In a major legal development impacting the adult entertainment industry, New York Attorney General Letitia James announced the indictment of prominent individuals associated with RCI Hospitality Holdings, Inc. This corporation, a notable proprietor of strip clubs across America, is now at the center of a criminal tax fraud and bribery scandal totaling millions. The indictments target the oufit's executives for allegedly bribing a state tax auditor to avoid paying more than $8 million in taxes.
The investigation led by the Office of the Attorney General (OAG) uncovered a scheme involving trips to Florida featuring private dances, with all expenses paid, aimed at gaining favor with an auditor from the New York Department of Taxation and Finance (DTF). These trips were intended to subtly influence the audit process for RCI's Manhattan clubs, including Rick's Cabaret, Vivid Cabaret, and Hoops Cabaret and Sports Bar. According to details shared by the Attorney General's office, the ill-gotten gains from the fraud ranged from "promotional" expense misclassifications to unreported sales of their in-house "Dance Dollars".
Attorney General James condemned the unethical actions of RCI’s executives, who used their strip clubs to evade millions of dollars in taxes. The OAG's investigation revealed that auditors were bribed and records were falsified to disguise the kickbacks as legitimate expenses, thereby undermining the financial system and avoiding significant sales tax payments.
In taped communications cited by the Attorney General’s office, the RCI team members openly coordinated their efforts to sway the auditor's decisions. CFO Bradley Chhay relayed progress with boastful messages about audit outcomes, noting obligations of "a couple trips" owed to their exempted associate. Similarly, RCI's accountant, Timothy Winata, suggested that they might have to "pamper [the auditor] more this time" to ensure a favorable outcome during another tax settlement negotiation.
The indictment, which includes 79 charges, names RCI and five of its executives, with a sixth co-conspirator yet to be arraigned. Those accused range from top executives like Eric Langan, RCI’s CEO, to key finance and operations managers Chhay and Ahmed “Ed” Anakar. The charge of Criminal Tax Fraud in the First Degree carries a potential sentence of up to 25 years in prison for Langan, Winata, and Anakar if convicted, as relayed by the Attorney General's office.
Corporate leaders, regardless of industry, are subject to the same legal and tax obligations as any other entity. The Attorney General's office recognized the Department of Taxation and Finance, specifically noting the efforts of Acting Commissioner Amanda Hiller and the Office of Internal Affairs for their collaboration on the case.
