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KNAPPSTER

George Knapp is a longtime reporter and anchor for KLAS Channel 8.


Thursday, March 10, 2005
Copyright © Las Vegas Mercury

Knappster: Crazy Horse indictments may focus on tips, cab bounties

By George Knapp

Those long-awaited, oft-delayed indictments in the Crazy Horse Too case are getting very close now, and letters may already be flying, inviting people to take a seat before a federal grand jury. And wait until you hear what some of the charges will be.

No one who is directly involved in the case is talking, but a variety of knowledgeable sources are saying that as many as 50 people could be named in the indictments. Basically, anyone who received tip income at the adult club will likely face tax evasion charges. That means managers, shift bosses, cashiers, everyone but the dancers, who probably make more in tips than anyone.

One story making the rounds is that the feds will initiate a novel and somewhat chilling assault on tip income, using the Crazy Horse as a test case. Their argument is that since a club employee was in charge of collecting, divvying up and then dispersing the nightly tip money, that fund was, in essence, club income at the moment it was being cut up. The club should have paid taxes, Social Security, all of that, on the nightly tip pool. You can imagine how such a narrow view of tax law might be of interest to businesses other than the Horse. Is there a casino, nightclub or restaurant in town that might also be held in violation of federal law for pooling tips? Of course, it seems unlikely that the feds will really go after all the other tip poolers. They've decided to use this little device against the Crazy Horse, along with many other creative charges.

A source not associated with the case told me there is a good chance the Horse will face federal bribery charges. Who was bribed, you ask? Cab drivers, that's who. Like dozens of other business in town, the Crazy Horse paid a bounty to taxi drivers for customers who were dropped off at the club. The irony is that the Horse tried to get laws enforced against its competitors to knock off this practice. It even went to court to get the statutes enforced. But in the end the cabbies prevailed. As we all know, any business that doesn't pay kickbacks to drivers can get raked over the coals. The drivers tell potential customers that the topless joint has either burned down or become a gay hangout. It's a very effective strategy. Now, it's possible the Horse will become a test case on this one too, if the info I heard is accurate.

It's hard to say what charges will really be filed. Months ago, the feds told lawyers for the Horse that it would likely be a tax case only, and that all the other allegations that have been floating around would not be part of the case. Not anymore. A law enforcement source says this will be a "kitchen sink" prosecution. The feds will allege that the club has been making tribute payments to a New York organized crime family, that it has looked the other way as drug and prostitution activity occurred on the property and that dozens of customers were either fleeced or beaten up over the years.

Club owner Rick Rizzolo has said in the past that he felt he could beat any of these charges in court, but think of what he is facing. It might take a year or more just to transcribe the thousands of conversations that have been recorded in the 10-year probe. Getting ready for a trial will cost millions of dollars. And if the trial lasts six months to a year, as some are predicting, it will cost a minimum of $5 million just in legal fees. Even if he prevails, Rizzolo could be tapped out.

That's not to say Rizzolo is going to cave. He has told me in the past that it isn't right that the feds can run someone out of business just because they get a bug up their butts. He's never even wanted to talk about walking away or cutting a deal because he never felt he did anything wrong.

But it looks like if the feds really want you, they can find a way to get you. And Rizzolo will have some tough decisions to make during the next two to three weeks.

Monorail miracle

So finally, after all this time, a public hearing will be held concerning the tax exempt status of the Las Vegas Monorail. The monorail itself was long ago afforded a tax exemption by bureaucrats operating behind closed doors. The only reason a public meeting will be held is to consider whether the monorail's principal contractors should also be eligible for rebates from the public coffers, to the tune of perhaps millions of dollars. But even though it's the contractors who will have their hands out, the fact that this is on a public agenda will mean members of Nevada's Tax Commission will have their first chance to ask questions about just how the monorail itself was determined to be a charitable organization under the law. That should be fun.

Perhaps it is no coincidence that the Nevada Cancer Institute is also asking that its contractors should be exempt from sales taxes. The same state tax officials who slobbered all over themselves to do favors for the well-juiced monorail were downright nasty in vehemently rejecting the Cancer Institute's request. Maybe it's the conspiracy buff in me, but I wonder if the monorail folks are tickled pink that the Cancer Institute is coming forward with its request. There's a good chance that a legitimate charity like the NCI will be granted a sales tax exemption so it can build a world-class research center and hospital. And since NCI's contractors may get a break too for their work on the project, shouldn't the monorail's much-maligned contractors get the same favor from the public treasury? They're both charities, right? The monorail hasn't quite had the nerve to try to push for more tax breaks for its partners, not with all the other problems swirling around the troubled train, so the Cancer Institute's problems might be viewed as a godsend, since it might allow the monorail to come along for the tax-free ride.

It's at least a little bit odd that this monorail matter is finally getting a public airing a full three years after the company first applied for its tax exemption with the state. The initial denial of a tax exemption for the Cancer Institute may be the best thing that ever happened to the monorail's ailing partners.

Ivanpah lawsuit

County commissioners have been reassured many times that there is no chance McCarran Airport officials will lose in their legal battle against a collection of well-known Las Vegas businessmen. As noted in this space recently, the plaintiffs allege the airport screwed them out of millions of dollars by stealing the concept for a new airport in the Ivanpah Valley south of Las Vegas. County leaders have been told there is no chance the lawsuit will prevail and that the plaintiffs will be crushed like bugs.

So why is it that lawyers for the county were in court last week, seeking to delay the trial once again? They tried delaying it not too long ago and were denied, then they tried yet again, and also lost. Previously, the county tried to get the whole case dismissed, but it wasn't, and then tried to make sure it would not be a jury trial, but it will be. If the county is so confident the trial will be a slam dunk, why does it keep trying to put things off? Jury selection begins next week and it should be a doozy.

A footnote to this story: One of the principal figures in the lawsuit is former Henderson City Manager Bob Campbell, who thinks it's an odd coincidence that after he got involved with the legal action against the airport, he suddenly found himself on the dreaded "no-fly" list created to identify potential terrorists and hijackers. Hmmmm.

Crazy Eddie's House of Horses

Has anyone EVER seen the BLM move so fast? The feds are in a full gallop when it comes to disposing of wild horses. A law was passed in late December to allow the unfettered sale of wild horses, and by March 1 the BLM was already moving horses off the lot, doing the bureau's best impersonation of the Chopper. Everything must go! Get 'em outta here.

Shouldn't the BLM be trolling for a consultant to do a study right about now? The truth is, the BLM has never wanted to be the steward of the nation's wild horses and it barely lifted a finger to make sure the adoption program succeeded, but they sure as hell seem jazzed to sell off the animals to whatever rancher or meatpacker might want them. Oh, they are highly motivated now. C'mon down, everybody. Make an offer on this little beauty right here and ride her off the lot for a quick trot to the glue factory.

The first sale of 200 mares to Wyoming ranching interests has an interesting side story that hasn't been told. Many if not most of those mares are pregnant, wild horse advocates say. In other words, it's a two-fer. It's like buying a Cadillac and finding a Volkswagen in the trunk. Those would-have-been-wild horses will be born into captivity and will spend their lives in the equivalent of a Wyoming zoo, that is, unless the owners find a more profitable end use for them. We may never know, since they are now private property and will not be monitored by the government whatsoever.

Ridding the ranges of wild horses will be a great benefit to those important BLM constituencies like ranchers and oil drillers who know that public land is supposed to be for their benefit and not for the actual public.

Names and faces

Informed sources say Rep. Jim Gibbons is working hard on a new speech that he hopes to unveil to the world on Memorial Day. The working title, I'm told, is "I Have a Dream." Catchy! ... An executive with KVBC Channel 3 says the station hired Assemblywoman Barbara Cegavske as a news consultant because it "wanted to do the best job possible of covering the Legislature." Of course, the best job of covering the Legislature without actually being there. Cegavske is the only KVBC employee in Carson City, to our knowledge. ... My friends at Euro Place Restaurant are celebrating their first anniversary this weekend by staging a full-blown blues festival. At least six blues bands will be at the restaurant on Sunday, March 13, for the Red, White, and Blues blowout including the Shuffle Aires, Jimmy Mack and His Blues Attack, Ruffnecks, Deja Blue, the Psyclotrons and house band The Nathan Wolf Project. Tickets are a mere $5. Euro Place is at Maryland and Sahara. 369-1556. ... Hey, Steve Wynn, here's an idea for your new hotel. Why not put glass walls inside each guest room? It might make for a touch of elegance. ... Why do I think that the next time the public gets a good look at the Golden Nugget's Tim Poster, it won't be because he is buying a new casino, but because he is hosting his own TV show? ... An attempt by the Las Vegas Centennial Commission to get a star named for Las Vegas was nixed by NASA, sources say. The space agency regards our city as a major source of "light pollution" so it nixed the honor of naming a star for us. However, local officials are not easily deterred, and I wouldn't be surprised to hear soon that NASA might assign us a namesake asteroid, which would be cool. One hopes it's not an asteroid that's on a collision course with Earth. ... Nothing against Barry Manilow. I hear he's a fine entertainer, and the Viking seems to like him, but he's playing on the same Hilton stage that was once home to Elvis Presley, and at the end of his show the producers unveil a giant likeness of Elvis in a white jumpsuit, juxtaposed against a gigantic Manilow in a white jumpsuit. My pal Jeff, The Elvis aficionado, cringes at the comparison. It's nothing against Barry, it's just that he will never be The King, jumpsuit or no jumpsuit. ... Is there a feud between rival nightclubs? Nightcrawlers keep telling Knappster that employees of Rain really have a serious beef with their counterparts at Light, and that the ongoing ill will has erupted in public more than once.


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