Secret FBI reports bare Galardi dealings

Jeff German and Steve Kanigher

Sunday, March 12, 2006 | 7:22 a.m.

On the morning of Aug. 26, 2003, Michael Galardi was so desperate to strike a deal with the government to avoid prison time that he offered to wear a wire for FBI agents to set up his longtime personal lawyer, not to mention other well-known Las Vegans.

The offer to set up lawyer Peter S. Christiansen and others came during a meeting with FBI agents and federal prosecutors at the J.W. Marriott hotel in Summerlin.

FBI agents, who had been investigating Galardi's illicit activities more than two years, were eager to take the strip-club owner up on his offer. They asked him to arrange a meeting the next afternoon with a prominent public official Galardi claimed to have bribed in the past.

But the plea negotiations, conducted betweeen Galardi's Washington lawyer Ira Rafaelson and the FBI, collapsed the next morning. Galardi, however, wasn't finished trying to deal with the government.

On Aug. 28 Galardi left a message on the cell phone of an FBI agent indicating he was not giving up on the talks.

"Galardi stated his Washington, D.C., attorney was out of the picture and that he still wanted to plead guilty and cooperate with the FBI," an FBI report said.

Galardi's offer to serve as a stingman has surfaced in confidential FBI reports obtained by the Sun that shed new light on his protracted and sometimes frantic talks with the government, as it considered charging him in 2003 with bribing Southern Nevada politicians. The reports do not indicate whether Galardi ever actually wore a wire.

Much of what Galardi told the FBI will be the focus of a political corruption trial starting this week of two former Clark County commissioners - Dario Herrera and Mary Kincaid-Chauncey - accused of taking the bribes.

The reports detail meetings between Galardi and federal authorities as he helped them assemble evidence in the case over five months in 2003. The documents start May 19, 2003, five days after the FBI executed search warrants on Galardi's topless nightclubs. The final report is dated Oct. 30 of that year.

The documents provide many new details on claims Galardi has made about providing cash and gifts under the table to a wide range of public officials, including former Clark County Commissioner Lance Malone, who prosecutors allege later became Galardi's bagman.

At one point in those discussions, Galardi sent word to the FBI that his cooperation made him concerned for his safety, and he was briefly placed into protective custody, the reports show. Galardi named three people he said he feared, but the names were blacked out in the documents obtained by the Sun.

One of the blackened names is identified in another FBI report as a casino owner.

"Regarding the perceived threat to Galardi, Galardi advised that he was fearful that the (three people) would hurt or kill him because of Galardi's knowledge of bribe payment from those parties to Lance Malone," one FBI report said.

The Sun also has obtained reports of interviews FBI agents did with former Clark County Commissioner Erin Kenny. The reports explain for the first time how she wound up betraying the voters and taking money from Galardi to further his business interests. Kenny agreed to cooperate with agents the day after the raid on Galardi's clubs.

Both Galardi and Kenny ultimately pleaded guilty in the much-publicized corruption probe, which made use of two years worth of court-approved wiretaps. Neither has been sentenced.

Galardi and Kenny are expected to be witnesses for the prosecution against Herrera and Kincaid-Chauncey, who are accused of taking and not reporting cash and gifts from Galardi in exchange for a series of votes and other actions benefitting Galardi's businesses.

The trial begins on Tuesday with jury selection in the courtroom of U.S. District Judge Larry Hicks at the George Federal Building downtown.

Lance Malone is expected to stand trial in August on similar corruption charges. Malone was convicted in San Diego last July of bribing councilmen there on behalf of Galardi. Galardi, who owned an adult cabaret in San Diego, has pleaded guilty in that case.

The 40-page racketeering indictment in Las Vegas, unsealed on Nov. 6, 2003, accuses Malone, Herrera and Kincaid-Chauncey of helping Galardi on a variety of fronts. That included harassing his competitors, promoting ordinances that would relax restrictions on topless dancing and paving the way for the 2002 opening of Jaguars, his largest and most extravagant club, at 3355 Procyon St.

Some of the officials Galardi claimed to have corrupted are named in the FBI reports obtained by the Sun, but most names are blacked out to avoid compromising the investigation. They are identified in generic terms, such as "PO #1" for a public official, "DA #3" for a deputy district attorney, "Police #3," "Judge #1," and "company #5."

Also blacked out are large portions, sometimes pages at a time, of some of the reports of Kenny's interviews.

Together, the reports show the breadth of political influence that the 44-year-old Galardi believed he had in Las Vegas. He claimed to have showered politicians and judges with cash and campaign contributions and maintained large slush funds at two of his clubs, Cheetahs and Jaguars, to provide lawyers, prosecutors, cops and even FBI agents with free drinks and lap dances.

He also said he hosted golf outings for law enforcement officers and public officials and provided sexual favors for his VIP guests at those outings and at his clubs.

And he told agents that he set aside money to pay dancers at the clubs to go home with officials. Sometimes he would get field passes and charter jets to fly his political friends to San Francisco 49ers football games.

Galardi's credibility, as well as Kenny's, has been called into question as the case has unfolded. The FBI documents show inconsistencies between Galardi's statements early and later in the case, which defense lawyers can exploit at the trial.

"If there is truth in what they're saying, then they are the dirtiest people in this whole mess," said Las Vegas attorney Dominic Gentile, who is defending Malone. "They're the ones who are getting leniency, so it makes sense for them to embellish their roles."

And there's this from an FBI report from an Oct. 29 interview with Galardi:

"Galardi has been seeing a psychologist and a psychiatrist for stress and alcohol abuse over the past few weeks. Galardi is taking Zoloft as prescribed by these doctors." Zoloft is for depression and anxiety disorders.

Prosecutors, however, have a wealth of wiretaps at their disposal to corroborate elements of Galardi's testimony. That combination contributed to the convictions in San Diego.

For nearly a decade, until FBI agents began investigating his underside, Galardi, like some of his rival topless club owners, was well known in social and political circles.

He was regarded as a legitimate businessman who frequently hobnobbed with VIPs and celebrities. Until about six weeks ago, Galardi was still maintaining a high public profile. He regularly was seen courtside at UNLV basketball games.

Galardi's first contact with anyone involved in the case apparently dates back to 1980. In one FBI interview, Galardi said he first met Malone that year when the two were in high school.

Malone went to Clark and Galardi to Western but they ran into each other socially, often at Hyde Park, a hangout for local youths.

Galardi and Malone went their separate ways after high school. Malone joined the Metro Police force as an officer, and Galardi eventually followed his politically connected father, Jack Galardi, into the topless nightclub business.

Months after Malone was elected to the County Commission in 1996, Michael Galardi told the FBI, he renewed their acquaintance.

Galardi told FBI agents that he realized he might need help opening the upscale Jaguars. So he turned to another longtime friend in politics, then-Las Vegas City Councilman Michael McDonald, for advice.

McDonald, Galardi said, suggested cozying up to Malone, who could help him get close to Herrera, Kincaid-Chauncey and others who could be in a position to help him.

Galardi had previously struck a financial arrangement with McDonald, whom Galardi claimed to have given "large sums of cash" when the councilman was a Metro Police officer.

In 1994, Galardi reported, McDonald came to him seeking a contribution for his upcoming 1995 campaign for the City Council.

Galardi told agents that he gave McDonald $10,000 in cash, and McDonald responded by saying, "Once I get into office, I'll cover your back ... make sure no laws are passed that will hurt you."

After McDonald was elected, Galardi said, McDonald came to him looking for a job. Galardi decided to put him on his payroll, giving him $5,000 a month as a consultant.

"Galardi emphasized that McDonald never did any real work for him and that McDonald's position was only to apprise and assist him in the City Council meetings or hearings when Galardi decided to expand his business interests," one FBI report said.

During his time as a consultant, Galardi said, McDonald was constantly asking for favors. He said he recalled buying the councilman a $15,000 Rolex watch and a $25,000 Harley Davidson motorcycle and giving him several luxury cars, including a Mercedes-Benz and Lincoln Navigator.

Galardi reported that McDonald helped exempt Cheetahs, 2112 Western Ave., from new distance requirements the city established between strip-clubs in 2001.

And he said McDonald was used as what agents called a "middleman" to give money to various judges.

But Galardi told agents that he also considered McDonald a "conniver" because he was on the payroll of one of Galardi's chief competitors, as well.

McDonald has not been charged in the corruption case, and he has denied any wrongdoing. He also has indicated that he declared the money he received from Galardi with the IRS and always abstained on City Council votes relating to Galardi.

Galardi told agents that he put Malone on his payroll in either 1998 or 1999. He testified in the San Diego case that Gary Guymon, a former Clark County chief deputy district attorney, helped set up his initial meeting with Malone.

In an interview with FBI agents, Galardi said that meeting, which was attended by a couple of ranking Galardi employees, occurred during lunch-time at the Angel Park golf course, 100 S. Rampart Blvd.

Galardi told Malone at the meeting about his plans to build Jaguars and how he wanted the approval process in the county to go smoothly.

"Galardi recalled Malone telling Galardi to just make sure you take care of me, to which Galardi said, 'OK,' " agents reported.

About three or four weeks after that meeting, a later report said, Malone sent word back to Galardi that he wanted a $5,000 monthly retainer, which Galardi said he agreed to pay.

Galardi told agents that he made the first payment himself, giving Malone $5,000 in $100 bills inside a car at a location he couldn't recall.

He said he continued to pay Malone $5,000 a month in cash after that, usually during a lunch meeting, and early on in their business arrangement gave him $25,000 in cash to help him buy a Ford Excursion.

Eventually, Malone told the topless club owner that Galardi was going to need the help of other commissioners, which Galardi said he assumed meant paying them $5,000 a month, too.

Shortly after that discussion, Galardi told agents that Kenny, Herrera and Kincaid-Chauncey "got on board."

After Malone left office, he became a consultant and lobbyist for Galardi and was given the task of providing Galardi's cash to the trio of commissioners, Galardi told the FBI.

"Galardi said the politicians would call around the first of the month and that Galardi would give Malone the money to give to them," agents wrote.

"Galardi was present for some of the subsequent payments. If Galardi was not present, Galardi would have the politicians call him and thank him, just so Galardi would know they got their money."

Kenny and Herrera started off receiving $5,000 a month, but later graduated to $10,000 a month, Galardi told agents.

Some payments to Herrera took place while Herrera, Galardi and Malone had lunch together, agents wrote.

"Malone would give Herrera the money while the two were in the bathroom," one report said. "Galardi never went to the bathroom with them."

The agents quoted Galardi as saying, "Herrera never missed a month."

On one occasion, a later FBI report said, Herrera asked Malone for $30,000 to buy furniture because he was moving out of his house. (The indictment provides wiretap excerpts of Herrera in September 2001 telling Malone that he was separating from his wife and needed money from Galardi to set himself up in an apartment.)

Galardi told agents that Malone gave the money to Herrera outside Landry's seafood restaurant on West Sahara Avenue.

"Malone got into Galardi's trunk and got the money while McDonald ... and Galardi watched from inside the restaurant," the agents wrote.

In Kenny's case, Galardi said he would count out the monthly cash payments himself and give the money to Malone to hand to Kenny. He said he also paid for vacations for Kenny and made other "special payments" to her.

Kenny recalled in her interviews with FBI agents the first time she met Galardi in the office of her accountant, Dan Geiger.

She didn't remember when that meeting took place, but she said she was "shocked" when Galardi pulled out a "wad of $100 bills" (about $10,000) from his pocket and tried to give it to her.

Kenny said she didn't accept the money, but explained that her accountant handled all of her campaign contributions. Then she left Galardi and Geiger in the room alone.

Eventually, however, Kenny learned to accept cash directly from Galardi and Malone.

She told agents that whenever she would get paid by Malone, she would take the cash and put it in her purse.

"The money was given to her loose, not in an envelope or rubber-banded," the agents wrote. "When she got home, she would put the cash in her makeup bag. She said no one would ever look in her makeup bag."

In one of his interviews with the FBI, Galardi recalled a visit Kenny made to Cheetahs to solicit campaign contributions from his dancers for her 2002 campaign for lieutenant governor.

"During the visit," the report said, "Galardi provided Kenny with another $20,000 in cash, and when Kenny received the money, Kenny wanted to thank Galardi in a special way. Kenny intimated that she would like to perform oral sex on Galardi."

Galardi claimed he was giving Kincaid-Chauncey $5,000 every month until just before the May 14, 2003, FBI raid.

In all, Galardi estimated that he had paid Herrera and Kenny between $150,000 and $200,000 and Kincaid-Chauncey about $100,000.

Galardi's involvement with the former county commissioners was only part of what he told the FBI in the ongoing corruption investigation.

He also implicated Metro Police officers, FBI agents, federal and local prosecutors, judges and other public officials as beneficiaries of his generosity. This included the establishment of slush funds at Cheetahs and Jaguars that he said he used to buy drinks and lap dances for law enforcement officers and attorneys.

No charges have been filed stemming from those allegations, and several of those who have been publicly implicated by Galardi have accused him of fabricating the allegations.

The most notable case involves veteran Assistant U.S. Attorney Eric Johnson, who was removed as lead prosecutor in the corruption case after Galardi told FBI agents that he had received comps at Cheetahs.

Johnson has strongly denied the allegations, and an internal Justice Department investigation did not find evidence to support Galardi's claims.

Guymon, now a county public defender, has also publicly denied allegations that he received favors from Galardi. He has said that false allegations raised by Galardi may have led to his forced departure from the district attorney's office.

Galardi was long-winded with FBI agents when discussing his efforts to spread money around town. He told the FBI that he provided his "girls" to policemen and had his dancers accompany FBI agents on golf outings.

In one interview with the FBI, Galardi said that he maintained cash reserves, or "club banks," of $75,000 at Cheetahs and $125,000 at Jaguars to buy drinks and lap dances for those individuals. Typically, the policemen would each have access to $500 per visit.

In other cases, Galardi said, the waitresses would run tabs for the officers and then have the club managers pay the bills with money from the banks.

By his estimate, the slush funds spent about $10,000 a month for law enforcement officers and the attorneys.

The practice of catering to policemen started from the time Galardi said he opened Cheetahs in 1990.

Galardi said he told his managers that "if you take care of the cops, they will take care of you." The word he wanted on the street with police was that "Mike was a good guy." He claimed to have been tipped off about vice raids at his clubs.

He talked about one officer he set up with girls from his club, and how the officer took care of one of his tickets and took him for a ride in his patrol car. Galardi shared an incident involving another officer having sex in his squad car with one of Galardi's "girls" in front of Cheetahs.

All told, Galardi implicated at least 11 police officers, all of whose identities were removed from the documents obtained by the Sun. Over the years, he said, he had comped at least 100 police officers for drinks and lap dances at Cheetahs.

"Galardi would even ride with the cops when they were on duty and, through this liaison, would establish a relationship with the cops that the Jaguars and Cheetahs employees/bouncers were good people," the FBI reported.

Sheriff Bill Young told the Sun that the FBI has declined to give him the names of the officers Galardi implicated, but agents have assured him that the activities of the officers did not rise to the level of crimes.

Galardi also implicated four FBI agents as comped customers of Cheetahs and participants in charity golf tournaments he supported. He said he paid their way into the tournaments, usually $300 to $500 per twosome, and provided girls to give them oral sex during the golf outings. The agents also attended parties at his house, he said.

Over the years, one FBI agent brought about 40 new agents to Cheetahs, and there were bachelor parties of 10 to 15 agents at a time, Galardi said. On those occasions, Galardi said he gave the lead agent $1,000 to cover drinks and dances.

FBI spokesman Dave Staretz would not discuss Galardi's claims about agents.

"We've looked into this, but we're not going to provide further comment at this time due to the trial," Staretz said.

The topless club owner also told agents that Christiansen, his former attorney, brought in about 20 deputy district attorneys on Friday nights to receive free drinks and lap dances.

Christiansen, Galardi said, would be given "a couple of thousand dollars" to take care of the group. Galardi also characterized Christiansen as a go-between with the prosecutors "to take care of any issues," according to the FBI interviews.

Christiansen, who has not been charged in the investigation, told the Sun he could not respond to Galardi's allegations.

"There's an attorney-client privilege that precludes me from commenting," Christiansen said. "Until he releases me from that I cannot comment."

Galardi told FBI agents that he dealt directly with two local prosecutors who allegedly received sexual favors from Galardi's girls and took care of speeding tickets and drunk driving citations for his employees. When his bouncers got involved in fights at the clubs, they would either be given leniency or no charges would be filed, he said.Galardi estimated that one of those prosecutors received $10,000 worth of sexual favors, lap dances and drinks. He also claimed to have given at least $5,000 in services to two other prosecutors.

Asked by the Sun about Galardi's claims, District Attorney David Roger said: "My sense is that no prosecutors presently employed by my office were involved in wrongdoing."

In addition to the former county commissioners and McDonald, Galardi claimed to have made cash payments to at least three other public officeholders, all "upwards of six figures," according to one FBI report.

Galardi also claimed that he gave money to at least six judges, often using a prosecutor as a middleman to deliver cash to their campaigns. Christiansen also facilitated payments to judges on Galardi's behalf, Galardi told agents.

Some of those funds were described as campaign contributions but others were stated as "cash" payments. One Municipal Court judge asked Galardi for a $5,000 check and $5,000 in cash and showed up at Jaguars to pick up the money.

Another judge, one of the "good ol' boys," Galardi said, received several $5,000 campaign contributions in cash, along with sexual favors. This included six girls that Galardi furnished for the judge's bachelor party.

All told, over a 10-year period, Galardi estimated that he gave judges in Clark County a total of $100,000 to $200,000. The implication from Galardi was that he had received judicial rulings favorable to his businesses.

Galardi's intense desire to strike a deal with the government was bared in an FBI report of his dealings with agents at the end of August 2003.

Rafaelson, his Washington lawyer, offered at the Aug. 26 meeting with FBI agents and prosecutors to let Galardi wear a wire to record incriminating conversations with people the attorney described as potential "short-term" and "long-term" targets.

The short-term targets, Rafaelson proposed, were Christiansen, Malone, McDonald and another public official whose name was blackened from the FBI report.

The long-term targets included one of Galardi's adult club rivals, casino operators, Metro Police officers, local government inspectors and judges.

"Rafaelson opined that any long-term plans would have to be coupled with an announcement that Galardi is not likely to be prosecuted criminally in the District of Nevada," the FBI report said.

But the short-term targets, Rafaelson explained, could be pursued immediately, even with the widespread publicity about the case, because all of those people had recently tried to make contact with Galardi.

Galardi reported that he had spoken to Malone a week earlier and that Malone told him if both men kept their mouths shut, the government wouldn't have a case.

Both sides resumed negotiations the next morning at the J.W. Marriott hotel, but they could not reach an agreement.

By 5:30 p.m. that day, Rafaelson, concerned that word had gotten out about Galardi's cooperation, telephoned one of the FBI agents working the corruption case, Joseph Dickey, and asked that Galardi be given protection.

Two hours later, the FBI report said, agents agreed to put Galardi in protective custody.

Dickey picked up Galardi at the Nevada Beverage Corp. office of another one of his lawyers, George Kelesis, and then drove to the topless club operator's home in the exclusive Queensridge development so that Galardi could pack some personal items. (The 35,000-square-foot home sold for $14 million earlier this month.)

From the house Dickey and Galardi went to a nearby In-N-Out Burger and ordered a late-night dinner for Galardi in their car before heading back to the J.W. Marriott to check Galardi into a hotel room.

Another FBI agent, Mathew Corten, stayed the night with Galardi and was relieved by Dickey at 6:45 a.m. on Aug. 28.

Later that day Galardi was charged in the San Diego corruption case, and the FBI released him from protective custody about 1 p.m.

Dickey then drove Galardi back to his home in Queensridge.

"Galardi stressed his desire to plead guilty and cooperate with the FBI and asked SA (Special Agent) Dickey to do what he could to assist in that endeavor," agents wrote.

Later in a telephone conversation Galardi told Dickey that Rafaelson "was out of the picture" and that Kelesis would get the plea deal done for him.

Galardi also told Dickey that he was driving to San Diego that afternoon and planned to turn himself in to authorities the next day to face the charges in the indictment.

Eventually, Galardi got his deal.

He pleaded guilty in San Diego on Sept. 8, 2003, to trying to bribe the San Diego councilmen, and on Oct. 24, 2003, he pleaded guilty in Las Vegas to a racketeering charge of paying off public officials.

Galardi agreed to forfeit $3.85 million to the government, pay $200,000 in restitution to both the city of Las Vegas and the county and give up ownership of Cheetahs and Jaguars.

And he agreed to continue cooperating with the government. Until he is sentenced, it won't be known what Galardi is getting in return.

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