Motion filed on former Crazy Horse Too site

A California-based bank that loaned the Crazy Horse Too gentleman's club $5 million is seeking to lift a stay of foreclosure on the vacant Industrial Road building in an attempt to recover its money.

Security Pacific Bank filed a motion in federal court on Monday, saying the value of the once successful property is quickly plummeting, putting at risk the ability to collect the loan money.

The U.S. government took ownership of the Crazy Horse Too after owner Rick Rizzolo entered a plea agreement associated with tax evasion charges. Rizzolo received a one-year prison sentence and was ordered to sell his club to pay back debts to the bank, forfeit $4 million to the government and pay off a $10 million lawsuit won by tourist Kirk Henry, who was injured on the property.

Rizzolo was given a year to sell the club and failed to do so. The government took the property last year.

The value of the club began to fall earlier this year after the Las Vegas City Council stripped the business of its liquor license.

According to the motion filed by Security Pacific Bank, the club that was once worth about $48 million might now sell for less than $5 million.

"In these perilous times there is no justification for forcing Security Pacific to sit on the sidelines while trouble in the credit market and banking and real estate industries destroys its asset's value," the motion states.

The U.S. Attorney approved offers for the club that ranged from $32 million to $38 million, but the deals fell through. After the U.S. Marshals took over the property in August 2007, a fourth offer worth $30 million failed. The motion to stay a foreclosure was approved in January 2008 after government officials vowed they were actively trying to sell the property and settle the debts.

Security Pacific Bank did not oppose the stay, but reserved its right to seek relief.

The club is located in an area that is no longer acceptable for a strip club under city ordinances. Therefore, any petition for a liquor license probably would be denied, further devaluing the property.

"In addition to the Crazy Horse purportedly losing its exotic dance permit and tavern license -- critical components to its business value -- property values throughout Las Vegas and Nevada have consistently and dramatically fallen," according to the bank's motion.

U.S. District Judge Phillip Pro has yet to rule on the bank's request.

Contact reporter Adrienne Packer at apacker@reviewjournal.com or 702-384-8710.