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Galardi, strip club owner and mobster, fined $1 million

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Saturday, January 10, 2004
Copyright © Las Vegas Review-Journal

Experts say hefty fine should be pocket change to Galardi


By MICHAEL SQUIRES
REVIEW-JOURNAL



According to Jack Galardi's attorney, the strip club mogul's response Wednesday to the record $1,095,000 fine handed down by the Las Vegas City Council was one of bewilderment.

"Where the hell am I going to get that kind of money?"

But some industry experts said for a successful entrepreneur such as Galardi, the fine he must pay to keep alcohol flowing at the topless club Cheetah's amounts to pocket change.

"I would say that coming up with $1 million would be about as tough for him as it would be for me to find 20 bucks in my wallet," said writer Jack Sheehan, who spent the past 18 months researching the local sex industry for a forthcoming book. "These guys will always say, `How am I going to come up with that kind of money?' But if anyone is going to be flush with cash, it's a guy that owns a chain of strip clubs."

The City Council approved the fine as punishment for Michael Galardi's guilty plea last year to federal corruption charges in San Diego.

Michael Galardi jointly owned Cheetah's and its liquor license with his father, Jack Galardi, at the time of the plea. The elder Galardi has since taken over the club.

A majority of the City Council agreed that Jack Galardi, who didn't participate in his son's crimes, shouldn't lose his license as a result.

Attorney Dominic Gentile thinks the fine was unlawful. But he admits the other options the council had considered, including revoking or suspending the license, would have been worse.

"The big issue was keeping the license," Gentile said. "In that regard, I thought that the end result was reasonable."

Jack Galardi was forced to close Jaguars and Leopard Lounge, two other local strip clubs he acquired from his son in recent months, because Clark County Commissioners revoked those liquor licenses last month.

However, Gentile said there's no guarantee his client will be able to pay the fine before the 30-day deadline.

"He doesn't have that amount of money," Gentile said.

Gentile thinks city officials incorrectly calculated the fine.

William Henry, senior litigation counsel for Las Vegas, said the $1,095,000 represented $1,000 a day from August 2000 to May 2003, the period during which Michael Galardi bribed San Diego officials.

"From my calculations, I think they're about $115,000 over what they should have imposed," Gentile said.

Whatever the amount, several experts had a hard time believing that Jack Galardi, who in addition to his recent Las Vegas acquisitions owns 17 strip clubs in five states, would have a hard time paying it.

Angelina Spencer, executive director of the Association of Club Executives, a national trade association for gentlemen's clubs, said she has no doubt Jack Galardi would come out ahead by paying the fine and keeping Cheetah's open.

"The million-dollar fine seems like a small price to pay for a multi-million dollar company to stay in business," she said.

Spencer, who owns a strip club in Cleveland, said her research shows the average Las Vegas strip club grosses $10 million a year.

Some industry insiders put Cheetah's well above average for Las Vegas. They estimate it's among the valley's three most profitable adult entertainment establishments, behind Crazy Horse Too and the Olympic Garden.

Rick Rizzolo, owner of Crazy Horse Too, said in a February interview that his club makes more than $10 million a year.

The valley's largest topless clubs are said to have profit margins of 35 percent, higher than is typical of Southern Nevada's casinos. Some large clubs are said to gross as much as $60,000 on a good night.

"On a busy night, it wouldn't surprise me if that's the kind of revenue they generate," said Jim DiFiore, chief of the city's Business Services division. "But it's unverifiable. And it might just be bragging rights."

Sheehan, whose "Skin City: Uncovering the Las Vegas Sex Industry" will be released in early March, called the amount of cash flowing through valley strip clubs "mind-boggling."

Good dancers make between $225,000 and $300,000 a year, he said. Clients jam the clubs' VIP rooms on most nights, he added, paying $500, which the dancer and club split.

Sheehan estimates Jack Galardi could cover the fine with one or two month's earnings from Cheetah's.

"If it's close the club or pay the money, it's a no-brainer," he said.

But attorney Roger Jon Diamond, who represents Michael Galardi and has worked with several strip club owners over the years, offers a different assessment.

"A million dollars would be more than most clubs make in a year," he said. "A good club might make $200,000 to $500,000 in profit each year."

Even if Jack Galardi comes up with the money, there's no guarantee he'll hang onto the Cheetah's liquor license.

Las Vegas police have opened an investigation on behalf of the county to determine his suitability to hold a liquor license for Jaguars and Leopard Lounge.

Among the allegations certain to receive scrutiny are recent claims by Florida authorities that four of Jack Galardi's clubs in Tampa were fronts for prostitution. According to a search warrant secured by Tampa police, Jack Galardi and his managers had received several warnings between July and October that prostitution was occurring inside the clubs' VIP rooms.

The clubs were raided last month, and five of Jack Galardi's employees were arrested on suspicion of racketeering.

Once Las Vegas police complete their investigation, which is expected to take about nine months, city officials will review the findings and could again seek to revoke Cheetah's liquor license, DiFiore said.









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