Court overturns $2.2 million fine against Vegas strip club

By Cy Ryan

Friday, March 13, 2009 | 2:04 p.m.

CARSON CITY – The Nevada Supreme Court has overturned a $2.2 million fine levied by the city of Las Vegas against the Crazy Horse Too strip club, which was closed in 2007 after its parent company pleaded guilty to tax and extortion charges.

The court ordered Clark County District Judge Mark Denton to hold a hearing to determine how much the club could be fined.

The Las Vegas City Council imposed a maximum fine of $1,000 a day, claiming The Power Company pleaded guilty in federal court to conspiracy to engage in a racketeering enterprise for five years or 2,192 days. The parent of the Crazy Horse maintains the conspiracy lasted only 1,461 days.

The Supreme Court said “We conclude that the district court erred in granting summary judgment in favor of the city because a genuine issue of material fact exists as to how long The Power Company participated in the conspiracy…”

In the guilty plea in federal court The Power Company admitted to count one, which alleged the conspiracy was committed between 2000 and 2005. But the plea memorandum states the conspiracy was between 2000 and 2003.

The Crazy Horse Too was owned by Rick Rizzolo who was sentenced in January 2007 to one year and one day in prison, three years of supervised release and fined $250,000 fine for conspiring to escape payment of federal taxes.

The government alleged the female dancers, who were private contractors, were charged 15 percent of what they collected as a fee for the opportunity to perform at the club. This money was distributed to the other employees but never reported for tax purposes. And false tax reports were filed with the government.

If a customer refused to pay a dancer or disputed charges, the shift manager or other male employees used threats or violence to get the patron to pay up, according to the government. Dancers also overcharged customers.

The club was also ordered by the federal court to pay $10 million to Kirk and Amy Henry for the injuries suffered by Kirk, a tourist who visited the club, that left him a quadriplegic in September 2001.

As part of the plea agreement, Rizzolo was required to sell the Crazy Horse Too by June 2007.

The Power Company was ordered to forfeit $4.25 million, acquired unlawfully from racketeering activity or unlawful debt collection at The Crazy Horse Too. It was fined $500,000 in federal court and placed on five years probation for its extortion and racketeering.