by New York, NY – In a stunning case of alleged corruption, executives from RCI Hospitality Holdings, Inc., a company owning more than 60 clubs, sports bars, and restaurants nationwide, have been charged with bribing a New York state tax auditor to avoid paying over $8 million in sales taxes. The indictment reveals a decade-long scheme involving lavish trips and illicit favors designed to secure favorable treatment during tax audits.
A Decade-Long Scheme to Evade Taxes with Bribery
According to prosecutors, RCI executives offered an unnamed former New York state auditor a series of bribes, including at least 13 complimentary trips to Florida. During these excursions, the auditor reportedly received thousands of dollars in cash daily to spend at RCI-owned clubs and was treated to free lap dances by performers. These arrangements, which spanned from 2010 to 2024, allegedly influenced the auditor’s handling of at least six sales tax audits.
- RCI Hospitality Holdings operates more than 60 venues across the United States, including multiple clubs in Manhattan.
- The bribes included free lap dances and luxurious trips, designed to lower tax liabilities.
- Communication between RCI staff documents efforts to ‘ply the official with favors’ to reduce tax bills.
“RCI’s executives shamelessly used their strip clubs to bribe their way out of paying millions of dollars in taxes,” said Attorney General Letitia James. “I will always take action to fight corruption and ensure everyone pays their fair share.”
Concealment and Internal Communications Expose the Alleged Fraud
The indictment further alleges that RCI executives concealed these illicit payments by classifying them as “promotional” expenses in company records. Closed communications between executives reveal attempts to negotiate tax figures:
“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,’” detailed an internal message from Chief Financial Officer Bradley Chhay.
One auditor reportedly described a trip as, “the best trip I had in Florida… The girls were very beautiful and nice… I hope we can have another trip before the summer.”
Legal Response and Ongoing Investigation
Daniel Horwitz, legal counsel for RCI, categorically denied the charges and emphasized the company’s intent to challenge the allegations in court.
“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,” Horwitz said.
He also reiterated that the company complies with tax laws, paying all “legitimate and non-contested taxes.” Despite the investigation, all three Manhattan clubs remain operational.
The New York Attorney General’s office has not publicly identified the state auditor involved. The indictment and ongoing investigations remain confidential in some details, including a sixth person indicted but not yet arrested.
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Financial Impact and Broader Implications
Amid the unfolding scandal, RCI’s stock value has plunged nearly 50% in 2024. Earlier this year, law enforcement executed search warrants at its Houston headquarters, intensifying the company’s legal troubles.
- 79-count indictment charges multiple RCI executives with conspiracy, bribery, and criminal tax fraud.
- The alleged scheme spans more than a decade, highlighting systemic corruption concerns.
- Potential broader implications for oversight of tax auditing and hospitality industry practices.
For further details on this developing case, visit the full report at The Independent.
What Do These Charges Mean for Tax Justice?
This high-profile indictment underscores the challenges governments face in combating sophisticated tax evasion strategies. Industry experts warn that unchecked corruption erodes public trust and can cost taxpayers millions.
Share Your Thoughts
What do you think about this bribery scandal involving strip club executives and a tax auditor? Have you encountered similar issues of corruption in other industries? Share your opinions and experiences in the comments below!
