED. The “Release of All Claims and Agreement to Indemnify For and in Consideration of the Issuance of a Draft” (“the Agreement”) signed by all parties, reads in pertinent part: “Although it is anticipated that the NINE-MILLION DOLLARS… will be paid from the proceeds of the sale, the obligation to make said payment upon the closing is not contingent upon the realization of net proceeds from the sale sufficient to make the NINE-MILLION DOLLARS… payment.” The Court finds that the plain language of the Agreement requires Defendant Rick Rizzolo to make the remaining payment of the settlement amount if the sale of the Crazy Horse Too Gentlemen’s Club does not net enough proceeds to meet the required amount. The non-judicial foreclosure sale took place on July 1, 2011, and did not net the proceeds required to satisfy the $9,000,000 judgment against Defendants. Recently, the Nevada Supreme Court interpreted a settlement agreement in In re Amerco Derivative Litigation, 252 P.3d 681, 127 Nev. Adv. Op. 17 (2011). There, the Supreme Court stated that “[b]ecause settlement agreements are contracts, they are ‘governed by principles of contract law,” and “[u]nder contract law generally, when a release is unambiguous, we must construe it from the language contained within it.” Id. at 693. Thus, because the Agreement here is unambiguous, the Court hereby construes the Agreement by the language contained therein. The Court finds that the wording of the Agreement accurately memorializes the intention of the parties, that once the funds from the sale of the Crazy Horse Too Gentlemen’s Club are exhausted, Defendant Rizzolo is responsible for the remaining payment of the settlement between himself and Plaintiffs. Accordingly, Plaintiff’s Motion is hereby GRANTED. The Court does not find persuasive the argument by Defendants that the sale of the Power Company, Inc., is a condition precedent to reducing the settlement to judgment. The sale of the Power Company, Inc. is impossible because it no longer legally exists. Counsel for Plaintiff shall prepare the order and circulate it to opposing counsel prior to submitting for Judge’s signature.

On July 20, 2011, U.S. Judge Pro found that Rizzolo had violated three supervised release conditions. The court revoked Rizzolo’s supervised release and sentenced him to nine months imprisonment followed by an additional two years of supervised release.

Rizzolo has appealed this ruling also.

Based on his two appeals, the United States Attorney's Office filed a 17 page Response (excerpts below) with the Ninth Circuit Court of Appeals. In it, the reasons why Rizzolo should serve his renewed sentence are clearly spelled out. Possibly the government's strongest argument is: "Rizzolo’s position would amount to automatic bail for any violation of supervised release resulting in a relatively short prison term, instead of placing the burden on the violator to overcome the presumption of no bail pending appeal by showing extraordinary circumstances," meaning that anyone who violates parole and is sent back to prison can stay out until their appeal is heard, no matter how weak their reasons may be.
District Court Case No. 2:06-CR-186-PMP-PAL


A. Procedural History
On January 25, 2007, after defendant Fredrick Rizzolo had pled guilty to a criminal information charging Conspiracy to Defraud the United States, in violation of 18 U.S.C. § 371, the (U.S.) district court sentenced him to 12 months and one day of imprisonment, to be followed by three years’ supervised release. Rizzolo’s supervised release included the following three conditions:
(1) Rizzolo “shall submit a truthful and complete written report” to his probation officer each month 
(2) Rizzolo “shall be prohibited from . . . negotiating or consummating any financial contracts without the approval of the probation officer,” and
(3) Rizzolo “shall cooperate and arrange with the Internal Revenue Service to pay all past and present taxes,” file accurate tax returns and “show proof of service of same to the probation officer.” 

On or about April 4, 2008, Rizzolo was released from federal custody and began serving his term of supervised release. On January 3, 2011, the United States Probation Office filed a petition for summons of offender under supervision. (the “petition”). The petition alleged that Rizzolo had violated Standard Condition No. 2 (requiring truthful written reports each month), and Special Condition No. 4 (requiring approval before any financial contract). 

On April 1, 2011, the Probation Office filed an addendum to the petition. The addendum cited seven additional violations of Standard Condition No. 2, and two additional violations of Special Condition No. 4. The addendum also alleged 12 violations of Special Condition No. 6 (requiring cooperation with and accurate reports to IRS). 

On March 29, 2011, and from May 9-11, 2011, the (U.S.) district court conducted an evidentiary hearing on petition for revocation of supervised release. 

On July 20, 2011, the (U.S.) district court found by a preponderance of the evidence that Rizzolo had violated the three supervised release conditions set forth in the petition and addendum. The court revoked Rizzolo’s supervised release and sentenced him to nine months’ imprisonment, to be followed by two years of supervised release. The court ordered Rizzolo (who was not in custody) to surrender to the Bureau of Prisons (“BOP”) on September 14, 2011. 

On July 28, 2011, Rizzolo filed a notice of appeal. 

On September 2, 2011, Rizzolo filed in (U.S.) district court an “Emergency Motion to Stay Surrender . . . Pending Appeal of Revocation of Supervised Release.” The Government filed an opposition, and, on September 12, 2011, the (U.S.) district court denied without comment Rizzolo’s
emergency motion for release pending appeal. Later in the day on September 12, 2011, Rizzolo filed in (U.S.) district court an “Emergency Motion for Reconsideration” of the district court’s denial. 

On September 13, 2011, the (U.S.) district court denied without comment Rizzolo’s emergency motion for reconsideration. 

On September 14, 2011, Rizzolo surrendered to BOP (Bureau of Prisons). 

On September 16, 2011, Rizzolo filed an “Emergency Motion for Release Pending Appeal . . . .” in this (Ninth Circuit Appeals) Court. 

On September 20, 2011, this Court ordered the (U.S.) district court to state the reasons why it had denied Rizzolo’s motion, and allowed Rizzolo ten days to file a supplemental memorandum in response to the district court’s order. 

On September 22, 2011, the (U.S.) district court issued an order stating its reasons for denying Rizzolo’s motion for release pending appeal. 

On October 3, 2011, Rizzolo filed his “Supplemental Memorandum in Support of Motion for Bail Pending Appeal . . . .” 

Rizzolo’s currently projected release date is June 12, 2012.

C. Analytical Framework
Defendants who are convicted and sentenced to imprisonment are presumptively not entitled to release pending appeal. Rizzolo has already served his custodial sentence, violated his terms of supervised release, and been sentenced to another term of imprisonment, based on those post-release violations. In order to secure release pending appeal from his supervised release revocation, Rizzolo must make a “showing of exceptional circumstances.” “Examples of exceptional circumstances include: (1) raising [a] substantial claims upon which [b] the appellant has a high probability of success; (2) a serious deterioration of health while incarcerated; and (3) any unusual delay in the processing of the appeal.”

Rizzolo Falls Far Short of Establishing the “Exceptional Circumstances” Required For Release Pending Appeal of His Supervised Release Revocation.
While not claiming his health will “seriously deteriorate” during his nine-month custodial sentence, Rizzolo nevertheless asserts “exceptional circumstances” exist because (1) “he raises substantial claims . . . upon which he has a high probability of success,” and (2) some unspecified form of “unusual appellate delay” will result in his having served his entire sentence before appellate disposition. 

The (U.S.) district court correctly found that the “circumstances” touted by Rizzolo were far from “exceptional.” After a vigorously-contested, four-day evidentiary hearing, the court was confident that Rizzolo had raised nothing that was either “substantial” or that stood a “high probability of success”on the merits: The Court denied Defendant Rizzolo’s request for bail pending appeal because he failed to meet his burden of demonstrating extraordinary circumstances. Rizzolo has not raised substantial claims upon which he has a high probability of success. This Court held an evidentiary hearing and made factual findings regarding three separate violations of Rizzolo’s terms of supervised release. 
. . . . Rizzolo failed to meet his burden of establishing extraordinary circumstances making bail pending appeal proper. The Court therefore denied his motion.

The (U.S.) district court also rejected Rizzolo’s attempt to manufacture “unusual delay in the processing of the appeal”, from speculation that he might complete his sentence before this Court resolves his appeal: Rizzolo also has not established any unusual delay in the processing of the appeal that amounts to an extraordinary circumstance. Although Rizzolo’s appeal may become moot if it is not resolved before his term of incarceration is completed, that is the case for any criminal defendant whose supervised release is revoked but who is not given a lengthy prison term. Rizzolo’s position would amount to automatic bail for any violation of supervised release resulting in a relatively short prison term, instead of placing the burden on the violator to overcome the presumption of no bail pending appeal by showing extraordinary circumstances. There is nothing extraordinary about Rizzolo’s situation, nor has Rizzolo identified any unusual delay with his appeal. Rizzolo’s claim of unusual delay is particularly unavailing where, in this Court’s view, the likelihood of prevailing on appeal is low. Furthermore, Rizzolo has other options available to him, such as requesting expedited review from the Court of Appeals.
Based on the totality of the evidence, therefore, the court discerned no “exceptional circumstances” to warrant bail pending appeal of a supervised release revocation. The district court’s stated rationale amply supports its conclusion – no “extraordinary circumstances” rebut the strict presumption in favor of Rizzolo’s detention. 

To show that his appellate issues are “substantial” despite the district court’s contrary assessment, (Rizzolo) complains that the civil plaintiffs (Kirk Henry) in the underlying litigation were permitted to speak at Rizzolo’s sentencing. Rizzolo summarily protests that the body of evidence adduced at his four hearings somehow fails to establish, by a simple preponderance, a violation of any one of his supervised release conditions. 
Moreover, it was perfectly appropriate for the district court – in fashioning a high-end, but within-guidelines sentence – to consider the effect Rizzolo’s concealment of assets had upon civil plaintiff Kirk Henry, who is still seeking money damages for the beating he suffered in Rizzolo’s strip club over five years ago. (Rizzolo does not disclose to Probation Officer receipt of $999,000 upon release from prison), (Rizzolo assigns $789,000 to father without advising Probation Officer).

Rizzolo’s appeal thus raises nothing that is “extraordinary” – none of his straightforward issues are “substantial,” and – given the strong presumption of detention, the moderate “preponderance of the evidence” standard, and the “clearly erroneous” standard that governs the district court’s findings – it is unlikely Rizzolo will ever prevail on the merits. 

Dated this 11th day of October, 2011.
Respectfully submitted,
United States Attorney
Chief, Appellate Division
Assistant United States Attorney 

Other than the reasons reiterated by the government, Rizzolo argues that the feds and the City of Las Vegas were totally responsible for him not paying his debts because both entities had the chance to run his strip joint while he was serving his first prison sentence, but failed to do so. This, according to Rizzolo, caused the club's value to crash, therefore he is not able to pay his bills.

Rizzolo failed to mention that he cleverly transferred his assets to his ex-wife in a hastily prepared divorce in 2005, right in the middle of his legal and criminal troubles, and much of his later earnings were transferred to his father without the knowledge of the court or his parole officer.

Now it's up to the U.S. Attorney, IRS, and Kirk Henry's attorneys to take the legal actions necessary to recover and repatriate Rizzolo's fortune in order to pay his mounting debts.

A Uniform Fraudulent Transfers Act lawsuit has been filed by Henry against Lisa Rizzolo, along with a separate civil lawsuit against Rick's stepmother Kim Tran Rizzolo, to recover those assets. (Rick's father died shortly after receiving the funds.)

In the meantime, on August 4, 2011, Henry's attorneys had Rizzolo's prized Mercedes Benz SL65 BiTurbo V12 seized by Clark County Constables from the parking lot of Piero's Restaurant in Las Vegas while Rizzolo was having lunch.

It was just revealed that the towing company that took Rizzolo's car is ironically owned by the brother of the attorney who represented the late Buffalo Jim Barrier, the garage owner whose information led to Rizzolo's demise.

What's next?

Since I began covering this story in 2001, my predictions have proven to be 95% accurate. So, I believe it's almost certain the following will occur in 2012:

(1) It will be discovered in deposition that Lisa Rizzolo, Rick's ex-wife, is paying a majority of his legal bills from her accounts in the Cook Islands.

(2) Rizzolo's appeals will fail dismally, and he'll remain in prison until June 12, 2012.

(3) Kirk Henry's attorneys will auction the Mercedes Benz SL65 BiTurbo V12 and split the proceeds with their client.

(4) It will be too inconvenient for attorneys to visit Rick in Taft Federal Prison, so someone will smuggle him a cellphone (Attn: Warden Andrews!) so Rick can give directions to his ex-wife's and stepmother's attorneys regarding how to protect his stash.

(5) Rick will get caught with the cellphone and be transferred to a higher security part of Taft Prison for the remainder of his stay.

(6) The feds will offer Lisa and Kim Tran Rizzolo immunity if they turn over the money they're holding for Rick.

(7) Lisa and Kim Tran will comply, and forego indictments.

(8) Kirk Henry will receive the majority of what the Rizzolos owe him.

(9) The IRS will write off most of what they are owed.

(10) Rick and Lisa will re-marry at Piero's, honeymoon at their home in Newport Beach, and be warmly welcomed back into Las Vegas and Newport society while living off the money the IRS will be too lazy to pursue, along with the cash Rick has hidden in seveal Strip casino cages.


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