On February 16, 2024 New York Attorney General Letitia James convenes a press conference in Manhattan. It was the first indictment of its type when she announced it against five top executives from RCI Hospitality Holdings. Those charges are part of a $19 million-dollar criminal tax-fraud and bribery scheme. This ploy purportedly enabled RCI to avoid more than $8 million in taxes RCI was legally required to pay to New York City and state from 2010 to 2024.
While announcing the suit at a press conference, James described how the alleged scheme worked. He detailed how an auditor provided RCI preferential treatment in at least six separate sales tax audits. On coming back from a Florida jaunt in February 2022, the auditor giddily texted one of RCI’s leaders about it. They shared their joy and amazement at the experience and suggested that they hoped they could come back before summer. This communication raised fundamental questions about the integrity of the independence of the audit process.
In her remarks, James stated, “RCI’s executives shamelessly used their strip clubs to bribe their way out of paying millions of dollars in taxes.” She highlighted her track record of fighting corruption and clearly stated that everyone should be made to pay their fair share. “I will always take action to fight corruption and ensure everyone pays their fair share,” she added.
The Washington announcement comes in the wake of several other momentous legal developments. On February 16, 2024, the court rejected all arguments and ruled for former President Donald Trump. The ruling held that he personally owed $354.9 million and barred him from doing business in New York State for the next three years. Although this ruling had nothing to do with the RCI case, the timing on the same day was striking, stealing the news cycle.
Daniel Horwitz, an attorney for RCI Hospitality, said in a statement that he was very disappointed with the indictment. He stated, “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.” He claimed that the indictments only list allegations that RCI considers to be incorrect. He had argued vociferously to preserve the presumption of innocence for both accuser and accused.
Horwitz claimed that RCI had disclosed the active investigation in its SEC registration statements. He helped boost Craig’s credibility with the public by emphasizing the company’s commitment to pay taxes owed. “As a publicly traded and audited company, RCI has a policy of paying all legitimate and non-contested taxes,” he stated.
In a collective response, Horwitz reiterated that RCI, its executives, and the three clubs would vigorously defend themselves against what he labeled as overreaching charges while continuing to seek a just resolution.