A Monday deadline still looms for the Crazy Horse Too gentleman’s club, which stands to lose its ability to get licenses for liquor and topless dancing, a development that would significantly reduce the value of the seized and shuttered club.
On Thursday, a federal judge decided not to extend that deadline because doing so would interfere with the city of Las Vegas’ local control over zoning and licensing.
The Las Vegas City Council previously turned down a request for a temporary liquor license that would have allowed the club to reopen because two would-be buyers did not have their financing together and police had not had time to complete a background investigation.
“The judge’s ruling was right on the button,” said Las Vegas Mayor Oscar Goodman in a statement. “It always amazed me that the federal government didn’t move in a timely manner to protect its rights and the rights of the victim of the Crazy Horse Too.”
That victim is Kirk Henry, who was paralyzed in a fight with a bouncer at the club. He is waiting for $9 million of a $10 million legal settlement, but without the licenses, federal prosecutors have estimated the club will not be worth that much.
“The circumstances that brought the Henrys into this case … are tragic and undoubtedly have motivated the efforts of the United States to maintain the value of the Crazy Horse Too,” wrote U.S. District Judge Philip Pro in his ruling.
“But that does not warrant the relief requested … particularly where, as here, to do so would require the court to disregard applicable law and violate fundamental principles of federalism.”
The club’s former owner, Rick Rizzolo, pleaded guilty to tax evasion and was supposed to sell the club to satisfy judgments and fines. When he didn’t, the federal government seized the club and began looking for buyers.
Two men have stepped forward with a $32 million offer, but they are having trouble getting the financial backing. Their attorney did not return a phone call seeking comment.
Besides being reluctant to trod on a local government’s turf, Pro also said that the federal government has no one else to blame for this particular pickle.
“The United States has significantly contributed to the dilemma that brings it to the court,” he wrote. “The United States could have attempted to obtain or extend the license and permits for forfeited property by operating the Crazy Horse Too directly or through a receiver.
“It chose not to do so.”
The club has “grandfathered” zoning status because it was open before other land uses were established around it. That status is set to expire at midnight Monday.
The U.S. attorney’s office in Nevada issued a statement saying the ruling would have the unfortunate effect of causing the property “to lose a substantial percentage of its present value.”
“As a result, several of the claimants to the proceeds of any sale of the property, including the victims of violent crime and the city of Las Vegas, stand to recover significantly less than the full value of their claims, if anything,” the statement read. “Since the seizure of the property, the Department of Justice has worked diligently to find a suitable purchaser and will continue to do so until the property is sold.”