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September 17, 2014

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Third time a charm for Privé’s liquor license?

Prive at Planet Hollywood

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What can be accomplished in two weeks that cannot be accomplished in one?

That was the question on deck immediately after it was announced on Aug. 4 that Privé’s appeal of the July 23 denial of a permanent liquor license would be postponed until Aug. 18. In a statement issued that morning, Clark County Director of Communication Erik Pappa said, "The owners of Privé and Living Room, along with their legal counsel, requested early this morning a hold of numbers 75 and 76 on this morning's County Commission agenda for two weeks due to new developments, which include continuing reorganization."

This will be the third attempt at reorganization since the Privé scandal broke.

The first go at it was July 27, when Privé attorney Jay H. Brown submitted a letter stating Privé’s intention to appeal the decision, which was accompanied by a four-page document outlining changes the club had already made and further intended to make to comply with regulations, as well as a request for a temporary license to carry the club through until the appeal could be heard on Aug. 4. At a meeting on July 28, Director of Business License Jacqueline Holloway denied both the temporary license and the corrective action plan, and removed club directors Greg Jarmolowich and Frank Tucker as key employees. “I believe we need a corrective action plan that includes a new management team and comprehensive management oversight that addresses all of our concerns,” she said.

Call it strike one.

Planet Hollywood attorney Frank Schreck spelled out the second attempt—complete with a new management team—at a July 29 meeting. Schreck proposed that his client absorb both Privé and the Living Room lounge’s bars into its own liquor license and, in effect, “lease” Privé’s staff from Privé Vegas LLC. His written proposal, dated July 30, arrived with a signed check to cover the $2,225 fees for filing the bars under Planet Hollywood. That same day, this proposal was turned down as “not sufficient,” with Holloway again emphasizing her need to see a staffing plan, new key employees and a proposal that would ensure “the proper level of protection for the public health, welfare and safety of guests.”

The check was returned. Strike two.

Following the postponement for Privé to mount its next attempt, Pappa elaborated on his earlier statement. While the Department of Business License did not go into Tuesday’s meeting having received any details on what this third attempt at reorganization might entail, he did say that Privé’s owners are continuing to work with the county's Department of Business License and Metro “to enhance Privé’s corrective action plan.”

Ball one.

So, what will it take to get Privé’s doors reopened? And what might be transpiring during this two-week span that will be revealed when Privé reps are given the floor on Aug. 18?

Aug. 18, 2009 - Decision Day

Come Aug. 18 (or sooner, if a special meeting is called), Holloway will present a case before the County Commission which, acting in its capacity as the county Liquor and Gaming Board, will decide whether to give Privé a liquor license of any sort, temporary, permanent or none. Representatives for Privé will also have the opportunity to state a third plan for reorganization. As two such proposals have already been denied, there is some implied pressure on the seven-member commission to seriously consider the third. One might also speculate that there is considerable pressure on Privé‘s rep (probably attorney Jay Brown) to make this one stick.

Based on what is known up to this point, and on what is rumored to be in the pipeline, that meeting could go down something like this:

Through Brown, Privé Vegas LLC will address the complaints by showing the commission progress, compliance and a new corrective action plan.

There are a few such plans being spoken of within Privé’s closest circles. In one of the most plausible, a current Opium Group operator, Orlando Oquendo (formerly of Light Group), would be brought back to Vegas to run Privé. Oquendo has spent the last year running Opium Group’s Mansion Nightclub in Miami, but was just recently in Las Vegas, he says, for a vacation. Oquendo will not confirm whether he had any meetings while he was here but did say he could “very possibly” be returning soon.

Another name reportedly being tossed around is Jim Reding, director of retail at Cosmopolitan Resort & Casino as well as a developer who was at one point planning to open The Hive, a live music club and bar at the corner of Las Vegas Boulevard and Fremont East. The stalled project still bears signs that read “Coming soon.”

As attorney Brown did in proposal one, Privé might restate its new security plans. They might restate that former security director Ron Lyons is gone; former U.S. Marshal David Hicks, Lyons’ former second in command, is said to be Lyons replacement as director. They might recount how Holloway removed Jarmolowich and Tucker as key employees and further show that both have been since let go by Privé Vegas, LLC. They may even go so far as to voluntarily remove the third part of the management trinity, perhaps by announcing that Privé Vegas managing partner Justin Levine has offered to step back as an operator.

At this point in the proceedings, they might then move forward with the proposal of Oquendo and Reding (and possibly Hicks) as Privé’s next key employee and rest their case with the assertion that all that was wrong has been righted.

If Oquendo and Reding are indeed the men for the job, and if Privé/Living Room are granted a liquor license on Aug. 18, Pappa says Privé will have to turn in any applications for new key employee(s) by 5 p.m. on the date of the appeal or meeting. A key employee "application" consists of a letter of appointment by the employer that an individual will be the key employee and a completed personal history questionnaire, which is Metro's form to complete for background checks.

To wit, the department of business license confirms that a managing partner need not necessarily live in the state and not necessarily be a key employee, and that he or she may appoint managers as key employees to run the venue.

Again, this is just one possibility.

Other corrective action plans hinge on a denial of the appeal. A denial is tantamount to a death sentence for Privé as we know it; with no business comes no money to pay bills, and Privé likely has a great deal of those. Planet Hollywood just laid out $500,000 for Privé’s lack of oversight, so it’s reasonable to assume that the casino wishes to recoup its costs. And, one would imagine, so would the club’s investors.

Were Privé to also owe money elsewhere, such as to general contractors, any ensuing lien could have disastrous consequences to the host casino’s financial structure as any associated banks, federal agencies or hedge funds might then begin seizing funds.

If Privé proves unable to secure a liquor license on Aug. 18, that alone might be enough for the casino to step in, evict their tenant and either run it themselves or get a new tenant. The club also could fall into the investors’ hands to run. Or, now that former employees such as former security director Ron Lyons—cited in two violations—are coming forward with stories alleging briefcases of cash leaving the property, any number of government agencies might step in with corrective action plans of their own.

Some fine print

In the moment after Privé presents its appeal, the commission will either see the holes in this third plan or approve it as is.

First, there is no longer an “Opium Group,” per se, not as a single business entity, anyway. There is, however, a massive tangle of LLCs, investors and partners collectively referred to as The Opium Group. As with Pure Management Group, each nightclub basically has its own LLC, if not a few, which function as payroll and management companies. There was historically an Opium Group, LLC in Florida, but the name was changed to Opium Vegas just prior to Privé nightclub’s one-year anniversary.

In addition to Privé Vegas and Opium Vegas LLCs, there are also Opium Vegas Partners (Levine, Jones); Opium International (Privé Vegas, LLC, Living Room Vegas, LLC); and Levine’s own JL Club Holdings.

Beyond that there is Roach Holdings, which Jones manages with Jaime Mitchell, daughter of Opium Group investor and group advisor Mitchell Rubinson; Opium Music, which Jones shares with nightlife magnate brothers Francis and Eric Milon; Opium Bruiser (Jones); and at least 13 other entities that list as managers one or more of the principal players: Jones, Levine, Mitchell Rubinson, Jaime Rubinson, Eric Milon, Francis Milon and some minor players.

In nearly every case, the LLCs’ registered agent is Alan W. Levine of Miami’s Levine law firm, who is understood to be of no relation to Justin Levine.

So when a representative for the group stated on Aug. 4, that "Greg Jarmolowich and Frank Tucker are no longer employed by Privé Nightclub," and later added, nor Opium Group, there could be some room for creative interpretations. Jarmolowich and Tucker may have indeed been terminated by Privé Vegas, LLC (or whichever of the many entities employed them; Opium Group officials will not confirm), but that does not mean that one (or both) is not continuing his employment with the group via other channels.

There is no telling at this point how the Privé affair will actually play out, whether investors will step up or managers step down. But barring any further postponements, on or by Aug. 18 nightlife law will be written. The outcome will set precedence for future cases.

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