Sunday, June 24, 2007 | 7:08 a.m.
With a Saturday deadline approaching and no buyer in place, federal prosecutors are taking steps that could give the government control over the troubled Crazy Horse Too topless club.
But while Uncle Sam isn't reluctant to take the top off your paycheck, he doesn't want to be that close to the topless club business for long, if at all.
Under a plea agreement with imprisoned Crazy Horse Too owner Rick Rizzolo, prosecutors are considering asking a federal judge this week to install a "third-party manager" to run the club and oversee efforts to sell it under the government's watchful eye.
If that occurs, it would not be the first time the federal government found itself involved with the kind of business you don't brag about at chamber of commerce meetings.
The Internal Revenue Service once took over the Mustang Ranch in Northern Nevada to satisfy the tax debt of the brothel's notorious owner, Joe Conforte, and the U.S. Marshals Service managed the Bicycle Club, a popular Southern California casino seized in a drug raid.
In the Crazy Horse Too case, the government has no appetite to keep the strip club operating under the third-party arrangement for a prolonged period.
"Everyone's looking at options," one source involved in the Crazy Horse dealings said. "The goal is to get the club sold as quickly as possible to meet all of the financial obligations of Rizzolo in his plea agreement."
Rizzolo, who recently began serving a 366-day prison term, pleaded guilty to tax evasion last June as part of a deal to end a decadelong FBI racketeering probe at the strip club. He agreed to pay $17 million in fines, forfeitures and court settlements, including a $10 million judgment to a Kansas City-area man who was paralyzed following a 2001 altercation at the Crazy Horse Too.
Because of Rizzolo's history of associating with organized crime figures, the government under the plea agreement has the right to disapprove of any Crazy Horse Too buyer with known mob connections. Also, Rizzolo is not allowed to have any say in the club's operations.
Even if an approved buyer emerges or the government moves to take the club out of Rizzolo's hands in the absence of a buyer, there's a strong chance it will have to temporarily shut its doors at the end of this week. The Las Vegas City Council needs to approve a liquor license for the new operator, and the earliest that could occur is at the council's July 11 meeting.
At that time, according to Jim DiFiore, the city's licensing director, the council could grant the new operator a temporary license while police conduct a background check.
The Crazy Horse Too's uncertain fate is the result of the inability of restaurateur Mike Signorelli to put together a deal to purchase the club he is leasing from Rizzolo.
Signorelli's liquor license will expire Saturday if he can't close a Crazy Horse sale by then. Without a liquor license, the club would be far less profitable, and the inability to serve drinks would be a strong disincentive for customers. As a result, a temporary closure would be likely.
While Signorelli has struggled to buy the Crazy Horse Too, another suitor, former Miami nightclub owner Athanasios Karahalios, has resurfaced.
"We are ready to take this over," he said last week. "We have real buyers, real financing and real money. We are not an operator looking for a deal."
But despite that expression of optimism, as of Friday Karahalios, known as Tommy Karas, had failed to put up a promised $3 million in escrow.
The 32-year-old Karas, well known on Miami's South Beach social scene, said he tried to buy the club for $48 million last year, but was rebuffed after he refused to allow Rizzolo to become a secret partner.
In a lawsuit Karas filed against Rizzolo in December, he charged that Signorelli's effort to buy the Crazy Horse Too was a ruse designed to allow Rizzolo to continue calling the shots.
Despite Karas' professed strong interest in buying the club, a succession of daily promises to post the escrow money came and went without action last week. He did not return phone calls to explain why.
Rizzolo's attorneys, Tony Sgro and Mark Hafer, also did not return phone calls. And Eric Johnson, the assistant U.S. attorney overseeing the Crazy Horse Too case, declined comment.
As the deadline nears, federal prosecutors are said to be concerned about Karas' lack of progress in his bid to acquire the strip club.
Any decision on who would be put in place as the third-party manager would be up to U.S. District Judge Philip Pro, who sentenced Rizzolo last year.
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