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TRC files suit in wake of Nye rejection of Chicken Ranch purchase

Attorney Mike Fattorosi still leads the adult industry league in most lawsuits filed. But attorney Clyde DeWitt just broke into the scoring column with this one:

Nevada- An applicant denied a brothel license to buy the Chicken Ranch Brothel in June 2007 has filed a lawsuit against Nye County in federal court.

TRC Holdings claims a residency requirement violates the due process clause and privileges and immunities clause of the 14th Amendment of the Constitution.

The company, which is solely owned by Bruce Kahn, claims the licensing and liquor board failed to give reasonable notice and opportunity to be heard with respect to the grounds for denying a license.

Kahn is a resident of Dallas, Texas, but the suit says he has an office in Carson City. The suit was filed by attorney Clyde DeWitt, [pictured] who represents the adult entertainment industry.

“As a result of these constitutional violations, plaintiff has suffered substantial damages, totaling several hundred thousand dollars,” the suit claims.

The lawsuit outlines the following scenario:

Kahn began negotiations with Ken Green, sole shareholder of Western Best Ltd., owner of The Chicken Ranch, in September 2006. The two parties reached an agreement and in November that year, TCR deposited $150,000 in earnest money. They couldn’t close escrow until TCR obtained the brothel license.

TCR retained the Moran law firm to present his application, which informed him he was qualified to obtain a brothel license.

Kahn was denied the application at a June 19, 2007, hearing because he wasn’t a resident of Nevada for six months, as specified in the Nye County brothel code.

The suit claims the board interpreted the residency language to mean a license can’t be issued to a person with a dwelling place in another state, even if the applicant will be physically present in Nye County or relocate to Nye County if the license is approved.

The code states, “All licensees and their managers must be available to the board at all times and cannot operate the premises from addresses located in other states.”

Besides the residency requirement, investigator Lt. Jack Primeau outlined various discrepancies in Kahn’s application in briefing the Nye County Licensing and Liquor Board June 20, 2007:

* Kahn listed only two addresses in Texas for the past 10 years, but an investigation revealed he had lived in California.

* The application didn’t include a complete and accurate financial statement. After the Moran law firm was contacted about the error, Primeau told county commissioners he received a final audit May 29, 2007 but a forensic analyst indicated it didn’t meet standards set by the Certified Association of Public Accountants.

* When it came to the legal description of the property, the application wasn’t dated, and the copy of the deed of trust indicated neither the assessor’s parcel number nor the name of the trust holder.

* The application listed Kahn’s investment of $3.6 million in the Chicken Ranch. Primeau questioned where the remainder of the $5.25 million purchase would come from. Kahn only listed a personal loan.

* Primeau said Kahn listed details of a previous arrest but not the location.

* When asked if he had ever been refused a gaming, liquor, brothel or other privilege license in Nevada, Kahn initially failed to answer the question but did answer it in a subsequent interview, Primeau said.

* While he was required to list 10 references, Primeau said Kahn only listed four.

* Then there was Nye County Code 9.02.120, which allowed the liquor and licensing board to refuse to grant a license to an applicant who is insolvent or has undergone any prior bankruptcy proceeding.

“The applicant indicated he had a bankruptcy in the past but had no facts on this matter,” Primeau told the board. “The facts prevent me from completing my investigation and presenting any factual and complete report.”

* Nye County Sheriff Tony DeMeo said Primeau came across more information a week before the hearing.

“A public records check indicates there are currently three federal tax liens against the applicant,” Primeau said.

The suit claims TCR was informed for the first time at the June 19, 2007, hearing about the income tax returns, a requirement which isn’t found in Nye County Code or any other statute.

Kahn, in his brief comments, said at the conclusion of the hearing, “I had attempted to provide as much information as possible but apparently I have failed at that.”

DeMeo recommended the board deny the application, which passed unanimously.

The suit says “Mr. Kahn failed to provide enumerated information, none of which had been requested by the board prior to the hearing and none of which was expressly required by any provision of the Nye County Code.”

At the hearing, Kahn requested time to produce the newly requested documents, but the board refused that request, notwithstanding the fact that it had the authority to grant it.

The suit indicates TCR may apply for another license to operate the Chicken Ranch or another brothel.

The suit also claims Kahn requested records from the Nye County Sheriff’s Office which were never provided in acordance with the Nevada Public Records Law.

“Western has been attempting to sell the Chicken Ranch since the transaction described fell out of escrow, but is unable to do so because it is clear to any potential buyer that the board will not issue a license to any applicant, which can be accomplished by the same tactic that the board used to deny Kahn a license,” the suit claims.

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