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Feds move toward running seized Vegas strip club, Crazy Horse Too

LAS VEGAS— Federal authorities are reversing position and asking a judge to let U.S. marshals operate a strip club seized after the owner was convicted of tax evasion.

The change is reflected in documents filed Thursday asking U.S. District Judge Philip Pro to extend by one month, until Dec. 3, a deadline for a decision whether to let a California bank foreclose on the Crazy Horse Too.

Security Pacific Bank has said it wants to foreclose to satisfy a $5 million loan it made to former owner Rick Rizzolo. It filed documents recently saying the value of the club had declined from about $30 million to $4.6 million under the marshals’ control.

Rizzolo was sentenced in 2006 to just over a year in prison and was ordered to sell the club just off the Las Vegas Strip to pay $17 million in court-ordered fines, forfeitures and settlements.

The government seized the club in September 2007 after Rizzolo failed to sell it. No buyer has been found, and the club liquor license lapsed June 30.

The Marshals Service said in the past that it did not want to operate a topless club.

But in the new court papers, the government said a private law firm that specializes in land use issues has been hired to help persuade Las Vegas city officials to grant the government a liquor license to run the club.

In the early 1990s, the federal government briefly operated the Mustang Ranch in northern Nevada after it was seized by the Internal Revenue Service.

The government also ran the Bicycle Club casino in Bell Gardens, Calif., in the 1990s after it was seized in a drug trafficking case.

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