Prosecutor aims to keep club’s value

In a rare display of emotion, a federal prosecutor described to a U.S. district judge Monday the dire consequences if the city of Las Vegas strips the Crazy Horse Too of its ability to offer exotic dancing and serve alcohol.

In answering the city's accusation that the federal government's fight to keep the special use permits is about money, Assistant U.S. Attorney Eric Johnson openly agreed.

"Is this lust for money? Your honor, this is an effort to find compensation for a man who was left quadriplegic," Johnson said, leaning forward at the courtroom podium. "I'm sorry if that is lusting for money. I'll defend that in any court."

Johnson urged U.S. District Judge Philip Pro to intervene with a city ordinance that would devalue the shuttered Industrial Road strip club by rescinding special use permits that allow exotic dancing and liquor.

Pro said he would announce his decision by the end of the week.

Johnson's eyes teared up when he emphasized how important it is for Kirk Henry to collect a $10 million settlement from former Crazy Horse owner Rick Rizzolo. Henry was left paralyzed after he was pummeled by strip club employees after arguing over his drink tab in 2001.

Rizzolo pleaded guilty to tax evasion charges in 2006 and served a one-year prison sentence. His plea agreement requires him to pay Kirk Henry $10 million from the sale of the club. The federal government seized the club when Rizzolo failed to negotiate a sale within a year of his plea deal.

Johnson argued that the value of the club would plummet from between $32 million and $35 million to between $8 million and $10 million without the special permits. The club opened before current zoning laws were adopted, but was allowed to continue operating.

The strip club has been closed since the federal government took it over last August.

Deputy City Attorney Bill Henry, who is not related to Kirk Henry, said the city would be "outraged" if Pro took the uncommon step of overriding a city ordinance. He explained that the city is "protecting our citizens" by working to get rid of clubs grandfathered in after the new policies were put in place.

Unless Pro intervenes, the city intends to remove the special use permits from the property on June 30.

Bill Henry's comments infuriated Don Campbell, a Las Vegas attorney representing Kirk Henry. He questioned where the city's concern for public safety was when patrons were getting beat up at the Crazy Horse.

Campbell said even emergency room nurses were aware of the club's reputation when Kirk Henry was admitted, changing his name out of fear that club employees would track him down and finish him off.

"I am outraged," Campbell said outside the courtroom. "Everyone in this town knew what was going on at that club except for the city attorney's office."

Bill Henry argued that the government was well aware it had to sell the club, reopen the business or risk losing the privileged uses within a year of taking it over.

"Sometimes you just roll the dice and you lose," said Bill Henry, who acknowledged the city also risks losing the $2 million that Rizzolo owes in fines. "We're rational because we're not lusting after that $2 million."

Bill Henry explained to Pro that the special use permits are stripped if the owner abandons them or discontinues the use of them. He said the federal government has done just that by failing to reopen the club.

He said the federal government could gain another year if it opens the club, serves alcohol and provides adult entertainment for an eight-hour period.

But prosecutors argued that the federal government is not in the business of operating strip clubs. Johnson said that the government has used the special use permits as a selling point during negotiations with interested parties.

"The United States has demonstrated again and again that it hasn't abandoned the uses," Johnson said. "Nothing in case law says eight hours is the trick that does it all."

Johnson scoffed at the notion the city isn't "lusting" after the $2 million, saying he has heard Mayor Oscar Goodman on more than one occasion discuss how the money would be spent.

In a recent court filing, federal prosecutors said that a city employee indicated that the city wants to strip the Crazy Horse Too of its value because it plans to condemn the club and build a freeway offramp. Without the special use permits in place, the city's condemnation division would save money.

"This is ridiculous," Bill Henry said.

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