Former Crazy Horse Too owner Rizzolo pleads guilty to tax charge

Former Crazy Horse Too strip club owner Rick Rizzolo, whose business endeavors and financial habits have been scrutinized by federal authorities for over two decades, pleaded guilty Thursday to a single count of felony tax evasion.

A notorious businessman with suspected mob ties, Rizzolo admitted in federal court to evading $1.7 million in employment taxes on wages paid over a decade ago — during the peak of his casino high-rolling days, when authorities suspected he was running an extortion racket out of his downtown topless cabaret.

The admission of guilt marks the second time in the last 11 years that the former strip club magnate has reached a deal with federal prosecutors to settle pending charges. If his legal troubles have had a common theme, it is that he has long been accused of engaging in criminal activity far more serious than his convictions suggest.

In 2006, he was the central target in a federal racketeering investigation that focused on the Crazy Horse Too. But after a decade of FBI efforts, Rizzolo walked away with a single felony tax conviction, a one-year-and-one-day prison sentence, and an agreement to quit the strip club business that for so long had funded his lavish lifestyle.

He also was ordered to pay $10 million in restitution to a Kansas tourist, Kirk Henry, whose neck was snapped in the Crazy Horse Too parking lot after he accused the club of padding an $8 bar tab. When Henry died this year, Rizzolo still owed him $8.8 million in restitution.

The infamous heydays of the now-shuttered Crazy Horse Too were revisited briefly in federal court Thursday, when U.S. District Judge Gloria Navarro reviewed the terms of the plea agreement.

Between the years 2000 and 2002, Rizzolo evaded the payment of $1.7 million in employment taxes. He did so by providing supplemental cash wages to floormen, bouncers, bartenders, and shift managers — strip club employees characterized in prior legal filings as henchmen who hustled patrons. He hid those cash payments from the topless club’s bookkeepers.

In pleading guilty, Rizzolo also admitted to hiding income and assets from the IRS after he was ordered to pay the $10 million in restitution to Henry.

After the 2006 conviction, he took $900,000 he received from the sale of the Crazy Horse Too and sent it to an offshore bank account in the Cook Islands. He also wrote a $50,000 check to another person — who subsequently returned the funds to him — in order to avoid an IRS levy and seizure. He lied to an IRS collections attorney, whom he told he had no income or assets and no ability to pay the taxes he owed.

The charge to which Rizzolo pleaded guilty carries a maximum statutory sentence of five years. Defense attorneys and federal prosecutors negotiated a two-year prison sentence and a restitution amount of $2.6 million, to be paid to the IRS. The deal allows Rizzolo, 58, to withdraw his plea if the court does not accept the sentencing terms included in the agreement. Navarro scheduled sentencing for Sept. 15.

Contact Jenny Wilson at jenwilson @reviewjournal.com or 702-384-8710. Follow @jennydwilson on Twitter.