Lawsuit: Rizzolo is hiding millions

By Jeff German

Friday, June 6, 2008 | 2 a.m.

A Kansas City-area couple are suing former Crazy Horse Too owner Rick Rizzolo, alleging he is hiding assets that could be used to pay them $9 million he has owed them for more than a year.

In their federal lawsuit, Kirk and Amy Henry contend they have been “misled, frustrated, damaged and defrauded in their continuing and ongoing efforts to locate assets to compensate them for the injuries suffered at the racketeering enterprise known as the Crazy Horse Too.”

As part of his plea deal with the federal government more than 15 months ago, Rizzolo agreed his company should pay the Henrys $10 million, but to date the couple have received only one-tenth of that. The settlement stems from a broken neck that left Kirk Henry paralyzed following an altercation at the topless club in September 2001.

Rizzolo, the suit alleges, created a phony “family trust” and engaged in millions of dollars worth of cash transactions, including running up gambling debts, to obscure his assets.

The Henrys contend the scheme included a June 2005 divorce in which Lisa Rizzolo was given nearly all of Rizzolo’s assets except the Crazy Horse Too. The lawsuit alleges Lisa Rizzolo was a conspirator and names her as a co-defendant.

The government ended up seizing the club as part of the plea agreement that ended a decadelong FBI probe into alleged racketeering at the Crazy Horse Too. Rizzolo recently completed 10 months of a 366-day prison term for tax evasion.

In the divorce settlement, as the Sun first reported, Rizzolo gave his former wife the couple’s 5,763-square-foot home in Canyon Gate, as well as a $1.4 million oceanfront home in Newport Beach, Calif., and a condominium in Chicago. Rizzolo also gave her $7.2 million in investment accounts and agreed to pay her $5 million in alimony over a five-year period.

Rizzolo’s attorney, Mark Hafer, said the allegations by the Henrys are “totally unfounded and speculative.”

“They’re simply not true,” he said. “This was not a collusive divorce.”

Attorneys Don Campbell and Stan Hunterton quietly filed the lawsuit on behalf of the Henrys last month as tempers flared over the government’s efforts to give a bank higher priority than the couple in the distribution of millions of dollars in proceeds from the pending sale of the Crazy Horse Too.

The sale of the club continues to be on hold while the intended buyers, two South Carolina businessmen, pursue a temporary liquor license. The Las Vegas City Council on Wednesday delayed for another two weeks a vote on whether to approve the license while the businessmen struggle to come up with financing to close the $32 million deal.

And on Thursday, federal prosecutors filed court briefs asking U.S. District Judge Philip Pro to postpone a city-imposed June 30 deadline to complete the deal. If the prospective buyers can’t get a temporary license and reopen the Crazy Horse Too by that day, the club can never be licensed to serve liquor again, according to a city ordinance. That would drive down the value of the club by about $23 million, prosecutors noted.

When the club is sold, Security Pacific Bank is to get $5 million from the proceeds to cover the loan it made to Rizzolo. The Henrys’ lawsuit alleges that Rizzolo obtained the loan to pay his alimony, knowing he would default on the loan to further diminish assets available to pay the Henrys.

The Henrys are asking Pro, who has been assigned the case, to consider a series of measures to stop Rizzolo from moving his assets, including the appointment of an independent examiner or receiver, if necessary, to take control of the assets.

The couple are also seeking monetary damages.