A troubled Las Vegas nightclub operator who once had the ear of the city’s mayor and money from a high-profile downtown investor is locked out of his former businesses by the landlord.
Kelly Murphy, owner of Phantom Entertainment, lost a challenge in Las Vegas Justice Court Monday put forth in an opposition to summary eviction from FAEC Holding Wirrulla, LLC, owner of the Neonopolis shopping and nightlife center at 450 Fremont St. and a motion for expedited relief.
The failed challenge means the landlord can keep Murphy from accessing the former Krave and Drink and Drag nightclubs, which a document filed with the court says have racked up more than $223,000 in unpaid bills.
That’s in addition to the reported $700,000 in debt to the state that prompted the Department of Taxation to close down Krave in late August.
Earlier this month the City Council unanimously voted against extending tavern licenses for Murphy’s clubs, citing a litany of unpaid bills and a failure to deliver the information needed to complete the licensing process.
Now Murphy can’t even access the approximately 100,000 square feet of space he once controlled on the second and third floors of Neonopolis, a shopping and entertainment plaza that’s struggled to attract tenants and foot traffic despite its location at Fremont Street and Las Vegas Boulevard.
“The bottom line is these guys … they have been in default with me since they opened,” Neonopolis operator Rohit Joshi said. “When those two (clubs) closed we had to send a final notice, either they cure the default or have it shut down.”
Murphy challenged the eviction in court, saying the amount he owed listed in the documents is wrong and that the landlord failed to honor promises.
But the court denied the tenant’s complaint for expedited relief. Judge Melissa Saragosa said at $500,000 the value of personal property at issue in the case exceeds the jurisdiction of the Las Vegas Justice Court.
“The court said they can’t come back to the premises, it belongs to us,” Joshi said.
Dale Hayes, an attorney for Murphy and Phantom Entertainment, did not respond to messages seeking comment.
Murphy’s nightclub businesses unraveled despite connections with the city’s political and business elite and hopes they would become a cornerstone of downtown nightlife.
Beginning last year he cultivated a personal pipeline to Mayor Carolyn Goodman who helped him navigate his way to receiving a $50,000 grant of public money through a program aimed at helping businesses renovate old buildings, despite warnings from staff members that the nightclub operator had filed bankruptcy and might not have a sustainable business plan.
Murphy also received a boost of capital from the Downtown Project, an urban investment vehicle funded largely by Zappos CEO Tony Hsieh.
The investment from Hsieh’s group became known after workers, vendors and former high-ranking officers in Murphy’s companies revealed the operation was in financial disarray that included bounced paychecks and bookkeeping irregularities, among other problems.
Investment from Hsieh’s group prompted hope that Krave, which had been billed as the world’s largest gay nightclub, would get back on track and succeed.
While Krave managed to open in June, it didn’t last long. The state shut the doors in late August and Drink and Drag closed earlier this month after the city failed to grant a tavern license approval.
Downtown Project spokeswoman Kim Schaefer downplayed the group’s involvement with the businesses when asked to respond to the evictions and allegations of unpaid bills.
“We have been, and continue to be, a minority owner and passive investor in the business. Any questions should be directed to the majority owner and manager of the business,” Schaefer wrote in an email.
Contact reporter Benjamin Spillman at email@example.com or 702-383-0285. Follow him on Twitter @BenSpillman702.