Feds get more time to sell club, recover millions ex-owner owes

By Jeff German (contact)

Wednesday, Nov. 14, 2007 | 7:22 a.m.

With the help of the Las Vegas City Council, federal marshals have been given breathing room in their rush to sell the Crazy Horse Too strip club by a year's end deadline.

The council last week quietly amended a zoning ordinance that extends for six months a Dec. 31 deadline to sell the seized club before it permanently loses its liquor license and, with it, much of its ability to turn a profit.

The action gives the Marshals Service the time and leverage it needs to sell the Crazy Horse Too at a price that will cover the millions of dollars in liabilities incurred by the club's jailed former owner, Rick Rizzolo.

"Everyone associated with the property is happy about this," said Geoffrey West, a vice president at real estate giant CB Richard Ellis, which was hired by the Marshals Service to market the club. "It protects the rights of any party who has a claim against the property."

Attorney Mark Hafer, who represents Rizzolo, estimated that his client has amassed $29 million in debts at the club. That includes $17 million in court-ordered fines, forfeitures and settlements stemming from Rizzolo's 2006 criminal plea agreement with the government, as well as a $2.2 million fine the city levied against the club.

West said his company and the marshals have pared down the 10 offers they received to four and this week expect to select a buyer willing to pay more than $30 million for the Crazy Horse Too and reopen it as soon as possible.

The marshals seized the club in late September under a federal court order after Rizzolo, serving a 366-day federal prison term for tax evasion, failed to sell it himself under terms of the plea agreement to pay off his debts to the government. Rizzolo had struck the plea agreement to end a decadelong FBI racketeering investigation of the Crazy Horse Too, long suspected of having links to organized crime.

Len Briskman, deputy chief of business management for the Marshals Service in Washington, said he was pleased by the amended ordinance giving the government more time to find a buyer.

But he added: "Our goal is to move forward as expeditiously as possible."

Under the old ordinance any buyer had to close the Crazy Horse Too sale and reopen under at least a temporary city liquor license by Dec. 31.

A zoning ordinance passed by the City Council more than a decade ago prohibits certain establishments from selling alcohol within 1,500 feet of one another, city officials said. The Crazy Horse Too, which is less than 1,500 feet from another topless club, Cheetahs, was grandfathered in.

The Crazy Horse Too shut its doors July 1, setting off a provision in the old ordinance that would force it to permanently lose its grandfather status after six months if it didn't reopen under a new licensed owner.

Last week's amended ordinance extends that six-month period to one year.