By Forbes Staff,Kelly Phillips Erb

Copyright forbes

Executives and employees from a nationwide strip club operator are facing charges for allegedly bribing a New York official with free trips and private dances.

Executives and employees from a strip club operator are facing charges for allegedly bribing a New York official with free trips and private dances. The aim? To dodge over $8 million in sales taxes, according to New York Attorney General Letitia James.

James announced the 79-count indictment this week. The indictment charges RCI Hospitality Holdings, Inc. (“RCI”), five of its executives and employees, and three RCI-owned strip clubs in Manhattan (Rick’s Cabaret, Vivid Cabaret, and Hoops Cabaret and Sports Bar) with conspiracy, bribery, and criminal tax fraud, among other crimes.

The Parties

RCI is a publicly traded corporation listed on the NASDAQ stock exchange under the ticker symbol “Rick” and incorporated in the State of Texas. Until around August 6, 2014, RCI was known as “Rick’s Cabaret International, Inc.” Through its subsidiaries, RCI owns and operates more than 60 strip clubs and restaurants across the United States, including three located in New York County.

The individuals charged are Ahmed “Ed” Anakar, 58, of Plantation, Florida; Bradley Chhay, 41, of Conroe, Texas; Shaun Kevlin, 45, of Warwick, New York; Eric Langan, 57, of Bellaire, Texas; and Timothy Winata, 71, of Houston, Texas. (A sixth individual has also been indicted but not yet arrested and will be arraigned at a later date. James did not confirm whether the individual was the auditor.)

The company, through a public statement, has denied any wrongdoing.

The Allegations

According to the indictment, an auditor at the New York State Department of Taxation and Finance (DTF) conducted and supervised several tax audits of RCI-owned strip clubs in New York County. At issue were unreported and uncollected sales taxes related to an RCI in-house currency called “Dance Dollars”—customers use those to buy and redeem private dances. RCI also charged its customers a service charge of 20-25% in addition to the Dance Dollars’ face value.

That means, according to the state, that the sale of Dance Dollars and the service charge qualified as an “admission charge” to a “place of amusement” and were subject to a combined sales tax rate of 8.875% for the City and State of New York and the Metropolitan Commuter Transportation District surcharge. As part of an alleged tax fraud scheme, RCI didn’t collect and pay over $8 million in sales taxes related to the sale of those Dance Dollars. The result was an audit.

James claims that perks and bribes were allegedly in exchange for favorable treatment during the audits. Specifically, James charges that the auditor agreed to settle pending and future sales tax audits for significantly less in back taxes, penalties, and interest than were owed, saving RCI millions of dollars.

According to the indictment, RCI provided the auditor with complimentary trips to Florida, including hotels and meals, as well as up to $5,000 per day for private dances at its strip clubs. The auditor also received free dances, food, and admission at clubs in New York.

Langan and other executives are charged with authorizing and overseeing the bribes. On at least 10 occasions since 2010, according to the authorities, Winata, RCI’s controller and accountant, traveled to Manhattan from Texas to provide the auditor with illegal bribes at RCI’s three Manhattan clubs. To support these claims, the authorities referenced exchanged texts and emails touting the scheme. Those texts include a June 2023 text from Chhay to Langan and Anakar confirming that Vivid Cabaret would pay just $47,000 as a result of an audit. “Tim [Winata] got the guy to $47k in Vivid New York. But owes him a couple trips,” he texted.

After another trip in February 2022, the auditor allegedly texted Winata, “This was the best trip I had in Florida. The girls were very beautiful and nice. On Thursday night there so many beautiful women. That’s why I do many lap dances instead of going to the room. I hope we can have another trip before the Summer. Thanks again for making making the trip great and better before.” [sic]

In another message, Kevlin is said to have texted Langan that “Tim guest would like another $1500,” adding that they “did $2k yesterday.” According to the indictment, Kevlin stated that the money would be recorded in the club’s records as an expense, to which Langan responded, “That’s fine. Go ahead.” Later, Devlin and Anakar are alleged to have created a false receipt and sales report that listed the $1,500 used to bribe the auditor as an expense for a strip club “promotion.”

And on December 6, 2023, Winata texted Anakar, in part, “Remember in the beginning the tax on Vivid audit was $190K plus interest. We wanted it to be $70K. While we were at Expo I told him that I would take him to FL once if he could get it down to that amount. He asked what it would take for him to go twice. I told him that it cost us $13K – $14K each time we made the trip. So, if he could reduce it by $30K, I would split it…”

James held a press conference to announce the charges. She said, “RCI’s executives shamelessly used their strip clubs to bribe their way out of paying millions of dollars in taxes.” She added, “I will always take action to fight corruption and ensure everyone pays their fair share.”

Daniel Horwitz, a partner at the law firm Tannenbaum Helpern and a lawyer for RCI, disputed the allegations in a public statement and said the defendants will fight the charges in court.

In the statement, Horwitz noted, “RCI, two executives, three employees, and three clubs were indicted today in New York on state charges alleging non-payment of sales taxes and bribery of a state sales tax auditor. There are no allegations that any company executive or employee personally benefited from the alleged charges.”

Horwitz added that “RCI, the individuals involved, and the three clubs deny the allegations and will take all necessary action to defend themselves against these overreaching charges, while continuing to seek a just resolution.”

Horwitz did not respond to a request from Forbes for further comment.

James did not announce a court date for the proceedings.

The indictment contains only allegations. However, if convicted, the defendants could face over a decade in prison.
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