Strip club executives accused of bribing U.S. tax auditor with private dances and other perks

Eric Langan, president and CEO of Rick's Cabaret International Inc., speaks during the company's annual stockholders meeting, Aug. 27, 2004, in Houston. (AP Photo/Pat Sullivan, file)

Executives at a company that owns strip clubs around the country have been charged with bribing a New York official with free trips to some of the venues and with private dances to avoid paying more than US$8 million in sales taxes, authorities said Tuesday.

Houston-based RCI Hospitality Holdings and its corporate leaders received favorable treatment during at least six tax audits that were performed over a decade in exchange for the perks given to a state auditor, New York Attorney General Letitia James said.

James alleges RCI gave the auditor at least 13 complimentary trips to Florida, including hotels meals, plus up to $5,000 per day for private dances at its strip clubs, including Tootsie’s Cabaret in Miami. The auditor also received free dances, food and admission at clubs in New York, authorities said.

“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.

RCI Hospitality, publicly traded on the Nasdaq composite, owns and operates more than 60 clubs and sports bars and restaurants across the county, including Rick’s Cabaret establishments in more than a dozen cities including New York, according to the company’s website. It also owns two other businesses in Manhattan.

A 79-count grand jury indictment that was unsealed Tuesday charges RCI, five of its executives and the three clubs in Manhattan with conspiracy, bribery, tax fraud and other crimes.

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. “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 Manhattan clubs remain open.

The indictment alleges RCI failed to pay over $8 million in city and state sales taxes on the sale of “dance dollars,” which are purchased by customers and redeemed for private dances.

In exchange for the bribes, the auditor agreed to assess “substantially less” in unpaid sales taxes, interest and penalties than was actually owed by RCI’s New York clubs and to stop the state from performing additional tax audits of Rick’s Cabaret, the indictment says.

James’ office and the indictment did not name the auditor, who worked for the state’s Department of Taxation and Finance. 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.

Among the RCI executives who were indicted are Eric Langan of Bellaire, Texas, chief executive officer, president and board chairman; and Timothy Winata of Houston, a controller and accountant. Prosecutors allege Langan and other executives authorized and oversaw the bribes, and Winata directly provided the bribes and accompanied the auditor on trips to the clubs.

According to the indictment, the auditor texted Winata in 2022 saying: “This was the best trip I had in Florida. The girls were very beautiful and nice.” He wrote that on Thursday night there were “so many beautiful women,” and he had “many lap dances instead of going to the room.” He thanked Winata and said he hoped for another trip before the summer.

Dave Collins, The Associated Press