Friday, December 26, 2003
Copyright © Las Vegas Review-Journal

Rival weighs Galardi lawsuit

Sapphire owner studying civil case in San Diego

The owner of the Sapphire topless club is considering filing a lawsuit against Michael Galardi, claiming the former Jaguars owner gained an unfair business advantage by bribing elected officials.

Pete Eliades, who purchased the Sporting House fitness center and turned it into Sapphire, is fashioning his lawsuit after similar legal action taken by a San Diego club that competed against Cheetahs, a Galardi-owned club in that city.

Eliades' lawsuit would be the first such civil action taken in Nevada against Galardi, who pleaded guilty to political corruption charges earlier this year in San Diego and Las Vegas.

Eliades believes Galardi had a hand in a Clark County ordinance that extended required distances between adult clubs from 500 feet to 1,000 feet.

The ordinance stalled Eliades' plans to purchase the Sporting House and convert it into a topless club because the Industrial Road business was within 1,000 feet of another adult business.

When commissioners extended the distance requirements, Eliades backed off a deal to buy Sporting House for $7 million.

"I could no longer buy the place because I would have bought it for one purpose, to make it adult entertainment," said Eliades, who also owns the Olympic Garden on Las Vegas Boulevard.

A federal indictment alleges that one month after then-Clark County Commissioner Lance Malone sponsored the distance ordinance, Galardi accompanied Malone to Friendly Ford and gave Malone $20,000 toward a new Ford Excursion.

Malone later worked as a lobbyist for Galardi, and is awaiting trial on federal corruption charges.

Eliades was set to purchase the Sporting House from the Jenkins family in 1999 when Clark County commissioners approved the new law. At about the same time, Galardi was working toward opening his $15 million topless club, Jaguars.

Eliades said he believes Galardi derailed the Sporting House's plans so that Jaguars wouldn't have any competition.

"Every time a new place opens, it's going to take business away," Eliades said. "But that's no reason to eliminate the place, to prevent somebody from opening. You can't do that."

After the County Commission increased the distance requirement, Sporting House won a yearlong legal battle against the county. A District Court judge ruled in 2001 that Sporting House had its application in before the distance laws were formally enacted.

By the time the legal wranglings ended, however, a California company had made an offer for the Sporting House, Eliades said.

Instead of $7 million, Eliades paid the new asking price of $14 million. He shares the business with the California company.

Sapphire opened six months after Jaguars.

Eliades said he had discussed the potential lawsuit with his attorneys and will determine next month whether he has a case against Galardi.

Eliades has no intention of suing the county, even though former commissioners Erin Kenny, Malone and Dario Herrera and sitting board member Mary Kincaid-Chauncey are accused of accepting bribes from Galardi.

"There is no reason to sue the county; most of those people are gone," Eliades said. "I don't want to take public money; the public didn't do anything wrong."

Eliades's attorneys are examining a lawsuit filed in October against Galardi by the owners of the San Diego strip club Deja Vu Showgirls.

In San Diego, Galardi is accused of paying off three City Councilmen to weaken an ordinance adopted in November 2000. That ordinance, which remains in effect, prohibits all touching between strippers and customers.

Deja Vu's lawsuit claims the only method of enforcing the new law was to send undercover detectives into strip clubs.

Unlike other San Diego strip clubs, Galardi's Cheetahs didn't take the economic hit from the new ordinance.

That's because, according to a federal indictment, Galardi paid an undercover police officer to alert management of police visits to Cheetahs.

The officer, who worked for the federal government, served as a Cheetahs security manager.

Deja Vu owners said they closely monitored dancers and patrons to ensure the new ordinance was not violated.

As a result, "patron volume dropped and the revenue ... dropped precipitously," the lawsuit says.

Cheetahs gained customers because management "routinely permitted patrons and entertainers to engage in wilful and illegal touching," the lawsuit says.

Deja Vu owners are seeking compensatory damages as well as $5 million, the amount of money they believe they lost during the time Galardi's clubs allowed touching between dancers and customers.