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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:

Crazy Horse Too's worth highly exaggerated
Skim allowed to continue until eventual sale

INSIDE VEGAS by Steve Miller
June 26, 2006

         Emergency vehicles respond to beating at Crazy Horse Too, Sept. 2001
                        (Photo by Buffalo Jim Barrier used on Dateline NBC)

LAS VEGAS - Now that Rick Rizzolo, his family, and corporation have pleaded guilty to racketeering and tax evasion, he's been given one year to sell his topless bar, the Crazy Horse Too, for market value, and get out of the adult business for the rest of his life. He may also have to sell the land under the just-opened Philadelphia Crazy Horse Too. But there may be more to this story than meets the eye.

Located in one of Las Vegas' seediest neighborhoods surrounded by a jungle of telephone poles, power lines, and billboards (some advertising competing gentlemen's clubs), Rizzolo shocked local real estate experts in 2002 by paying an amazing $5.5 million for the 2.63-acre site where his strip club and a next door auto garage owned by former pro wrestler Buffalo Jim Barrier, less-than-peacefully coexist in the shadow of an overpass next to the tracks. In the eyes of those experts, this can hardly be referred to as prime Vegas real estate, and speaks loudly about Rizzolo's limited business skills.

                     Competitor leases billboard over Crazy Horse Too

Nonetheless, Rizzolo has sold the U.S. Federal Court a bill of goods, including that his broken down, blood stained bar is worth in excess of $35 million - enough to cover almost $7 million in fines and penalties, along with paying Kirk Henry another $10 million for his broken neck suffered at the hands of a Crazy Horse bouncer.

Meanwhile, as Rizzolo prepares to cool his heels in Club Fed, if his braggadocio holds true that the club generates up to $18 million each year -- compared to a legitimate appraisal obtained by INSIDE VEGAS that tells quite a different story -- his father Bart, brother Ralph, and sister Annette might be able to continue skimming at least another $15 million between now and the time Rick gets out of the slammer. (They did plead guilty to skimming!)

How can the Feds let this happen? To enlighten them, I inquired of one the most knowledgeable professional real estate and business appraisers in the country. I asked him to evaluate the actual worth of the Crazy Horse Too business and property. This was his reply:

Dear Steve: The property was in contract earlier this year, but the buyer walked away from the deal after the shooting inside the club in February at the advice of counsel - also after the buyer found out that Rizzolo wildly exaggerated what the club actually makes (per Crazy Horse Too - Power Co. Inc. tax returns) fact, the club does not make anywhere near the $18M NOI that (Rizzolo) suggested. The Power Company Inc. 2004 tax returns you supplied indicate they made only $3.6M before debt service on the $6M 1st Trust Deed, netting around $3M after debt service. 
Considering Cheetahs made $6.5M NOI in 2004, and Cheetahs can be bought for less than $25M (it has been marketed "quietly" without any takers for two years), and considering that Scores, an absolutely gorgeous club, sold for ten year terms for $23M, how can (Rizzolo) say that the Crazy Horse is worth anything near $25M? 
As a development consideration, the land is currently zoned for a widening of Industrial Road leaving the new owner with less than two acres, even at $7M an acre (on Industrial Road?) that is less than $14M.
These strip clubs are valued by Wall Street investment banking firms between 4 and 5 times NOI (EBITDA). Crazy Horse made $6.08M in 2003 (per their tax returns) and $3.6M in 2004.  If you take a median of the two years, the average NOI is around $5M, that means that the Crazy Horse is worth between $20 and $25M. This is interesting because he owes the Govt/(Kirk) Henry $17M, he owes Bank of Nevada $6M (1st TD), and he will owe 28% Capital Gains tax of $8M, additionally there are other pending claims and attachments (Buffalo Jim Barrier) around $1M; that means to break even his sale price would have to be $32M! 
Considering the Scores sale (with 5 and 1/2 acres) and Cheetahs no-sale, Rizzolo may well be in the hole financially the rest of his life if the club sells for "MARKET VALUE."

The expert quoted Rizzolo's tax returns showing declining "EBITDA" which means "earnings before interest, taxes, depreciation and amortization," and declining "NOI" which means "Net operating income," after both had been wildly exaggerated by Rizzolo to the Federal Court, Kirk Henry's attorneys, and the Federal prosecutors.

Business at the Crazy Horse started a steady decline after the 2001 beating of Kirk Henry that made national news and showed Rizzolo to be less than a legitimate businessman. The Henry episode, and several prior cases of brutality, clearly showed that Rizzolo and his management are most skilled at beating profits out of customers instead of profiting through legitimate business means.

Henry's story inspired many patrons to seek safer venues causing the declining revenues indicated on Rizzolo's corporate 2003 and 2004 tax returns which I asked my expert to review. Since 2004, patronage has continued to decline which is evidenced by an increasingly empty parking lot during peak hours, i.e., it will be hard to sell the Crazy Horse for enough to cover Rizzolo's obligations.

In February 2003, after 80 FBI agents raided the Crazy Horse, one agent described the interior of the building as a "toilet." "They have to spray perfume all around the place to cover up the smell. The place looks like it hasn't been cleaned for years."

Its obvious that whoever buys the bar will also have to invest millions to clean up Rizzolo's mess and make the place competitive with newer clubs, let alone invest in a public relations campaign to improve the club's reputation and image.

In an interview a day after the raid, Rizzolo told the Review-Journal that his club makes more than $10 million a year. "It makes so much money, I wouldn't do something stupid to jeopardize it," he said at the time.

Now, Rizzolo's playing poor boy, this while he's known as a "whale" on the Strip for losing up to a million dollars per night during his frequent gambling binges. Because of his felony conviction, Rizzolo could become the first whale inducted into Nevada's Black Book of persons banned from entering casinos, but that's a long shot because casino owners pay for the governor's political campaigns, and the governor appoints the Gaming Control Board members. No casino wants to lose a whale, no matter how much damage Rick Rizzolo could do to the reputation of gaming in Nevada.

After a convenient divorce from his wife of 27 years, and the vesting of most of his assets to her in the quasi divorce settlement, Rizzolo claims he's now limited to gathering the $17 million he owes the IRS and Kirk Henry's family from the sale of his property on Industrial Road, or so he says. In reality, there's plenty of money to go around considering his wife's beach front home in Newport Beach, California, and her golf course estate in Las Vegas.

Often, when a defendant transfers his assets to a family member prior to anticipated prosecution, the court wisely reverses the after-the-fact transfer. They should do so in this case - immediately! Rizzolo is obviously scamming the Federal Court and the Henry family. His ex-wife was his partner when Henry was crippled and while her husband skimmed profits. That makes her liable even after the contrived divorce.

Foreseeing a lack of assets available for award in an unrelated civil harassment lawsuit brought by Buffalo Jim Barrier, Gus Flangas, Barrier's attorney, recently filed a motion for Prejudgment Writ of Attachment and Garnishment of at least $1 million worth of Rizzolo's assets in the likely event his client prevails at a jury trial expected to take place later this year in the court of Judge Elizabeth Gonzelez. Barrier has proved he's been harassed by Rizzolo in five successful lower court cases, so he's expected to again prevail in his upcoming District Court lawsuit seeking several million dollars in damages for attempts by Rizzolo to put him out of business so the Crazy Horse could expand into his space. 

Frankly, I'd rather be attacked by a swarm of malaria-crazed mosquitoes than
have Miller and Barrier on my case.  --  John L. Smith,  LV Review-Journal
                                     ( photo by Mike Christ)

Then there's the threat by the City of Las Vegas to fine 47 year old Rizzolo up to $2 million. After hundreds of requests to bring the Crazy Horse before the City Council for disciplinary action, the City Attorney finally decided to respond. I hope the council members are not swayed by Rizzolo's claim his wife now has all his assets, or his claim that he's in poor health. The taxpayers could sure use the $2 million after all the bad press the Crazy Horse has brought upon our city, and the pain and suffering he's caused so many innocent customers.

Rizzolo has also reportedly bragged that he would "burn the place down" before he would lose it to the government or Henry. For this reason alone, U.S. Federal Court Chief Judge Philip Pro should immediately place a receiver in the business to collect and protect all the cash that could be ripped off by Rizzolo's family members while he's in prison and beyond.

A confidential source close to Rizzolo put it this way:

I heard that Rizzolo is trying to stall the government by putting the club into contract for sale, then killing the deals by finding unreasonable escape clauses and claiming the buyers didn't perform. He's using this tactic to keep possession of the club and continue his activities and avoid a receiver from being placed in the property by the federal govt. (by showing them he is "acting in good faith" to find a buyer  - to get the govt. and Henry their money). I can't believe that the govt. is allowing this guy to remain open for business and continue to lie to them about "sale of the club" to stall potential receivership action by the govt. I heard that Rizzolo said he would burn the club down rather than lose it to Henry or the govt.

This is also a case where the government is doomed if it does, and doomed if it doesn't. The Feds learned over a decade ago
that it's impossible to run an sexually orientated business after it made several attempts to sell Joe Conforte's Mustang Ranch brothel in Reno. In September 1990, the IRS seized the Mustang and failed in an attempt to successfully run the brothel to pay back taxes.

Could you imagine paying the United States Treasury to get laid in a Nevada brothel? Few customers took advantage of the bizarre offer.

After being criticized in the national media for trying to run a whorehouse, the government padlocked the Mustang, and announced it was for sale. When the sale never materialized, the Feds in 1990 auctioned the Mustang Ranch property and sexy memorabilia. The Feds later learned that the ranch was sold to Mustang Properties Inc., a shell corporation represented by Victor Perry, brother of Conforte lawyer Peter Perry. To the Fed's dismay, Joe Conforte returned to manage the Mustang, and it was business as usual until 1995 when Conforte and Perry were indicted for bankruptcy fraud, aiding and abetting, money laundering, witness tampering, racketeering, conspiracy and forfeiture. In 1999, the shell owners transferred millions of dollars to Conforte, and the Mustang was ordered closed. Conforte fled the country and never returned.

Another source familiar with Rizzolo wrote:

Steve: What is interesting is that the government is willing to allow the guilty parties to continue running the club until it's sold. Rizzolo recently told someone that the report that “he only has a year to sell the club” isn't true. He said, that “he could conceivably own it for an indefinite period of time.” Example: if he is unable to find a buyer who can be approved for licensing; let's say after six months he sells it to someone. The sale is contingent on licensing approval which can take up to a year to obtain. Let's further say that the buyer gets denied at the 11th month. Rizzolo can now take the club back and put it on the market again. The government will allow him more time to sell it and to get the buyer approved. For the sake of speculation, let's say that Rick wants to hold on to the club for an extended period of time, because after all, he still gets the profits until it's sold. All he has to do is set an unrealistic price (like the one that he's asking $30 - $40 million). In this case, no one will ever buy it. Does the word “loophole” come to mind? In a similar case in Atlanta (Gold Club -Steve Kaplan), the government took possession of the property immediately upon the plea signing. They closed the club, tore down the building and sold the property to a developer, with a covenant that the property could never be used for a strip club again. In most cases of business fraud, the business entity goes down with its operators.

Now, the Feds may have a similar problem on their hands with Rizzolo and his relatives. Its starting to look like the Rizzolos are borrowing a page from Joe Conforte's book, and will never keep their promises to the IRS, FBI, Judge Pro, or Kirk Henry.

If so, then instead of the pubic getting screwed at a Federally operated Reno whore house, it will be Judge Pro and the Feds bending over for Rizzolo who may be plotting a successful scheme to get away with murder, beatings, robbery, and tax evasion.

Let's hope Judge Pro, and Kirk Henry's attorney Stan Hunterton, get wise to this scheme before Rick Rizzolo and his family steal all the money they owe for hurting so many people, while leaving the IRS, FBI, taxpayers, and the Henry's out in the cold.


At 12:55 PM, PDT, Sunday June 25, two ambulances and two Las Vegas Metro Police units were observed at the front entrance of the Crazy Horse Too. No further information was available.

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