Crazy Horse may sell for $31 million

The U.S. marshal's office is closing in on a deal to sell the Crazy Horse Gentlemen's Club for $31 million, a move that would permanently take the strip club out of the hands of Rick Rizzolo, who is serving prison time for evading taxes.

If the sale is finalized, Kansas tourist Kirk Henry, who was paralyzed in the club parking lot, is set to receive $9 million. Henry has already received $1 million of the $10 million settlement. Rizzolo must also pay $17 million in liens and fines to the federal government.

Who is entitled to the remaining $4 million was the subject Monday of a federal court hearing attended by attorneys representing the government, Rizzolo and even Michael Signorelli, who at one time wanted to buy the club.

According to a motion filed by Signorelli attorney Steven Gibson, Signorelli is seeking $900,000 he spent on employee health insurance while operating the club on Rizzolo's behalf, plus $1.5 million he claims Rizzolo promised him under the operating agreement.

A June 2006 plea bargain signed by Rizzolo forced him to sell the business. Rizzolo is currently serving a one year, one day prison sentence at the Los Angeles Metropolitan Detention Center.

Assistant U.S. Attorney Daniel Hollingsworth said the name of the potential buyer will be kept under wraps until the deal is finalized. Hollinsworth said the buyers have already been harassed and any further problems could cause the sale to fall apart. He didn't elaborate on the nature of the harassment.

Signorelli agreed to buy the club earlier this year for $40 million, but the deadline for the sale passed without a deal. The city of Las Vegas initially threatened to revoke the liquor license for the property by December, but extended the deadline until June 2008 so the value of the property would not drop.

The federal government seized the business in August.

Fred "Pete" Gibson argued that Rizzolo's company, RICRIZ, is entitled to the proceeds of the sale. The Rick and Lisa Rizzolo Family Trust owns 1 percent of RICRIZ, the other 99 percent is held by the Lions Limited Partnership. The general partner of Lions is Demole LLC. Rizzolo and his wife are the managers of Demole.

Steven Gibson argued against the sale of the property, but U.S. District Judge Philip Pro declined to halt the negotiations until Gibson can file a motion in court.

"I'd like to see the sale occur," Pro said. "After that the parties can argue over what is left."

Pro scheduled another hearing on the matter for Jan. 14.

Attorney Don Campbell, who represents Henry, said he was pleased that the judge declined to stall the sale of the business. He said Henry deserves to receive his money. A 2001 altercation with Crazy Horse personnel left Henry paralyzed from the neck down.

Contact reporter Adrienne Packer at apacker@reviewjournal.com.