Columnist Jeff German: Imagine feds owning strip joints

Tuesday, June 3, 2003 | 10:57 a.m.

When the dust settles in the FBI's investigation at Cheetahs and Jaguars, there is a chance that the federal government may end up owning the two topless clubs.

Federal prosecutors have informed lawyers for current owner Michael Galardi that they plan to initiate proceedings that could force him to forfeit the clubs at the end of the racketeering investigation into possible political corruption.

This comes as Galardi attorney Peter S. Christiansen confirmed Monday that his client has received a target letter in the two-year probe.

The government's play for Cheetahs and Jaguars, two of the valley's most lucrative strip joints, puts a lot more on the line for Galardi than just his freedom. We're talking a loss of money -- lots of it.

And the irony is that the very government that is trying to clean things up could one day fill the void.

There is precedent for the government to obtain unusual businesses through forfeiture. In the early 1990s, the government made millions of dollars running a popular Southern California card room, the Bicycle Club, following the racketeering conviction of the club's owner. The government also took control of the Mustang Ranch outside Reno under similar circumstances during this time and later sold the brothel back to its owner, the now-fugitive Joe Conforte, only to seize it again in 1999 and close it down.

The Justice Department, it turns out, can proceed with a forfeiture either through criminal or civil proceedings. If prosecutors choose the civil route, they have a lesser standard of proof, a preponderance of the evidence instead of beyond a reasonable doubt.

Often, however, the government takes the criminal path. It simply adds a forfeiture charge at the end of a racketeering indictment that calls for the defendant to give up his business if convicted. The government has to prove that the business either was acquired through criminal activity or was used to further criminal activity. It's not always an easy thing to prove.

In this case prosecutors likely would have to show that Galardi was using Cheetahs and Jaguars to make illegal payments to politicians. But first prosecutors need to get an indictment. When that will happen is unclear.

What would the government do if it ultimately wound up with the clubs?

Assistant U.S. Attorney Eric Johnson, who's spearheading the topless club investigation, won't even confirm whether the government is eyeing forfeiture.

But whatever the government does will have a profound impact on the topless nightclub scene.

The government could close the clubs down, which would send Galardi's rivals scurrying to fill the vacuum. It also could find someone it trusts to buy the clubs at a handsome profit. That will make Uncle Sam smile.

Or the government could run the clubs itself, which would create the most interesting scenario -- starting with government's application for a business license before the Las Vegas City Council and the Clark County Commission.

That might be the biggest irony of all. The government that has investigated local elected officials for ties to strip clubs could end up under scrutiny, too.