Former operator accused of hindering strip club’s sale

By Jeff German (contact)

Thursday, Dec. 6, 2007 | 7:10 a.m.

For over a year, the fate of Crazy Horse Too has been tied to Mike Signorelli.

The longtime restaurateur triggered a series of events last summer that forced his eviction as the strip club's operator and put the federal government in the unenviable position of selling a business that was closed and rapidly declining in value.

Today, as federal marshals work feverishly to complete a $31 million sale to an undisclosed buyer, Signorelli again is regarded as the bad guy, accused of disrupting that deal.

"He's pursuing a litigation strategy that's causing everybody headaches," said Mark Hafer, an attorney for the club's jailed former landlord, Rick Rizzolo, who has the most riding on the sale. "In my opinion, he's trying to stop the process from going forward for his own personal gain."

At a federal court hearing on the status of the slow-moving sale last week, Hafer charged that Signorelli's aggressive legal maneuvering in recent months bordered on obstruction of justice.

Not surprisingly, Signorelli and his battery of lawyers don't share that opinion. But there is no denying that Signorelli has been locked in intense civil litigation over his eight-month tenure at the helm of the once-popular Crazy Horse Too, distracting the government from moving to unload the strip club.

Signorelli is suing Rizzolo in District Court over his failed attempt last summer to buy Crazy Horse Too from Rizzolo. He also has filed suit in federal court challenging the legality of the government's subsequent seizure of the club. Signorelli is seeking a piece of any profits from the government's sale.

The irony is that the government took control of Crazy Horse Too only after Signorelli couldn't make good on his $45 million offer to buy the club.

At the time, law enforcement authorities suspected that Signorelli might have been part of a scheme to allow Rizzolo to circumvent a 2006 criminal plea agreement with federal prosecutors and secretly keep his hand in Crazy Horse Too's operations. Rizzolo leased the club to Signorelli while Signorelli tried to put a deal together.

But after Signorelli's efforts faltered and Rizzolo couldn't find any other buyers, the government stepped in and seized the club to ensure that Rizzolo pays $17 million in financial liabilities to the government stemming from his plea agreement.

By then, any cordial relationship between Rizzolo and Signorelli had soured. The city of Las Vegas took away the club's liquor license June 30 and days later the club shut down, giving Rizzolo an opportunity to evict Signorelli.

The government finally lost patience with Signorelli a few weeks ago and opened a criminal investigation into his failure to pay the IRS thousands of dollars in federal employee payroll taxes during his brief stint at the club, which began in October 2006.

Not reporting payroll taxes is the charge that Rizzolo pleaded guilty to last year to end a decade-long FBI racketeering probe of Crazy Horse Too.

In August, as the government sought to take control of the club, FBI Agent Anthony Mace filed a sworn affidavit alleging Crazy Horse Too owed the IRS $595,023 in payroll taxes during Signorelli's tenure. Nevada later filed a lien seeking $636,743 in back sales and entertainment taxes and penalties from the club.

Hafer contends Signorelli also owes Rizzolo $2.5 million in rent.

Signorelli's alleged debt to the IRS, however, might be his biggest problem. Rizzolo is serving a 366-day prison term in Los Angeles because of similar tax troubles.

Steve Stein, a criminal defense attorney, has been attempting to negotiate a deal with the IRS to stave off the criminal probe of Signorelli. Stein declined comment.

Despite the distractions, the government's push to wrap up the Crazy Horse Too deal continues to move forward, albeit slowly.

The government won't disclose the buyer's name, but sources said the buyer has considerable experience in the topless club business, owning several clubs in other states.

Geoffrey West, a vice president at real estate company CB Richard Ellis, which was hired by the Marshals Service to market Crazy Horse Too, acknowledged that the negotiations are moving more slowly than expected.

"We're making sure everything is documented appropriately and nothing is overlooked that could later jeopardize the transaction," West said.