City rejects temporary liquor license

Prospective buyers of the Crazy Horse Too haven't given up all hope, but they suffered a setback Wednesday when the Las Vegas City Council shot down a request for a temporary liquor license.

It's not the final nail in the coffin, but every day brings a June 30 deadline closer. After that, the gentleman's club at Industrial and Sahara avenues most likely won't be able to open as an establishment with liquor and topless dancing.

That, in turn, would significantly reduce the value of the property, and a host of parties -- including the city of Las Vegas and a man who was paralyzed in a fight at the club -- are in line to get money from that sale.

"This is the proverbial last exit on the freeway," said attorney Jeffrey Silver, who represents the would-be buyers. "There are no other council meetings between now and June 30."

The council has the option of calling a special meeting before then, but Mayor Oscar Goodman said that wasn't likely.

"It's so nebulous at this time," he said of the purchase proposal. "The message you've delivered is not satisfactory."

"There are miracles," Silver said.

"There are always miracles," Goodman responded. "But not when it comes to the Crazy Horse."

The federal government seized the club in August and has been trying to sell it to satisfy judgments and fines. The former owner, Rick Rizzolo, pleaded guilty to tax evasion in 2006.

The men trying to buy the club are fighting both the club's history and the sour economy, Silver said.

"Who would've thought there'd be difficulty financing an adult business club in Las Vegas?" he said. "Lenders are not interested in putting money out right now. All over town you've seen that kind of sensibility, or irrational caution."

A lender had agreed to finance $18 million to $20 million of the $32 million purchase price, he said.

But uncertainty, including the liquor license issue, prompted the lender to reduce that to $4.8 million until a formal appraisal is completed.

"Things don't happen that fast," Silver said. "This morning, when we appeared, we really didn't have any financing in place that met the strictures."

From the council's perspective, he added, "the predecessor had so many broken promises, the moment that my client's promise was broken it was just more of the same."

The club was operating before current zoning rules were in place, so it was grandfathered in as long as it stayed active. But it's been closed since last year, and the ability to operate it an adult nightclub is set to expire at the end of the month.

With a temporary liquor license, the purchasers could have opened for one night and "reset the clock" -- except the federal government ruled that out as long as the property is in public hands, Silver said.

He said his clients will continue to seek financing. There's a hearing in federal court June 24 on a request to push the deadline back in order to protect the value of the club.

Without the liquor and adult entertainment licenses, the property's value drops an estimated 75 percent to $8 million.

Goodman was unapologetic about the council's action, saying the U.S. Marshal's Service should operate the club until a buyer is found. He cited the precedent of the federal government operating the Mustang Ranch brothel near Reno for a time after it was seized years ago.

"If the marshal's office doesn't want to do it, that's their fault," he said. "That's not the city's fault."

Las Vegas has a $2.2 million lien on the property. The federal government is owed $17 million in fines, and $9 million of a $10 million legal settlement with the paralyzed patron, Kirk Henry, has yet to be paid.

Contact reporter Alan Choate at achoate@reviewjournal.com or 702-229-6435.