Former topless-club owner Rick Rizzolo indicted on tax evasion charges

Former Crazy Horse Too owner Rick Rizzolo, a colorful figure authorities linked to the traditional mob in Las Vegas, was indicted by a federal grand jury Wednesday on charges of attempting to evade more than $2.5 million in employment and income taxes.

Agents with IRS Criminal Investigation in Las Vegas arrested Rizzolo on the two felony charges after the indictment was returned. He is to make an initial appearance before a federal magistrate judge today, according to Nevada U.S. Attorney Daniel Bogden.

The charges stem from a high-profile plea deal Rizzolo struck with the government in 2006 to end a decade-long federal racketeering investigation at his notorious strip club.

In 2011 federal prosecutors alleged in court that Rizzolo failed to pay the IRS an agreed-upon $1.7 million in employment taxes plus an additional $861,000 in income taxes he earned in 2006.

Rizzolo, 55, long suspected of having ties to Chicago and New York organized crime figures, had pleaded guilty in June 2006 in the racketeering investigation to a single felony charge of conspiracy to defraud the United States. He was ordered out of the popular topless club and served 10 months of a one-year prison sentence.

The U.S. Marshals Service eventually took control of the Crazy Horse Too, but could not find a buyer and shut its doors for several years until the club opened under new private ownership last year.

Wednesday’s indictment charged Rizzolo with two counts of attempting to evade and defeat the payment of taxes.

From June 2006 through May 2011, Rizzolo tried to avoid paying the $1.7 million in employment taxes at the Crazy Horse Too by concealing his assets, lying to IRS agents and placing funds and property “beyond the reach of process,” the indictment alleged. The unpaid taxes were for the years 2000 through 2002.

Rizzolo avoided paying the $861,000 in income taxes he owed in 2006 in the same manner from March 2008 through May 2011, according to the indictment.

His lawyer, Sigal Chattah, declined to comment on the indictment.

In July 2011 a federal judge ordered Rizzolo to spend another nine months behind bars for deceiving his probation officers.

Prosecutors alleged at the time that Rizzolo had been living a wealthy lifestyle on supervised release off funds he hid from authorities while failing to pay millions of dollars in restitution to a tourist crippled in an altercation at the Crazy Horse Too.

Rizzolo was accused of ducking his legal responsibilities to pay Kirk Henry, the Kansas City area man paralyzed after a fight over a bar tab at the strip club in September 2001.

Prosecutors also alleged that Rizzolo had concealed from probation officers a series of lucrative financial transactions, including several with offshore trust accounts. Many of the transactions were related to $1 million Rizzolo received from the sale of a Philadelphia strip club.

The allegations surfaced while Henry and his wife, Amy, were suing Rizzolo in federal court to obtain retribution for the life-changing injuries Henry had suffered.

Last year, Vincent Faraci, one of Rizzolo’s Crazy Horse Too managers, was sentenced to 15 months in federal prison after he pleaded guilty to filing a false 2006 tax return.

Faraci, 60, a reputed Bonanno crime family member who was running a nightclub in Brooklyn at the time, admitted that he failed to report $134,904 in income on the tax return when he filed it in 2008. He also admitted he owed the IRS $46,869 in back taxes.

Faraci was one of 16 of the club’s employees who pleaded guilty in 2006 to a conspiracy charge of failing to pay taxes on tips and other income. He was sentenced in 2007 in that case to 10 months behind bars but was allowed to serve five months under home detention.

The group deal, which also included Rizzolo’s guilty plea, ended what prosecutors called an extended pattern of lawlessness at the strip club, once regularly visited by mobsters, politicians and celebrities.

For years, Rizzolo was linked to a series of organized crime figures, including Joseph Cusumano, a reputed lieutenant of Anthony Spilotro, the Chicago mob’s overseer in Las Vegas. The bodies of Spilotro and his brother Michael were found buried in an Indiana cornfield in 1986.

Rocco Lombardo, the brother of 85-year-old former Chicago mob boss Joseph “Joey the Clown” Lombardo, worked as a doorman at the Crazy Horse Too under Rizzolo’s leadership.

The tax case against Rizzolo is being prosecuted by Assistant U.S. Attorneys Phillip Smith Jr. and Sarah Griswold.

Contact Jeff German at jgerman@reviewjournal.com or 702-380-8135. Find him on Twitter: @JGermanRJ.