JOHN L. SMITH: Grand jury investigation of McDonald keeps Rizzolo in hot seat - News

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Mar. 01, 2009
Copyright © Las Vegas Review-Journal

JOHN L. SMITH: Grand jury investigation of McDonald keeps Rizzolo in hot seat

JOHN L. SMITH
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If Rick Rizzolo dreamed of living happily ever after, he was only kidding himself. He must know that by now.

He was recently served with a subpoena compelling his testimony before a federal grand jury in a brewing Internal Revenue Service tax case against his friend, former Las Vegas City Councilman and ex-Metro police officer Michael McDonald. Unless defense attorney Tony Sgro can figure a way to get that subpoena quashed, I'm hearing Rizzolo will receive limited immunity from prosecution and be ordered to answer questions about his long relationship with McDonald.

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It's no secret McDonald worked as a case consultant for Sgro from 2001 to 2003 and received $5,000 a month for his opinion and ability to bring clients to the law firm. In those days, McDonald was considered the city's most powerful councilman.

When McDonald's name surfaced in the G-sting public corruption probe, his value as a consultant and rainmaker flat-lined. He was bounced from office after being accused of ethics violations.

Sources interviewed by an IRS agent working the case tell me they were asked whether McDonald's arrangement with Sgro was standard practice within the legal community. McDonald was paid by check for his work at the law firm.

The sources also were asked whether Rizzolo might have funneled cash to McDonald independently or through an intermediary. It is an intriguing line of questioning, but this is a tax case.

McDonald has consistently maintained he always paid his taxes. He'd have to be a monumental moron to do otherwise, considering what some members of the federal and local law enforcement thought of him. (His attorney, Richard Wright, did not return a phone call seeking comment for this story.)

If McDonald paid his taxes, then the question may be whether he filled out his return properly. Could he have padded his write-offs? (That noise you hear is the sound of thousands of white-collar workers cursing and rewriting their tax returns.)

Could McDonald have done Rizzolo a favor by, for instance, harboring or selling off his assets?

It would be easy to assume the feds are asking whether Sgro was Rizzolo's errand boy, but Sgro has shown a keen awareness of the scrutiny he and his clients are under. It is doubtful he'd make that mistake.

Here's another scenario floating around the legal community: Could the high-rolling Rizzolo have influenced people by slipping them some of his casino winnings? Cash could just as easily have been handed out far from a surveillance camera.

It's the kind of speculation Rizzolo continues to generate after all these years.

In 2005, Rizzolo signed off on a global settlement and accepted a felony tax conviction in exchange for ending a withering criminal investigation. He was sentenced to a year and a day in prison, ordered to stay out of the topless business, and agreed to pay millions in fines and assessments.

As part of the plea deal, Rizzolo also agreed to pay Kirk and Amy Henry $10 million from the proceeds of the club's sale. Kirk Henry, a Kansas tourist, was disabled in 2001 after having his neck broken outside the club. To date, the Crazy Horse Too hasn't sold. The Henrys have received just $1 million.

Rizzolo's deal was an attempt to put a costly investigation behind him. He was handed the opportunity to write a Hollywood ending on his wiseguy life, but the current IRS investigation threatens to ruin that.

If he's dragged before the grand jury and immunized, he has precious little wiggle room.

If Rizzolo declines to answer questions, he can be jailed for contempt.

If he answers in a manner the Department of Justice attorneys believe is misleading, he can be charged with obstruction. That charge would violate his parole and send him back to prison.

Those DOJ attorneys didn't come all the way from Washington, D.C., to play footsie. I'm guessing they're looking for a scalp.

For two decades, Rizzolo was the bon vivant of the local topless racket, making millions and carving out a high roller's lifestyle. Nevada politicians and judges rushed to accept his generous contributions and fraternal hugs.

That must seem like a long time ago.

The subpoena and all the trouble it portends make Rizzolo's Hollywood ending a real long shot.

John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call (702) 383-0295. He also blogs at lvrj.com/blogs/smith.

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Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. A wrote on March 02, 2009 01:40 PM: Jealous People Stinky Pinky and Sons LLC wrote on March 01, 2009 06:00 PM: Do not fear, oh soon to be indicted ones. All Nevada Federal Judges will recuse and Friendly Federal Judge Quackenbush can step in again. Got this one down to science. Jerod wrote on March 01, 2009 03:14 PM: Oh, poor Rizzolo. Pay back always comes back. Mcdonald is nothing but a coward. He thought he was slick like rizzolo but look who's laughing now! Las vegas is finally changing for the good. Keep the articles coming, John Smith! Rest in peace james barrier. UNBELIEVABLE wrote on March 01, 2009 01:54 PM: "...Those DOJ attorneys didn't come all the way from Washington, D.C., to play footsie. I'm guessing they're looking for a scalp." Thank GOD you are here! FEES are the Vegas QUID PRO QUO! Consultant, Administrator, Legal, Receivership, etc....FEES! TRUSTS are pretty BIG too! I am sorry to say, but there are careers worth of cleaning to do. Sit down, take your coat off. Can we offer you some refreshments...for the next four years, maybe? Interesting wrote on March 01, 2009 12:49 PM: A Snippet INSIDE VEGAS by Steve Miller AmericanMafia.com 10-1-07 Rizzolo throws a technicality at the court Dumps Patti & Sgro and hires a Mormon law firm Lionel, Sawyer, and Collins have ties to United States Senator Harry Reid and are closely associated with former U. S. Senator Richard Bryan, former Nevada Governor Bob Miller, and Clark County Commission Chairman Rory Reid who is Harry's son. Unlike criminal defense lawyers Patti & Sgro who were fiercely loyal to their biggest client but usually lost Rizzolo's cases, Lionel, Sawyer, and Collins are not known for defending criminals, but are accustomed to being on the winning side in civil cases in Nevada's State and Federal courts where they are well known for being the driving force behind the election or appointment of most Nevada State and Federal Judges. In fact, I cannot remember the name of any sitting Nevada judge who was elected or appointed without the firm's prior blessings. The Rizzolos made a brilliant choice in John Dawson, brother of the Federal Court Judge who gave 16 of Rizzolo's former Crazy Horse employees the lightest sentences possible for crimes they committed on Crazy Horse customers -- crimes that made the Rizzolo's filthy rich. Judge Dawson, who was appointed for life by U.S. Senator Harry Reid, did not disclose his brother's employment by the Rizzolos during the 2006 trials of the "Crazy Horse 16." Fraternal Hugs. wrote on March 01, 2009 11:33 AM: A judge in their pocket "Mr. Rizzolo has a good name in the community." INSIDE VEGAS by Steve Miller AmericanMafia.com August 15, 2005 Judge Saitta then summarily dismissed Barrier's suit, but not before stating on the record: "Mr. Rizzolo has a good name in the community." Mar. 28, 2006 Copyright © Las Vegas Review-Journal JOHN L. SMITH: Disentangling the provable Galardi allegations proves to be monumental The back wages case was eventually resolved, but during his interview with the FBI, Galardi recalled Rizzolo telling him that he had "taken care of Saitta." At a settlement conference, Galardi also recalled, Judge Saitta gave Rizzolo "a big hug and kiss like they were friends" and thanked Galardi for his generous contribution with several witnesses present. Victim from Treasures beating wrote on March 01, 2009 11:23 AM: The person below is pretty accurate in his/her description of what is and did happen in regards to the brutal beating I received at Treasures on June 22, 2007 when 4 guys, 2 still unidentified with no ongoing investigation, were allowed to nearly kill me in 2 separate beatings just minutes apart. I have yet to figure out why reporters like John L. Smith still haven't mentioned it, investigated the corruption surrounding the cover-up or even returned an email regarding the crime and cover-up. Yet if Rick Rizzolo farts they will report on it. It seems like a diversionary tactic to allow the crimes taking place today to continue. Rizzolo and the CH2 are past history. Let's see kirk henry get paid and concentrate on the corrupt politicians and actions and beatings of today. To John L., If you have any questions you can reach me at pethead@aol.com M HAFER wrote on March 01, 2009 10:49 AM: THE PERSON SUFFERING THE MOST BESIDES KIRK HENRY IS RIZZOLO'S WIFE LISA. V FARACI wrote on March 01, 2009 10:47 AM: MCDONALD DID WORK LONG BEFORE 2001 FOR SGRO, MUCH LONGER BEFORE THAT FOR RIZZOLO.SGRO WAS ABSOLUTELY AN ERRAND BOY FOR RIZZOLO. HE FELT HE OWED HIM BECAUSE HE MARRIED ONE OF RIZZOLO'S GIRLS. OLD MCDONALD... wrote on March 01, 2009 10:33 AM: Old McDonald took a bribe... E-I-E-I-O As most crooked cops live by different rules... E-I-E-I-O With an oink oink here and an oink oink there ---- Read All Comments