Friday, November 07, 2003
Copyright © Las Vegas Review-Journal

FRAUD, CONSPIRACY, EXTORTION PROBE: Three indicted on corruption charges

Federal prosecutors unveil cases against trio, unseal two secret plea agreements

Daniel Bogden, U.S. attorney for Nevada, joins Ellen Knowlton, special agent in charge of the FBI's Las Vegas office, at a news conference Thursday to announce charges in a corruption case. Photo by John Gurzinski. Las Vegas Mayor Oscar Goodman shakes hands Thursday with County Commission Chairwoman Mary Kincaid-Chauncey during a reception at the county government building. Kincaid-Chauncey spoke at the event shortly after she was indicted by a federal grand jury. Photo by Jeff Scheid. LANCE MALONE Michael Galardi's lobbyist, former Clark County commissioner Racketeering conspiracy: one count Conspiracy to commit wire fraud: one count Wire fraud: 14 counts Maximum sentence: 305 years *Likely sentence: 14 - 17 1/2 years MARY KINCAID-CHAUNCEY Clark County Commission chairwoman Conspiracy to commit wire fraud: one count Wire fraud: five counts Extortion: four counts Maximum sentence: 185 years *Likely sentence: 10 - 12 1/2 years DARIO HERRERA Former Clark County commissioner Conspiracy to commit wire fraud: one count Wire fraud: seven counts Extortion: eight counts Maximum sentence: 305 years *Likely sentence: 10 - 12 1/2 years *As calculated by Houston attorney Douglas McNabb, based on convictions on all counts and an estimated government cost of $200,000 to $400,000.

A federal indictment returned Thursday alleges that Clark County commissioners took tens of thousands of dollars to do the bidding of strip club magnate Michael Galardi.

The sweeping indictment states that County Commission Chairwoman Mary Kincaid-Chauncey and former commissioners Dario Herrera, Erin Kenny and Lance Malone accepted bribes to take actions that benefited Galardi and damaged his competitors.

Prosecutors say that after he was unseated in the 2000 election, Malone acted as a middleman for Galardi, funneling cash and other favors to Kincaid-Chauncey, Herrera and Kenny.

Excerpted in the 42-page indictment are dozens of wiretapped conversations that disclose Malone's dealings with Galardi and the three commissioners.

"Tell me what I've got to do, but I've gotta have money from him. ... I'm on my knees begging," the indictment says Kenny told Malone in October 2002, when she was in a heated and ultimately unsuccessful race for lieutenant governor.

Kincaid-Chauncey solicited $15,000 from Malone to pay tuition at an Olympic ski school for her grandson, the indictment alleges. "We'll take care of it," Malone replied. The indictment says Malone later gave Kincaid-Chauncey's daughter $4,000 toward the tuition.

In March 2001, Herrera had Galardi pay for about $400 worth of lap dances that Herrera received at Cheetah's, one of Galardi's clubs, according to the indictment.

The indictment caps a more than two-year investigation that first became public knowledge in May, when the FBI raided Galardi-owned strip clubs here and in San Diego.

The indictment charges Herrera, Kincaid-Chauncey and Malone with wire fraud and conspiracy to commit wire fraud. Herrera and Kincaid-Chauncey are charged with extortion. Malone is charged with conspiracy under the Racketeer Influenced and Corrupt Organizations Act.

Galardi and Kenny previously struck plea deals with prosecutors and are cooperating with them in their cases against Herrera, Kincaid-Chauncey and Malone. Secret cases filed against Galardi in October and Kenny in July were unsealed Thursday at the same time the indictments were made public.

Other defendants maintained their innocence Thursday.

Just minutes after the indictments were handed down, Kincaid-Chauncey fulfilled an already scheduled speaking engagement at a third anniversary party for the Citizen Review Board.

"Oh my gosh, really?" Kincaid-Chauncey said when a reporter told her of the grand jury's decision. "They indicted me? I'm surprised. I can't imagine what they're indicting me on."

The commission chairwoman maintained her innocence and strongly denied breaking any laws. But she expressed relief that the case against her is finally moving forward.

"I know I didn't do anything wrong," she said. "I've been kind of waiting for the other shoe to drop and it finally dropped."

Kincaid-Chauncey was identified as a target of the investigation in May. She referenced the probe in a joke that elicited mild laughter from the audience, which had gathered to honor the board that reviews citizen complaints against Las Vegas police officers.

"Maybe we should have a Citizen Review Board for some federal agents," she quipped.

In an interview, Kincaid-Chauncey said she hopes to continue as chairwoman of the commission, but noted that decision will be made by her colleagues on the board.

Attorney Richard Wright, who represents Kincaid-Chauncey, said he had not seen the indictment and had not talked to his client since it had been returned.

"She is not only presumed innocent, but she's factually innocent. There's no reason why people should rush to judgment on an accusation. Let the system work," Wright urged.

Attorney Dominic Gentile, who represents Malone, could not be reached for comment.

Herrera's attorneys, Eric Goodman and David Brown, released a statement Thursday in which they expressed their confidence that Herrera will be cleared of all charges.

The attorneys also asked for people to respect the privacy of the Herrera family, "since as of yesterday, they are enjoying the birth of their baby girl."

Clark County Manager Thom Reilly, whose office was contacted by federal agents shortly after the May raids, said he was relieved no county employees were named in the indictments.

"I'm saddened and disheartened," he said. "But I'm encouraged by the fact that county staff is not the subject of the investigation."

At the heart of the indictment is the allegation that county commissioners took bribes in exchange for using their control of county government to help Galardi and hurt his competitors.

For instance, prosecutors say the defendants conspired to defeat a proposed ordinance that would have restricted physical contact between customers and strippers and prohibited patrons from G-string tipping.

Commissioner Yvonne Atkinson Gates, who last year introduced the ordinance, said she was shocked that her colleagues tried to sabotage her proposal.

"I'm stunned by this whole thing, that my fellow commissioners would go to those kinds of lengths to undermine me," she said Thursday.

Atkinson Gates said commissioners didn't raise concerns about the proposed ordinance with her and instead worked behind her back to water down the law. Her colleagues often requested delays, saying they didn't fully understand the new language in the law.

"This particular process was so different than anything I'd ever seen before because of all the delays and the 'I didn't know this, I didn't know that,' " Atkinson Gates said.

Prosecutors also say the defendants plotted against acting Building Director Ron Lynn's application to fill the post permanently.

This was because Galardi was angry that Lynn didn't expeditiously lift the "red tag" on the construction of Jaguars. A red tag puts a hold on construction until a project complies with building code. Clark County administrators withdrew their nomination of Lynn, who still works for the county.

Reached at home Thursday evening, Lynn said he had no knowledge of commissioners plotting to keep him from getting promoted.

However, Lynn recalled receiving daily phone calls from Malone, who served as Galardi's lobbyist while Jaguars was being built.

Malone called to check on the status of inspections, a common practice for business owners during certain phases of the project. But Malone called "more times than I would have expected for a project of that size," Lynn said.

"There was a high level of concern. He was trying to expedite the project."

Lynn recalled Malone telling him he had spoken to Kenny, but Lynn did not remember commissioners pressuring him to issue permits for Jaguars.

"What people did or didn't do against me, that's their business," Lynn said. "I gave (Jaguars) the level of service necessary. I just keep doing my job and that's what I think I should do."

Prosecutors also contend that the defendants successfully sought to increase the distance between strip clubs from 500 feet to 1,000 feet, a change proposed by then-Commissioner Malone.

One month after the change was unanimously approved in September 1999, Galardi went with Malone to a Ford dealership and gave him $20,000 cash toward the purchase of a sport utility vehicle, the indictment alleges.

That vote had a detrimental effect on Pete Eliades, whose family owns and operates the Sapphire strip club on Industrial Road.

It prevented the previous owner of the land where Sapphire is located from selling the property to Eliades or another strip club operator. The prior owner successfully sued the county so that the new law didn't apply to his land. But the court battle delayed the opening of Sapphire.

Eliades said that gave Galardi a competitive advantage because it enabled him to open Jaguars months before Sapphire opened.

"Galardi is a no good son of a bitch because he tried to corner the market. He deserves what he got. He couldn't have cornered the market if he didn't bribe them," Eliades said Thursday. "He had an advantage. If you open before someone else it is a 100 percent advantage."

Eliades was more forgiving of the commissioners accused of accepting Galardi's bribes. It's human nature to take money when it's offered, he said.

"If you put a carrot in front of a rabbit, what is going to happen?" he said.

The indictment includes numerous details of the behavior of politicians while they were under federal investigation.

For instance, the indictment says Galardi provided a stripper from Cheetah's to provide entertainment for Herrera and others during a golf outing at Southern Highlands Golf Club.

It also says that in 2001 and 2002, Herrera and his friends received $3,000 worth of alcohol and lap dances from Galardi's clubs.

The wiretaps indicate Malone sometimes used plain language in reminding the commissioners of their debt to Galardi.

This is demonstrated in a September 2002 conversation in which Malone told Galardi the message he gave Kenny.

"Anything you've ever done for us, it's not like you just did for free," Malone said according to the indictment. "You've always been compensated, uh, very heavily."

Guy Rocha, state archivist for the past 23 years, said the case will go down as one of the most significant political corruption scandals in state history because it involves one-time rising stars in Nevada politics.

"This has the potential to be one of the big ones because of the people involved. You have some prominent people that held local office," Rocha said. "They had political futures in front of them. They were expected to move up in the political ranks."

Since the FBI raids in May, Reilly, the county manager, has expressed concerns about the effects they would have on the public's perception of county government.

"You can't ignore it, anytime allegations of this magnitude are leveled there is going to be some cynicism," Reilly said Thursday.

Reilly's fears might be on target.

After a group of condominium owners unsuccessfully asked county commissioners to let them keep a waterfall in their courtyard Wednesday, one resident walked away muttering, "I guess we don't have enough money to grease their palms."

Review-Journal writer Frank Geary contributed to this report.