Feds give Rizzolo one last shot at selling his Crazy Horse Too

Jeff German and Mark Hansel

Saturday, June 30, 2007 | 7:29 a.m.

Federal prosecutors held off taking action Friday to gain control of the Crazy Horse Too to give the topless club's imprisoned owner a chance to make a last-ditch effort to strike a deal with a buyer.

But the troubled strip club's ability to stay open hung in the balance, as Las Vegas licensing officials were poised to take away the club's liquor license by Sunday's 12:01 a.m. deadline.

The city granted the license to restaurateur Mike Signorelli, who is leasing the Crazy Horse Too from owner Rick Rizzolo on the condition that Signorelli purchase the club by the deadline set by Rizzolo's federal plea deal.

Signorelli, though, has been unable to close a sale and, without a liquor license, the club would be far less profitable and may have to close until another buyer is found and licensed.

The earliest that the Las Vegas City Council could approve a temporary liquor license for a new operator would be at its July 11 meeting.

Signorelli's attorney, Steve Stein, said Signorelli has agreed to surrender his liquor license at midnight, but hopes to keep the Crazy Horse Too open without serving alcohol.

Stein said his client put $3.2 million into an escrow account and is still looking to persuade a reluctant Rizzolo to sell the club to him on Monday.

But Rizzolo's attorney, Mark Hafer, said Signorelli is not among the two prospective buyers who have surfaced at the eleventh hour.

"We're in negotiations with other interested buyers, and we're close to making a deal," Hafer said. "We're hoping to have a new contract as early as Monday."

Signorelli, the attorney added, has become a "potential obstacle" to a sale agreement, and Rizzolo would like to force him out of the property.

Hafer said he has been working closely with federal prosecutors to get a deal completed and fulfill Rizzolo's end of the plea agreement .

Rizzolo, who recently began serving a 366-day prison term, pleaded guilty to tax evasion last year to end a decadelong FBI racketeering probe at the Crazy Horse Too. 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 after a 2001 incident at the club.

Money from the sale of the Crazy Horse Too is to be used to meet those obligations.

If the midnight deadline set by the plea deal passes without a sale, prosecutors have the right to ask a federal judge to install a third-party manager to run the club and oversee efforts to sell it.

But they agreed Friday to give Rizzolo one more chance to sell the Crazy Horse Too on his own.

Because of Rizzolo's history of associating with organized crime figures, the government has the right under the plea agreement to disapprove of any Crazy Horse Too buyer with mob connections. And Rizzolo cannot have any say in the club's future operations.

Hafer declined to identify the two potential buyers, but he confirmed that former Miami nightclub owner Athanasios Karahalios is not one of them.

The 32-year-old Karahalios, known as Tommy Karas, lost out after he was unable to make a promised $3 million down payment on the club.