Troubled Night Club Wants Third Chance

LAS VEGAS (CN) - A strip club owner claims Las Vegas used "intentional abuse and manipulation" of its powers to close him down, after the club's former owner was jailed repeatedly.

Las Vegas newspapers - the Review-Journal and the Sun - claim the club gained a "nefarious" and "notorious" reputation under its former owner, and present its latest problems in a somewhat different light than its new owner does in his federal lawsuit.

A Review Journal columnist last year called the Crazy Horse Too a "historically mobbed-up" club and a "trouble magnet," under its original owner, Rick Rizzolo.

Rizzolo was sent to prison and forced to give up the strip club in 2011, sent back to prison after probation problems and then charged again, with tax fraud, in 2014. The strip club was closed for two years until plaintiff Mike Galam bought it in May 2103.

Galam and his strip club sued Las Vegas and its business licensing department on Aug. 27, demanding the business license back, challenging the denial of the license as unconstitutional, and prohibiting the city from imposing any conditions on the club that are not "specifically articulated" in the business code.

Rizzolo, who opened the Crazy Horse Too in the early 1980s, pleaded guilty in 2006 to conspiracy to defraud the United States, ending what the Review-Journal called "a decade-long federal racketeering investigation at his notorious strip club."

He was sent back to jail in 2011 on charges of violating probation by failing to pay $10 million in restitution to a tourist who was beaten and paralyzed at the club. And in 2014, Rizzolo was charged with hiding assets to try to duck $2.5 million in employment and income taxes.

Galam vowed to clean the club up when he reopened it. "No punching, no assaults of any kind, including self-defense," he said, according to Review-Journal columnist John L. Smith. "We plan on a whole new demeanor of smiles instead of punches."

In his 53-page lawsuit, Galam claims the city violated his civil rights by making unconstitutional demands and closing him down.

Among other thins, he says, the city required him to install and maintain a video surveillance system with a hard drive containing at least 90 days of footage for police to review any time they ask. He says the city code "contains no requirements whatsoever related to surveillance systems, or hard drive storage capacity."

The defendants Department of Planning, Business Licensing Division and its director Karen Duddlesten enforce city laws on licensing businesses that provide live erotic entertainment and serve alcohol. Galam claims Duddlesten has either ignored the law or interpreted it so as to give her "unfettered discretion to decide who may exercise free speech rights and on what conditions," and "all but extinguished a $3.6 million business investment."

In addition to surveillance equipment, Galam says, Duddlesten required the club to report any arrests, citations or calls to police within 24 hours, though city law does not give her this authority.

He claims that after Duddlesten denied the club an erotic dance license and forced it to close, she acknowledged it was a mistake because the license was permanent, but refused to reactivate the license unless he met several conditions, including paying a renewal fee and reestablishing the business with a new operating agreement.

The Las Vegas Sun reported the closing differently. It reported in September 2014 that the city closed the club on Aug. 22 because its temporary liquor license had expired, and the city refused to issue a permanent license due to continued violations, including prostitution arrests and not enough video surveillance at the club. The Sun reported there had been five arrests for prostitution on a single night, and that Galam acknowledged the club had received 27 citations for liquor violations. His co-plaintiff, Craig Franze, sought to reapply for the license and reopen the club, "in an effort to cooperate with the defendants' demands," according to the complaint.

Galam, Franze and the club seek injunctive relief, writ of mandamus, damages and attorney's fees. They are represented by William Brown, with Lambrose & Brown, who could not be reached for comment. Duddlesten's office did not reply to a request for comment.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit