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Inside Vegas - Steve Miller

Steve Miller is a former Las Vegas City Councilman. In 1991, the readers of the Las Vegas Review Journal voted him the "Most Effective Public Official" in Southern Nevada. Visit his website at:

Forewarned is forearmed
Bank ignores warning, takes
$5 million dollar loss, then
shoots the messenger
"Based on our investigation and the information provided by RicRiz's representatives, we concluded that the allegations regarding Rizzolo's involvement in unspecified criminal activity were not verifiable, and that some of the rumors were affirmatively inaccurate. Accordingly, I and others recommended proceeding with the loan, which closed on November 3, 2005." - Gregory Alcala, 1st Vice President and Manager, Real Estate Loan Underwriting for Security Pacific Bank

INSIDE VEGAS by Steve Miller
February 18, 2008

LAS VEGAS - I've been blamed for a lot of stuff I didn't do, but a DECLARATION filed last week in U.S. Federal Court tops them all. It also gives me the perfect opening to say, I TOLD YOU SO!

It started back in 2005 when about-to-be-indicted topless bar owner Rick Rizzolo applied for a $5 million dollar loan.  An application was filed with a California bank that listed the infamous Crazy Horse Too as collateral. Missing from the application was any reference to the-then ongoing heavily reported federal investigation that in less than a year would result in the forfeiture of the saloon and the imprisonment of Rizzolo.

The bank funded the loan, but it didn't take long for Rizzolo to default and skip with the cash.

With egg on their face, Security Pacific Bank's loan committee (photo on left) claimed total ignorance of the federal investigation and cried foul. But they didn't to go after Rizzolo or the title insurance company to collect what they're owed. They decided to go after the $9 million dollar court ordered settlement of a man whose neck was broken by a Crazy Horse manager.

The problem is that the bank was warned in advance that they were about to loan millions to a crook, and they ignored the warning.

I learned of Rizzolo's loan application in 2005 when Crazy Horse next door neighbor Buffalo Jim Barrier received an Agreement from Security Pacific's loan department asking him to attest that he had no pending lawsuits against Rizzolo.

At the time, Barrier was deeply involved in his harassment lawsuit against Rizzolo and was certainly not willing to sign such a document. He advised his attorney to contact the bank and inform them of the litigation.

I went one step further and sent the bank an email telling of Rick Rizzolo's problems and sent them links to hundreds of news stories on the subject.

It was later confirmed that the bank's officers carefully reviewed the information I provided, then took the word of a mob lawyer over mine. They granted Rizzolo the $5 million dollar loan after being fully informed they could lose their investment!

Within days of receiving the bank's cash, Rizzolo hid their money with the help of the brother of a Federal Court Judge.

"On October 26, 2005, Rizzolo signed a $5,000,000.00 note which was secured against the underlying real property on November 3, 2005. The FBI has not been able to track or locate the $5,000,000.00 in United States Currency," wrote 
FBI Special Agent Anthony J. Mace on Aug. 13, 2007.

On Tuesday, February 12, 2008, Security Pacific entered a RESPONSE to a MOTION filed on February 5 by attorneys for beating victim Kirk Henry. Henry's MOTION was in opposition to Security Pacific's effort to foreclose on the Crazy Horse Too.
The Henrys are concerned that if the bank gets their hands on the property, they'll hold a fire sale, and Henry's unpaid $9 million dollar court ordered settlement will be impossible to collect unless the court reverses an asset protection scheme devised by the brother of a Federal Court Judge.

Conspiracy theorists also think the bank will sell the property back to an associate of Rizzolo for the unpaid balance of his loan, and the carnage will be allowed to continue with the blessings of the Mayor.

Also in their RESPONSE, the bank identifies Steve Miller as the source of all the information they received regarding Rizzolo, and said that based on their conversations with Rizzolo's attorney Tony Sgro, they decided to discount the information, and fund the loan.
Now they're paying the consequences.
They're referring to an October 30, 2005 email I sent to bank officers containing links to documents including my comprehensive "Rick Rizzolo Connection" website; a press release from the United States Attorney telling of racketeering activity at the Crazy Horse: and a transcript of the Dateline NBC segment "It happened one night" that aired on August 8, 2004, a year before the bank granted the loan. The segment told of the beatings of Kirk Henry. Eban Kostbar, and Paul Russo, and confirmed the presence of a federal organized crime investigation.

According to the transcript: "But these allegations of intimidation and violence have caught the attention of the FBI, which has started its own investigation. The feds have interviewed Kirk Henry and last year they raided the Crazy Horse as part of a probe into an alleged pattern of sticking customers with inflated tabs and beating them if they don’t pay up. And what does the club have to say about the allegations? Its attorney Tony Sgro denies everything."

But this was not enough to impress Security Pacific Bank! Throwing caution to the wind, they raced ahead and granted the loan. It was as if they did it to spite me and the other writers who've been covering this story for over a decade.

After the loan was funded, it didn't take long before the bank learned Rizzolo had no intention of paying back his loan; had hid the cash; and that their collateral was seized by the United States of America.

Instead of doing the sensible thing and going after Rizzolo who personally guaranteed the loan, or Chicago Title who issued the title insurance policy, the bank for some unknown reason opted to spend stockholder's money on expensive San Francisco and Las Vegas attorneys to fight Kirk Henry and ask Federal Judge Philip M. Pro to approve them foreclosing on the Crazy Horse Too property so they can conduct a fire sale to recoup their losses.

When attorneys for Henry protested, the bank gave the excuse they didn't know in advance of Rizzolo's problems. Then after it was brought to their attention that I had provided them with the information before the loan, they tried to denigrate the veracity of the news reports I sent them in order to substantiate their foolish decision.

Here's the bank's excuse for funding the loan:
"In the course of conducting underwriting due diligence regarding the proposed loan, the Bank became aware of some allegations and speculation regarding Rizzolo and the Crazy Horse Too business. The Bank reviewed a number of articles from the Internet, including some emailed to the bank, suggesting that Rizzolo was the subject of a federal investigation and was subject to an impending indictment."
"As part of its investigation of these issues, the Bank sought further information from representatives of RicRiz and Rizzolo. On October 11, 2005, the Bank received a letter from (Paul) Marrone attaching a letter from the attorneys for Rizzolo and the Crazy Horse Too." "Marrone's letter said that there was no indictment against Rizzolo and that Rizzolo had 'broken no laws.' Marrone's letter indicated that the articles the Bank had found on the Internet were 'dated some time ago,' and had 'been squashed.' Marrone's letter said that the investigation of Rizzolo had since closed with no findings at all of illegal activity.'" 
The RESPONSE continues: "On October 21, 2005, representatives of the Bank then spoke with Marrone and an attorney brought into the call by Marrone." "The borrower's representatives told the Bank that Rizzolo was the subject of ongoing investigations by the FBI and IRS, but indicated that this level of scrutiny was typical for owners and operators of adult businesses in Las Vegas. And critically, the lawyer said that he had no knowledge of a pending indictment, and did not expect there to be an indictment. None of Rizzolo's representatives disclosed ever, that Rizzolo was in the process of negotiating a plea agreement with the government."

The above excuse is the kind of behavior that should inspire bank examiners
to investigate Security Pacific Bank, especially since they make no mention of going after Rick and Lisa Rizzolo's hidden assets, assets that were also pledged as collateral.

The bank screwed up, then blamed the messenger for their troubles.

This is why our nation is now faced with hundreds of thousands of loan defaults. Lenders like Security Pacific obviously don't do their homework, then come begging the government to bail them out.

For telling a bank such lies, Mr. Sgro should face court sanctions. And for supposedly believing him, Security Pacific deserves a visit from Federal Bank Examiners.

Sgro even tried to use Rick Rizzolo's 2000 SLAPP suit against me in order to try to bolster his claim that I provided bad information. However he failed to mention that by November 2005, the basis of the libel lawsuit -- my writing about his client's racketeering activities -- had been verified and the case dismissed.

Nonetheless, the bank fell for it. At least it looks that way from the surface.

One of my inside sources thinks it goes much deeper:

"The actions of Security Pacific Bank could have been Rizzolo's plan all along.  He could buy the Crazy Horse back through a strawbuyer with the bank's money.  There are several standing by with close ties to Rizzolo, et. al., including two men with real estate holdings on the LV Strip. This way Rizzolo gets it back for free.  Up until this point everything Rizzolo has done, except for sitting in the can for a few months, which is a small price to pay for the pay back, has paid off in spades for him.  He gets the money to buy the place from the same people that foreclosed on it. Then pays back the strawbuyer with his hidden 5 mil.  How beautiful -- if the judge goes along.  You have to give Rick credit for this scam.  Thinking about it, someone at the bank really could have been in on the scam from the get go.  Perfect way to wash his money. He gets the money from the bank with no intention of paying it back knowing that he was going to lose his license to operate the CH2.  Bank takes building. All is good for Rizzolo.  Now Rizzolo claims poverty and does not have to pay all the rest that he owes.  While he still has all of his money that can't be touched thanks to a FEDERAL JUDGE'S brother who hid his assets.  Pretty damn smart of him.  He beats everyone and spends a few months in lock-up.  His Chicago friends taught him well the art of the bust out."

His part about Rizzolo claiming poverty is really far fetched. The following was filed by Tony Sgro on October 30, 2007.

In his sentencing of Rizzolo, Judge Pro clearly ordered that bankruptcy was not an option -- that Rizzolo could not declare bankruptcy to protect his assets. I can't understand how Patti & Sgro can use bankruptcy to try to pressure the court at this late date. They were present when Judge Pro made his order, and did not protest it at the time. They also know that Rick and Lisa Rizzolo hid way more than enough assets to cover their debts, and the feds know it.

Security Pacific Bank's MOTION will be heard at 3 PM on Friday February 22 in Judge Pro's court.
INSIDE VEGAS will be there to report the outcome.

But the question of whether a bank that didn't do its due diligence should be allowed to seize an asset owned by the citizens of the United States of America, then be allowed to auction it off, may have been answered on Friday February 8 by a highly coincidental action taken by the IRS. On that day two liens were filed; one against the Crazy Horse Too property, and the other against Rizzolo personally. Together they total $22,473,840.41.

It's now very obvious the IRS is not going to let this asset slip out of their hands.

With this new information, it's expected that Judge Pro will categorically deny Security Pacific's ridiculous MOTION and put to end the rampant conspiracy speculation.

That said, there are only 17 weeks remaining to sell the Crazy Horse Too as a topless bar. On June 30, its adult use zoning will permanently expire, and the property will revert back to warehouse use only. If so, this may hopefully put an end to one of the saddest chapters in Sin City's history.

Copyright © Steve Miller

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