Nightclub cabbie tip battle is expanded

Kim Smith

Friday, Feb. 1, 2002 | 10:05 a.m.

With attorney Dominic Gentile joining the fray, the battle to stop adult nightclubs from diverting customers to their establishments will be fought on two fronts.

While other attorneys are arguing that certain nightclubs are guilty of violating state, city and county ordinances, Gentile, hired earlier this week by Olympic Garden owner Peter Eliadis, said Thursday he believes club owners may be guilty of racketeering.

Nightclub owners have been paying cab drivers -- who oftentimes lie about their clubs -- to divert customers to their establishments, Gentile said.

"They'll say, 'You don't want to go there, they're infested with rats or the girls there are really transvestites or the club is closed,' " Gentile said.

The nightclubs, said Gentile, are guilty of obtaining money under false pretenses, which falls under state Racketeer Influenced and Corrupt Organizations statutes.

Eliadis, along with the owners of Cheetah's, Crazy Horse Too and Club Paradise, are suing dozens of competitors.

Anthony Sgro, Dean Patti and Jerry DePalma, who represent the clubs -- and until this week represented Eliadis -- plan to argue the competitors violated state and local ordinances.

The attorneys have alleged that dozens of nightclubs have been tipping cab drivers up to $40 per head for every customer the driver convinces to visit their clubs.

On Thursday District Judge Mark Gibbons found Pussycats guilty of violating a court order prohibiting the tipping of cab drivers. He fined the club $500 for contempt and ordered the club's owner, Ben Cummings, to pay Eliadis, Cheetah's, Crazy Horse Too and Club Paradise $29,000 in attorneys' and investigators' fees.

Pussycats attorney Mace Yampolsky said he will recommend that Cummings appeal.

Gentile said he was hired -- at a rate of $400 per hour -- by Eliadis because he is a past chairman of the American Bar Association's RICO Committee.

Eliadis is strongly committed to the cause, Gentile said.

"My client pursued me for four years to become his attorney in this matter," Gentile said. "He has given me carte blanche to conduct whatever investigative efforts and acquire whatever professional experts I need to pursue the racketeering efforts of these clubs."

Allen Lichtenstein, who represents Tally-Ho, Talk of the Town and Babydolls, said District Judge Sally Loehrer won't have far to look to determine who is violating RICO statutes.

"Olympic Garden has already admitted in court they spent millions paying taxi drivers to divert," Lichtenstein said. "It takes a certain amount of audacity to admit you've broken the law and then go after someone else for the same thing."

Eliades, in a letter posted on a cabbie website, said he has been forced to pay drivers nearly $4 million over the past two years just to keep pace with his competitors.

"My clients are not even taking in $2 million a year," Lichtenstein said.

Lichtenstein said several of his clients have never tipped cab drivers but were named in Eliadis' lawsuit because they refused to sign a stipulation that they would never tip.

"Even those that don't pay don't like to be bullied, so they said, 'Go ahead and take us to court,' " Lichtenstein said.

Other nightclubs have tipped only nominally, Lichtenstein said.

Lichtenstein said he favors State Taxicab Authority Administrator John Plunkett's suggestion that the regulation against local businesses tipping cabbies be repealed.

Lichtenstein said the taxicab authority shouldn't have implemented such a regulation because the Legislature has failed to pass a law to that effect.

And even if the authority repeals the law, nightclubs and cabbies will still contend with city and county ordinances that prohibit tipping.

Gentile said he doubts Eliadis will give up the fight.

"If Pete Eliadis spends $1 million in attorneys' fees and wins, he'll have saved himself $3 million" in money lost as a result of diversion, Gentile said. "It just makes economic sense to pursue this."com