Corruption trial spawns lawsuit over strip club’s liquor license

Six years ago, Max Markovitz zeroed in on a $2.2 million lot along Hacienda Avenue where he planned to fulfill his dream of operating a thriving strip club in Las Vegas.

The location was ideal, a quick cab ride away from the Strip. The timing was perfect; Mandalay Bay and the House of Blues were preparing to open the doors to a more hip crowd of tourists just across Interstate 15.

Markovitz hired Las Vegas attorney Matthew Callister to help secure a liquor license, even though he expected it to be a smooth process. Markovitz had a clean background, and the land was already properly zoned for a topless cabaret, Callister said.

But on Jan. 31, 2001, Markovitz's vision was torpedoed when Clark County commissioners, according to Callister, experienced a sudden change of heart and rejected his application.

"I had all the votes lined up; I had the commitments," Callister said Thursday. "I had every reason to believe it would be approved. Something happened overnight."

Markovitz's company, Wild Kingdom, never closed on the property because the sale was contingent on the license. But he believes he has cracked the mystery that confounded him for years.

In what is believed to be the first civil lawsuit stemming from a political corruption case that rocked Clark County, Markovitz claims that strip club owner Michael Galardi paid commissioners Dario Herrera, Mary Kincaid-Chauncey and Erin Kenny to railroad his club.

Markovitz is suing Galardi, the former commissioners and Lance Malone, a former board member turned bagman who delivered cash bribes to his former colleagues.

"During and after this liquor license application process for Wild Kingdom, defendants Herrera, Kincaid-Chauncey and Kenny had been and continued to accept monetary bribery payments from defendant Michael Galardi," the lawsuit says.

Galardi "sought to obtain a monopoly" over the adult entertainment business in Las Vegas, the complaint states.

Galardi and Kenny admitted in 2003 that they conspired to keep out businesses that would threaten Galardi's monopoly on Las Vegas topless clubs. Herrera and Kincaid-Chauncey were found guilty of taking bribes from Galardi in 2006. And Malone admitted he paid the commissioners in a 2006 plea deal.

The property Markovitz sought has since been sold, but he is after the money he believed he would have made from the strip club. He believes Galardi and the former commissioners should pay him an undetermined amount of punitive damages, a figure that could skyrocket if a jury determines the elected officials conspired to keep Markovitz out of Las Vegas.

"This conduct was so reprehensible, damages are not limited to out-of-pocket costs," Callister said.

The case could open a new chapter in the county's political corruption scandal, a book many thought would close when Kenny, the last of the commissioners to be sentenced, checks into federal prison Tuesday.

Callister intends on calling as witnesses Herrera, who is serving a 50-month sentence in Florence, Colo.; Kincaid-Chauncey, who is fulfilling a 30-month prison term in Victorville, Calif.; Galardi, who is serving 30 months in Taft, Calif.; and Malone, serving a six-year sentence in Lompoc, Calif.

Callister acknowledges the case might be tough to prove. The commission voted 5-0 with one abstention to deny the application. Commissioners Yvonne Atkinson Gates, Chip Maxfield, Bruce Woodbury, Herrera and Kincaid-Chauncey all agreed to reject the application. Myrna Williams abstained from the vote.

Deputy District Attorney Mary Ann Miller believes it would be difficult to sue over votes that were unanimous.

Kenny wasn't present at the meeting, Herrera said nothing during the hearing and Kincaid-Chauncey simply asked questions about any hidden owners involved in the deal.

According to transcripts of the licensing hearing, commissioners and detectives with the Metropolitan Police Department expressed concerns that Markovitz's son, Alan, might someday become involved in the club. The younger Markovitz owns two topless clubs in Detroit. Between 1984 and 2000, he was slapped with $42,000 worth of fines.

Callister said last week that if Alan Markovitz ever inherited the club, he would have had to secure a liquor license of his own. Commissioners could deny that application at the time.

"It's a curious, curious case," said Callister, a former Las Vegas city councilman. "The real reason for denial is what was testified to in the criminal case. They were taking daily orders from Galardi."

Callister said Kenny, who testified that she accepted about $70,000 in bribe money from Galardi, refused to meet with him before the licensing hearing even though Markovitz's property was located in her district. Woodbury told Callister he opposed the strip club.

Markovitz already dodged one potential obstacle in the pending lawsuit.

Last year, District Judge Michelle Leavitt rejected defense attorneys' argument that the three-year statute of limitations on the case has expired. She ruled the clock began ticking after the commissioners were convicted, not when they voted against Markovitz's application.

The original lawsuit was filed in 2006; a second amended complaint was filed in June.

John Barriage, a Chula Vista, Calif.-based attorney who represents Galardi, acknowledged that the strip club owner paid off commissioners, but said the payments were not to keep out competitors such as Markovitz. Instead, the payments were "merely defensive as to stricter regulation by Clark County."

The lawsuit doesn't make sense given the way the votes fell, he said.

"There were enough votes to turn it down without any of the people Galardi was giving money to," Barriage said. "Our (defense attorneys) clients don't even remember this thing. I think it's a stupid case."

Defense attorneys argued that if Markovitz is seeking a new licensing hearing, he should put in a request with the sitting commissioners, not the former board members.

"They had an administrative remedy, and they had a judicial remedy, and they waited a long, long time," said Frank Cremen, who represents Kenny. "They are seeking damages that are so speculative."

Cremen suggested that Markovitz is simply taking advantage of the criminal case with far-fetched hopes of receiving a chunk of change.

"This is somebody who just sees an opportunity to perhaps grab a dollar," Cremen said. "I think they probably have a target, and it's a big, fat juicy one and that is Michael Galardi. I would assume they want to shake the man down. We'll see how far it goes."

Kincaid-Chauncey's attorney, Richard Wright, wouldn't discuss the case, but the motion he filed in court backs Cremen's argument that the "plaintiffs have failed to exhaust all of their administrative remedies."

Callister said his client was disheartened by the vote because of his appreciation for the system of government in the United States.

Callister said Markovitz was born in the Czech Republic and his family was incarcerated at the Auschwitz concentration camp when he was a young boy. Markovitz escaped; his parents did not.

He moved to the United States in 1951 and has operated various businesses since then, Callister said.

"He was very offended by this," Callister said of the commission's vote. "It really bothered him."

Callister said he expects the case to go to trial next year.