Once Bitten, Twice Shy

Back in January 2007, Frederick John “Rick” Rizzolo was sentenced to a year and a day at ClubFed for his part in conspiring to defraud the IRS. Mr. Rizzolo was the owner of the Crazy Horse Too, an ‘adult entertainment facility’ (aka a strip club) here in Las Vegas. According to the DOJ press release from 2007,

According to the court records, beginning in approximately January 2000 and continuing through 2005, Rizzolo, The Crazy Horse Too, and its employees, conspired to defraud the United States by impeding and obstructing the IRS in the assessment and collection of income and employment taxes. Dancers at the Crazy Horse Too were independent contractors who were required by the club to pay about 15 percent of their earnings to the club as a fee for the opportunity to dance. The club’s managers then distributed these monies to certain male employees, including floormen, bouncers, bartenders, and shift managers as supplemental income, but failed to report or maintain records of these monies. The employees subsequently under-reported the amount of the cash salary payments they received to the club’s bookkeepers. Management of The Crazy Horse Too delivered inaccurate records to the club’s accountant, resulting in the preparation of inaccurate quarterly financial reports and tax returns, and provided inaccurate W-2 forms to certain employees, which the employees used to file false individual income tax returns. Management of The Crazy Horse Too, including Rizzolo also filed quarterly federal employment tax returns which under-reported the true amount of earnings received by the conspirators in order to conceal the fraud. By failing to report or record the cash payments to the club’s employees, the owners of The Crazy Horse Too and the participating employees evaded and failed to pay approximately $400,000 in FICA taxes and Medicare taxes owed to the IRS on the unreported compensation.

The defendants were also required to make restitution of $1.73 million to the IRS and $10 million to a customer deliberately injured at the club in 2001. Mr. Rizzolo allegedly had ties to organized crime. And so the story ended…except it’s now 2014 and I’m reporting it.

That’s because this morning’s Las Vegas Review Journal trumpeted the arrest of Mr. Rizzolo on tax charges. Mr. Rizzolo was charged with two counts of attempting to evade and defeat the payment of tax. From the US Attorney’s Office press release:

The indictment alleges that beginning on about June 28, 2006, and continuing to May 31, 2011, Rizzolo allegedly attempted to evade the payment of approximately $1.7 million in employment taxes that he owed for 2000 to 2002, and $861,075 in income taxes he owed for 2006, by concealing and attempting to conceal from the IRS the nature, extent and location of his assets, by making false statements to IRS employees, and by placing funds and property in the names of nominees and beyond the reach of process.

You remember that restitution to the IRS? It apparently hasn’t happened.

Mr. Rizzolo’s pleaded not guilty today. He was released on his own recognizance with trial set for September 15th here in Las Vegas.


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