Sources said the city attorney's office will recommend not granting the permanent liquor license.

Council members contacted Monday said they had not finalized their decisions but said they had grave concerns about the operation of the club under Signorelli.

"Mr. Signorelli is a very, very nice guy. But I think sometimes, with the reports going on, Mr. Signorelli is in over his head," Mayor Pro Tem Gary Reese said. "He's doing what he wants to be doing, I guess, but I can't figure out why."

Councilwoman Lois Tarkanian said her concerns are whether new management of the club is separate from the old regime.

"I'm concerned that there has been a number of times people have been hired, a number of times people have been in positions of influence" connected with Rizzolo, she said.

The club on Industrial Road is one of the oldest and most popular of Las Vegas' adult entertainment venues, those in the industry said.

Rizzolo was once an elite Las Vegas power broker, donating heavily to campaigns and calling a number of politicians friends.

In January, a judge sentenced him to one year and one day for conspiring to defraud the U.S. government by evading taxes.

He will start serving his prison time in May.

The city revoked Rizzolo's liquor license in September after he and 14 workers entered separate federal guilty pleas to several crimes in June.

The City Council also voted to ban him from the property and levied a $2.2 million fine, the largest in city history. That was reduced later by a judge.

Rizzolo's federal plea agreement required him to sell his business and pay nearly $17 million in fines, forfeitures and restitution, including $10 million to Kirk Henry, whose neck was broken after disputing a tab at the club.

Signorelli, the former owner of the Golden Steer Steakhouse, signed an agreement to lease the club and eventually buy it for $45 million. That is according to documents presented to the city in October, when the city first granted Signorelli his temporary liquor license.

But no proof of financing for the purchase has been produced. Signorelli has been paying about a third of the $400,000 a month he agreed to pay. Business wasn't what he thought it would be, he has said.

Jay Brown, Signorelli's attorney, said Friday that his client could not get financing until he had a permanent liquor license.

Losing the liquor license would cause the business to close, Brown said.

In January, City Attorney Brad Jerbic raised several concerns about the operation of the club, including hiring people connected to the Crazy Horse's former management and illegally tipping cab drivers for dropping off patrons.

"I don't think it was my intent, for lack of a better word, to do anything illegal," Signorelli told the council at the time.

"I think we made it clear at the meeting, then (city staff members) made it extremely clear in writing that we wanted a separation," Tarkanian said. "Information I've received indicates they have not made that separation, nor is it shown that Signorelli is an independent, knowledgeable individual for running the business."

Reese, whose ward includes the strip club, would not specify his concerns.

But he wondered why Signorelli was in the business.

Reese said he once asked Signorelli whether his family supported him.

"He said, 'My wife doesn't want me to do it.' That business, to me, is kind of cutthroat."

Steve Miller, the former councilman who has hammered the Crazy Horse Too and the city for not shutting it down, said Wednesday was a big day in the Crazy Horse Too saga.

"It's the most significant day in the history of this issue," Miller said. "The council can prove their mettle."

During a hearing in September, when the council revoked Rizzolo's license, Henry's wife gave a tearful appeal to keep the club open so the family could obtain their settlement with the club.

Henry's attorney Don Campbell did not respond to a call for comment, nor did Rizzolo attorney Tony Sgro.

Wayne Bridge, chief executive officer of the Sin City Chamber of Commerce, said his organization, which represents 500 businesses, some of them adult-oriented, supports the permanent liquor license for Signorelli.

"They have worked hard to create a new attitude and abide by the laws and regulation for gentlemen's clubs," Bridge said.