Thursday, Jan. 8, 2004 | 11:02 a.m.
Las Vegas levied its largest business fine ever, but allowed the topless club Cheetahs to keep its liquor license after a "quasi-judicial" hearing Wednesday that featured two of the city's most prominent lawyers playing word games and expressing mutual admiration.
The City Council approved Mayor Oscar Goodman's motion to assess La Fuente, the parent company of Cheetahs, a $1.095 million fine instead of pulling the liquor license. Goodman's motion -- initially for the fine to be paid within one week -- followed his vote against revoking the license.
"This man can't come up with that ($1.095 million) in one week," said Dominic Gentile, the lawyer for La Fuente owner Jack Galardi, who was sitting in the audience.
"You tell me. I'm going to be reasonable. How long?" Goodman replied. Gentile conferred with Galardi, then said, "I'd ask for six months."
Goodman answered: "Nope. If I were a banker I'd lend him the money this afternoon."
Then followed a quick barter. "Ninety days," Gentile said.
"Nope. You got 30," Goodman said.
"Sixty days," Gentile said. "Nope," said Goodman, who then sent the matter for a vote with the 30-day limit and a warning to Gentile that the license could be revoked if the deadline is not met. The motion passed 4-2, with Councilwoman Janet Moncrief and Councilman Lawrence Weekly voting against.
Moncrief wanted nothing short of revocation, and Weekly had backed her. Councilman Michael Mack, who is a consultant for a competing strip club, Treasures, abstained from voting.
The largest previous fine related to a Las Vegas business license was $50,000. Three penalties of that amount were leveled in 1996 against three nude clubs that were caught serving liquor. Nude clubs in Las Vegas are not allowed to serve liquor, although topless clubs can with a license.
After the majority of the council approved the fine, Goodman congratulated Gentile on doing a fine job representing Galardi.
Moncrief led the charge against the license, starting with a press release sent to the media declaring her intent to seek revocation and urging council members to support her.
The release angered some of the councilwoman's colleagues, who said she ought to speak with them instead of using the media to pressure them.
The press release also gave Gentile an issue as he sought to have Moncrief disqualified from the hearing. Gentile argued that as members of a "quasi-judicial" body, they cannot "pre-judge" a case. City lawyers, however, rebuffed the argument by saying that under Nevada law, officers at administrative hearings such as the revocation can have an opinion on the case. What they are barred from doing is allowing extraneous factors -- dislike for one of the parties, or a financial interest -- play into their decision.
With that, Moncrief was in the debate and worked to convince her colleagues that La Fuente did not deserve its liquor license because Michael Galardi, who was a part-owner until his father, Jack, bought him out in late October, pleaded guilty to federal corruption charges in San Diego. The younger Galardi was accused of paying off a police officer and several San Diego council members, seeking favorable treatment and ordinances that would benefit his club there, also called Cheetahs.
The Las Vegas Cheetahs is a topless club where alcohol is served. Under city rules, a licensee is subject to discipline if a principal has committed criminal acts in the same or a similar business, Assistant City Attorney Bill Henry told council.
Henry submitted as evidence copies of Michael Galardi's federal indictment, and his plea hearings.
That opened up one of the several volleys between Gentile and Goodman as Goodman tapped his own background as a defense lawyer.
Gentile questioned whether the plea was sufficient cause to revoke the license, referring to a portion of the city code -- 6.02.330, paragraph C -- that states disciplinary action is warranted if the licensee or any of its principals have been convicted.
Goodman shot back by quoting from 6.02.350, which states that the licensee is liable for acts committed by its principals, and does not require a conviction.
"That becomes a question of statutory construction," said Gentile. If one rule is specific and the other general, the specific takes precedence, he said.
"You made your point in the record, but I'm sticking to my interpretation," Goodman said.
At the end of the discussion, Henry told council that Michael Galardi, while he was with La Fuente, "went to the heart of the regulating authority" with his actions in trying to bribe council members in San Diego.
"If you think about the object of the conspiracy ... I would submit to you, I for one, cannot conceive of a more serious disciplinary offense having to do with a liquor licensee," Henry said.
Gentile pointed out that the actions took place without the knowledge of Jack Galardi, who owns strip clubs across the country and now owns La Fuente outright, and said the father should not be punished for the sins of the son.
He noted that 250 workers who receive W-2 forms, and 1,500 independent contractors -- dancers who frequently perform at the club -- would lose their jobs if Cheetahs lost its liquor license and had to close.
"A minority shareholder did something elsewhere," Gentile said, adding that the club in San Diego did not have a liquor license. The city rules state that a license is in jeopardy if a principal committed a crime related to the same or similar business elsewhere. "If someone did something in another place, without a liquor license, how are they the same?"
Goodman then made the first motion, which was to impose disciplinary action. That passed unanimously.
Goodman asked Henry what the options were, and was told council could revoke the license, suspend it, or assess a fine of $1,000 a day for each day of the violation, considered to have taken place from August 2000 to May 2003, the time frame in which the federal documents indicate Michael Galardi's criminal actions took place.
The dollar figure was put at $1.095 million.
Some discussion ensued about how long it would take if Jack Galardi applied for a license -- six to nine months -- and what's happening to Jack Galardi's two clubs in the county, which have had their licenses revoked, and are to be leased to the another party that has a license, Gentile said.
Then Moncrief made her motion to revoke Cheetahs license.
"We will not be punishing the employees of Cheetahs," she said. "Cheetahs punished itself."
That motion, supported by Moncrief, Weekly and Ward 3 Councilman Gary Reese, failed on a tie vote with Goodman, Ward 4 Councilman Larry Brown and Ward 2 Councilwoman Lynette Boggs McDonald voting against. Mack abstained.
Goodman then made his million-dollar motion, bringing the city its largest fine ever, payable within a month.
After the meeting, Gentile walked out of Council Chambers, mobbed by the members of the media. When asked about the future for Cheetahs, he said: "If (Jack Galardi) can pay the $1.095 million, the future looks real bright ... everybody ought to be real happy about it -- except Jack Galardi."
Jack Galardi declined to comment.
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