Strip club executives accused of bribing tax auditor with lap dances to save millions: ‘The girls were very beautiful and nice’
Executives at a nationwide hospitality company bribed a New York state auditor with free lap dances and lavish trips to Florida to try to avoid paying more than $8 million in taxes over more than a decade, according to the New York Attorney General’s Office.
The allegations come from an indictment unsealed on Tuesday against executives at RCI Hospitality Holdings, Inc., a publicly traded firm that owns and operates more than 60 clubs, sports bars, and restaurants across the country, including multiple venues in Manhattan.
“RCI’s executives shamelessly used their strip clubs to bribe their way out of paying millions of dollars in taxes,” Attorney General James said in a statement announcing the charges. “I will always take action to fight corruption and ensure everyone pays their fair share.”
The 79-count indictment names five executives at RCI involved in the alleged scheme and accuses them of charges including conspiracy, bribery, and criminal tax fraud.
Between 2010 and 2024, executives regularly paid off an unnamed former state auditor, giving him 13 complimentary trips to Florida, where the official would get thousands in cash per day to spend at RCI clubs and was treated to free dances, according to the AG’s office. The quid pro quo helped the company get favorable treatment during at least six sales tax audits, officials say.
Communications between RCI staff openly describe an attempt to ply the official with favors to lower potential tax bills, including those related to RCI clubs’ use of an in-house currency called “Dance Dollars,” James’s office alleges.
In an alleged message from Bradley Chhay, RCI’s chief financial official, the executive claims the company’s controller and accountant “got the guy to $47k” from a higher initial tax figure and noted RCI “owes him a couple trips.”
“This was the best trip I had in Florida,” the auditor allegedly told an RCI official following a 2022 trip, according to officials. “The girls were very beautiful and nice…I hope we can have another trip before the summer.”
Club leadership concealed these payments by describing them in records as “promotional” expenses, according to the indictments.
Daniel Horwitz, a New York lawyer for RCI, disputed the allegations and said the defendants will fight the charges in court.
“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 in a statement to The Associated Press. “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.”
He added that RCI’s policy is to pay “all legitimate and non-contested taxes” and all three of its Manhattan clubs remain open.
James’ office did not name the New York state auditor. It said that a sixth person who was not publicly named was indicted but not yet arrested. James’ office declined to say whether that person was the auditor. The name of the auditor, who worked for the New York State Department of Taxation and Finance, is redacted in the indictment.
RCI’s shares have lost nearly half their value this year, and the company disclosed in financial filings last month that in May of 2024, search warrants were executed against its Houston headquarters and multiple employees.
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