Thursday, September 16, 2004
Copyright © Las Vegas Review-Journal

CITY COUNCIL: No more alcohol at Treasures

Club denied liquor license after prostitution conviction

Treasures owner Ali Davari, front, and his attorney Ross Goodman listen during a Las Vegas City Council hearing on Wednesday. Photo by Jeff Scheid.

The Las Vegas City Council denied the topless club Treasures a permanent liquor license on Wednesday, putting the future of the multimillion dollar business in question.

In rendering their decision, council members held Treasures' owners to their now-famous promise: that if there was a single conviction for sexual misconduct at the club they would willingly surrender their liquor license. Last month a Treasures dancer was convicted of soliciting prostitution.

"If this is an apple, you chose to bite into it," Councilman Steve Wolfson said, adding he had doubts the industry as a whole is capable of complying with city regulations.

The council voted 5-0 to deny a permanent liquor license to the club, which has operated since September 2003 with a temporary liquor license.

Mayor Oscar Goodman, whose son Ross Goodman represents the club in criminal matters, and Councilman Michael Mack, who is a marketing and public relations consultant to Treasures, abstained from voting.

Following the vote, Las Vegas officials informed liquor distributors that as of midnight Treasures would no longer possess a license to pour alcohol. Las Vegas police were to be present to enforce the council's decision.

Ali Davari, who with his brother Hassan owns Treasures, declined to comment on his plans for the club.

"I don't know what they're going to do," attorney Mark Fiorentino, who represents the Davaris, said as he left City Hall.

Late Wednesday, club attorney John Weston said the club planned to close at midnight. He said the business would reopen at 6 p.m. today, after all alcohol had been removed from the premises. Asked whether the club would appeal the council's decision, Weston said the club was exploring all options, with a lawsuit being one of them.

As of late Wednesday evening, city officials said the Davaris had not filed an appeal of the council's decision.

During the nearly three-hour hearing Wednesday, City Attorney Brad Jerbic made the case for denying Treasures a permanent liquor license.

The Davaris, who parlayed a $12,000 strip club investment in 1986 into a combined net worth of over $80 million, have a long and troubled track record in Texas, where they own six clubs, Jerbic said.

Texas law enforcement officers allege dancers have openly performed sex acts on customers and each other. Officials have said management has allowed dancers to engage in prostitution, and used condoms littered the floor of some of their clubs.

The Davaris have paid more than $228,000 in fines in Texas, Jerbic said.

Texas officials have also accused the Davaris of attempting to skirt federal cash-reporting requirements. Harris County officials seized $2.17 million from their bank accounts in May and the state of Texas filed a civil lawsuit against them related to their banking activity.

An audit by Las Vegas officials found no such activity associated with Treasures.

Jerbic noted Las Vegas police are concerned Treasures' management has not cooperated with law enforcement and hindered their access to the club.

But, Jerbic emphasized, the Davaris' promise to run a club without a sexual misconduct conviction was alone grounds for denying the license.

On Aug. 18, Treasures dancer Jessica Crockett, one of three dancers arrested in October for soliciting prostitution at the club, was found guilty in Municipal Court.

"They set the standard," said Jerbic. "They said, 'One conviction and we're gone.' "

If the Davaris had not made their promise, the City Council would probably not have granted them the temporary license used to operate Treasures over the past year, Jerbic added.

"They had clubs in Texas that looked more like the lobby of a brothel in Pahrump than a strip club in Las Vegas," he said.

But "nothing remotely close" to the conduct alleged in Texas has occurred at Treasures, Fiorentino argued. In fact, the club is unique in the Las Vegas erotic dance industry for measures to ensure compliance with the law, he said.

Dancers receive training to comply with dance regulations. Internal enforcement officers patrol the club along with undercover investigators. Drug-sniffing dogs have been brought to Treasures to make sure there's no drug use.

Fiorentino argued the club has improved since it opened in September 2003. There have been no citations for soliciting prostitution this year.

"Whatever we're doing, whether we've been perfect or not, is having some result," he said.

With more than 100 dancers working the club at one time it's impossible to monitor all activity, Fiorentino said. But Treasures is no worse than any other club in Las Vegas, he added.

Private investigator Tom Dillard had done an undercover comparison of Treasures and its competitors at the club's request. Dillard's 120-page affidavit detailing his investigation turned up activity at Treasures competitors "equally as graphic" as the allegations against the Davaris' clubs in Texas, Fiorentino said.

At one Las Vegas club, Dillard said, a dancer told him, "I can do a table dance for $20 or I can go to your room for $300."

Treasures and all but one of the clubs probed by Dillard had about the same level of compliance, Dillard said. However, one competitor, which Treasures representatives declined to name, was "way out of control."

"The idea that Treasures is an outlaw club is not true," Dillard said. "I'd go so far as to say it's preposterous."

Fiorentino threatened to make Dillard's affidavit a part of the record, but didn't.

However, city officials countered that Treasures license application wasn't about other clubs. "This is solely about the suitability of the applicant," Jerbic said.

Still, holding Treasures to a stricter standard prompted Councilman Larry Brown to express doubt the council's decision to deny them a license will lead to a higher industry standard.

"Nothing is going to change, regardless of this decision," Brown said. "These entertainers are there to make money. It (the industry) is going to remain what it is."

With Treasures license revoked, city officials and those familiar with the erotic dance industry said the club, which is licensed as a sexually oriented business, could become a totally nude club. Clubs that serve liquor are prohibited from having all-nude dancers.

The Davaris could also sell Treasures to an operator capable of obtaining a liquor license.

"It is possible to have another operator come in and keep the value of the club up while they shop it around," said attorney Paul Larsen, who represents the current owners of Jaguars strip club.

Larsen said the Davaris face tough times if they intend to operate Treasures without a liquor license.

Jaguars saw beverage sales and visitors to the club plummet last year when the Clark County Commission revoked the liquor license of its previous owner, Michael Galardi. Galardi, who pleaded guilty to federal corruption charges, sold Jaguars to his father but the liquor license remained in Michael Galardi's name.

"They went from having the place packed and doing $3,000 a night in liquor sales to where you could swing a cat without hitting anybody and doing about $50 a night in beverage sales," Larsen said. "It's hard to party on Sprite."

During the lengthy and at times graphic hearing, members of the council warned parents viewing the meeting on the city's cable television station and those in chambers that they might not want their children to listen in.

Reese instructed a woman who entered council chambers with her young son mid-way through the hearing that she may want to leave. Discussion halted for more than a minute as she exited.

Review-Journal writer Brian Haynes contributed to this report.