Crazy Horse Too owner Rick Rizzolo listens Tuesday in District Court as his attorneys argue for a preliminary injunction against the Las Vegas City Council’s revocation of his liquor license. Judge Mark Denton ruled that the city can collect only up to $1 million of a $2.2 million fine. Photos by Clint Karlsen. Mayor Oscar Goodman testifies Tuesday in District Court about the events leading up to the city’s suspension of the liquor license belonging Crazy Horse Too topless club.

A judge refused to stop Las Vegas' revocation of the Crazy Horse Too's liquor license but did rule that, for now at least, the city can collect only up to $1 million of the $2.2 million fine levied against the topless club.

District Judge Mark Denton's ruling on the fine was little consolation to club owner Rick Rizzolo, however, because Denton's rejection of the request for a preliminary injunction against the license revocation jeopardizes a negotiated $45 million sale of the club, according to testimony.

Rizzolo's lawyer, Anthony Sgro, said Denton made the wrong decision. The Las Vegas City Council "can't just ramrod a decision of this magnitude onto any citizen, topless club owner or not," Sgro said.

The City Council on Sept. 6 unanimously revoked the liquor license and imposed the fine for what city officials said was a pattern of crimes at the club on Industrial Road near Sahara Avenue.

City Attorney Bill Henry said Rizzolo has no one to blame but himself for the loss of his license.

"It was in Mr. Rizzolo's hands," Henry said. "Is it the fault of the City Council that he chose to operate (his) business the way he did?"

Rizzolo didn't comment on the judge's rulings.

For much of this decade, Rizzolo was the subject of a federal inquiry into crimes committed at or tied to his club. Federal authorities investigated violence at the club and also probed what authorities said was a conspiracy to defraud the federal government of tax revenues.

In June, with a federal indictment rumored to be on the horizon, Rizzolo pleaded guilty to a felony tax charge. In addition, his corporation, The Power Co., pleaded guilty to conspiracy to participate in an enterprise engaged in racketeering activity.

As part of the plea deal, Rizzolo was ordered to pay $10 million to Kirk Henry, a Kansas City tourist who was paralyzed from the chest down in September 2001 after he was attacked outside the club during an argument over an $80 bill at the Crazy Horse.

Another condition of the plea agreement was that Rizzolo sell the Crazy Horse Too.

Subsequent to Rizzolo's plea deal, the city moved to suspend Rizzolo's liquor license; but Henry's wife and their attorney, Don Campbell, urged the City Council not to do so, saying it would affect Rizzolo's ability to pay the Henrys.

The council voted unanimously to revoke the liquor license, however, and imposed the $2.2 million fine.

In court Tuesday, Rizzolo and his attorney sought a preliminary injunction against the city. During a nearly four-hour hearing in front of Denton, Sgro said the city violated several legal procedures in imposing what he called "an economic death penalty" on his client.

Specifically, Sgro said, since the City Council revoked Rizzolo's liquor license, the Crazy Horse Too has lost dancers, customer loyalty, and land value.

Rizzolo chose to close the club two days after the council revoked the liquor license.

"This is not a mom and pop shoe store," Sgro said. "This is not a mom and pop pizza shop. This is tens of millions of dollars."

Sgro called to the witness stand strip club owner and operator Stuart Cadwell, who testified he agreed last week to purchase the Crazy Horse Too from Rizzolo for $45 million. The deal is in escrow, but Cadwell said a lack of a liquor license at the Crazy Horse Too would likely nullify the deal.

"I have the opportunity to get out of escrow should the club stop serving alcohol for more than 24 hours," Cadwell said.

Sgro said Rizzolo's ability to comply with his federal plea agreement is in jeopardy if the sale does not go through.

"The financial penalties (from the plea agreement) were all tied to the sale," Sgro said.

Defense attorney Dominic Gentile, whose law firm in March purchased the real estate under the Palomino Club, a nude dancing establishment in North Las Vegas, testified that the Palomino land was more valuable because the club can serve alcoholic beverages.

Gentile said the Palomino land was appraised last year at $15.2 million if the property came with an adult use permit. An adult use permit is required for businesses that have nude or topless dancers. Without the adult use permit, the value of the property dropped to $8.2 million, Gentile said.

The Crazy Horse Too still has an adult use permit.

Also testifying in court Tuesday was Mayor Oscar Goodman, who was asked whether the city had ever considered disciplining the Crazy Horse Too prior to Rizzolo's plea deal in June. Goodman said no such request had been made during regular briefings by city officials.

Goodman said he repeatedly asked city officials, "Are there any requests from any authorities to take any action against the Crazy Horse Too?"

The answer was always no, he said.

Goodman said he had an attorney-client relationship with Rizzolo in the past, as well as a "social relationship."

Goodman said he recused himself from the City Council vote that revoked Rizzolo's license out of concern that if he did vote, it might be perceived as a conflict of interest given his shared business interests with lawyer David Chesnoff, who represented a co-defendant of Rizzolo's in the federal tax prosecution.

"I wasn't really worried about the (state) bar (of Nevada) as much as I was the Ethics Commission," Goodman said of his decision to recuse himself from the vote. "We have a long and storied history, and I didn't want to appear in front of them again."

Goodman said he learned after the vote that his association with Chesnoff would not have led Chesnoff's client to withdraw from the federal plea deal. Goodman said he also has since concluded that he never did have a conflict of interest on the matter.

Outside of court, Goodman said the ability of Rizzolo to comply with his federal plea agreement should not impact the City Council's actions against Rizzolo.

"We are two different, independent entities," Goodman said.

After Denton declined to issue the preliminary injunction, Sgro said he would be examining in the coming days what legal options Rizzolo had left to fight the license revocation. One of those options would be to ask the City Council to reconsider the liquor license revocation, and another would involve filing further motions in District Court.