Five top executives of the strip club operator RCI Hospitality Holdings — including its CEO Eric Langan — have been indicted in connection with a multi-million-dollar criminal tax fraud and bribery scheme, New York Attorney General Letitia James announced Tuesday.
The scheme included RCI executives allegedly bribing a New York state Department of Taxation and Finance auditor and supervisor with 13 complimentary multi-day trips to Florida, where he was given up to $5,000 per day for “private dances at RCI-owned strip clubs, including Tootsie’s Cabaret in Miami,” James’ office said.
And “on at least 10 occasions since 2010, Timothy Winata, RCI’s controller and accountant, traveled to Manhattan from Texas to provide the auditor with illegal bribes at RCI’s three Manhattan clubs, Rick’s Cabaret, Vivid Cabaret, and Hoops Cabaret and Sports Bar,” the office said.
“After one such trip in February 2022, the auditor texted Winata, ‘This was the best trip I had in Florida. The girls were very beautiful and nice…I hope we can have another trip before the summer,’ according to the office.
The alleged bribes helped RCI avoid paying more than $8 million in New York City and state taxes from 2010 through 2024, after the auditor gave them favorable treatment in at least six separate sales tax audits, according to the AG’s office. The taxes involved the sale of “Dance Dollars,” which customers of RCI’s strip clubs bought and redeemed for private dances.
Langan is accused in the indictment of personally supervising RCI’s negotiations with the auditor and approving payment of bribes.
“On April 12, 2018, while Winata was in Manhattan to meet with the auditor at Rick’s Cabaret and other locations, Langan texted [ Director of Operations Ahmed] Anakar: ‘We need to talk about New York and Dance Dollars,’ explaining that RCI was ‘going to be hit by 3M in sales taxes soon,’ ” James’ office said.
“Later that same day, Langan texted Anakar: ‘I think I got the sales taxes in New York to 350 plus interest possibly. Tim [Winata] is discussing with the auditor tonight ;).’ “
RCI shares dropped nearly 17% in late afternoon trading after the 79-count indictment alleging conspiracy, bribery, criminal tax fraud, and other charges was announced.
The attorney general’s office said that the trips to strip clubs for the auditor and the alleged bribes were “authorized, directed and overseen by the 57-year-old Langan, RCI’s Chief Financial Officer Bradley Chhay, 41, Anakar, 58, and 45-year-old Shaun Kevlin, a regional manager for RCI’s New York City strip clubs, and later the company’s assistant director of nightclub operations.
All four men, along with 71-year-old Winata, were charged in the case.
The AG’s office said that a sixth person had been indicted, and would be arraigned at a later date, at which point the indictment would be unsealed.
“RCI’s executives shamelessly used their strip clubs to bribe their way out of paying millions of dollars in taxes,” James said in a statement.
“I will always take action to fight corruption and ensure everyone pays their fair share,” she said.
A lawyer for RCI, Daniel Horwitz, in a statement to CNBC said, “RCI, the individuals involved, and the three clubs deny the allegations and will take all necessary action to defend themselves against these overreaching charges, while continuing to seek a just resolution.”
“We are clearly disappointed with the New York Attorney General’s decision to move forward with an indictment and look forward to addressing the allegations,” Horwitz said. “We remind everybody that these indictments contain only allegations, which we believe are baseless. RCI and the individuals involved are presumed innocent and should be allowed to have their day in court.”
“RCI previously disclosed the New York Attorney General’s investigation in its SEC filings,” the lawyer said. “As a publicly traded and audited company, RCI has a policy of paying all legitimate and non-contested taxes.”
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